Saturday, October 30, 2010

So what is an accountable care organization?

Mortgage meltdown or medicine meltdown?

As we enter the final phases of the election cycle you can get a good idea of the spoils of big government just by looking at the rhetoric in the campaign.

Clearly, one issue is dominating the election this fall: the economy, and more specifically the lack of jobs.

So I would like to pose a few questions and ideas on just how government actually performs in creating economic growth and in kick starting job growth. I don't necessarily have the answers, but I'm real good at asking questions.

Did government assisted mortgages help the economy? Certainly by artificially lowering mortgage rates and the creation of investor owned, government back sub-prime mortgage equities, the federal system of assistance in home buying has become the norm.

But given the meltdown in the mortgage industry, did we do a service to Americans by putting people in homes they couldn't afford? Flipping houses became the source for a evening cable television show and the folly of many particularly young home buyers.

As liquidity in the mortgage market disappeared so did the dreams and savings of many Americans -- including those that had invested in the "government" back equities of Fannie Mae and Freddie Mac.

Is government funded healthcare going to be beneficial for our country in the long term? Just like mortgages, are we going to put our country into a health system they can't afford?

Out current federal health legislation creates "coverage" for 85% of our citizens, but does nothing to promote access to care or an improvement in health care choices.

The latter is particularly concerning.

Regardless of the life style choices one makes, there is a guarantee of coverage. There certainly needed to be an improvement in health care services for the uninsured, and there needed to be some limitations on the growth in spending, but wouldn't it have been better to put incentives on the user?

The real question becomes: will we be facing a health care meltdown just like the mortgage industry? As the requirements for health care services rise, there being no limitations on cost, and no impediments to limiting health care decisions, can the system continue to function?

The biggest concern here is whether physicians and other health care industry providers (pharmaceutical companies, insurance companies, hospitals) can continue to function in an economic environment of continued declining reimbursement for services.

This is especially true given the proposed 23%+ cut in Medicare rates next month with more to follow in January.

Will there be a decline in health care liquidity?

Physicians and other health care providers may find themselves in a situation much like the mortgage industry: servicing consumers with health care services they and the government really can't afford.

I guess the real question is will there be a foreclosure on your new sub-prime health coverage?

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Wednesday, October 27, 2010

Perry-Palin in 2012? Hillary Clinton in 2012?

As we enter the final weekend of this political season I thought I would take a few moments to suggest some possible scenarios for 2012 that will begin as soon as the last ballot is cast on Tuesday.

Here are some thoughts:

Perry-Palin 2012? Could this be the next Republican dream team? Before I get the laugh lines and hate mail let me make my point.

Both of these individuals have been or are Governors from large states with many similarities. Texas and Alaska have faired much better than their counterparts in the latest recession, have enjoyed a relatively friendly tax environment, have benefited from the increase in energy demand, and, lets face it, represent geographically about a third of the United States.

But more importantly both Rick and Sarah correctly identified early on the upswing of the Tea Party movement and latched on. I think this "movement", I don't really think it qualifies as a Party yet, has surprised almost everyone's expectations about its growth and popularity. I'm not sure where it will end up, but these two mavericks have been riding the wave into this election season.

Both have also been able to run as "non-incumbents". This has been easy for Palin (read: jobless), but despite the anti-incumbent rage sweeping the country, Perry has been able to be the outsider in the current Texas governor's race. He has successfully painted his opponent as being part of the "problem" by using his mediocre performance as Houston mayor as the whipping post.

Will I vote for this team? Not sure, but it will make for an interesting discussion as we move into next year and both are not running for President. Right.

Now think about this: Hillary Clinton the Democratic nominee? I know this sounds far fetched.

But think about it for a moment. Assuming President Obama is defeated in his bid for reelection, Hillary would face the risk of a four to eight year stint of being on the outside of a Republican administration. (And she would likely be too old to run at the end of an Obama second term.)

So what would happen (assuming the Democrats get trounced in the Congressional elections) if Clinton resigns her post as Secretary of State, moves back home, and now jobless -- turns into the Palin-type evangelist of change and returns to the Democratic principles that she campaigned on (and remember, almost won).

She could certainly make the argument that the wrong choice was made in selecting Obama and he has moved way outside the mandate for American that swept the D's into power.

If she could somehow manage to recreate the mid-term rehabilitated mode of her husband Bill during his first term (move slightly to the center, fiscal responsibility, make the country's problems those of the Republicans), she might offer hope to the Democratic Party.

Particularly if there isn't a valid Republican nominee (read #1).

Plus, what an exciting political season. We haven't had a sitting President with a primary challenge in a long time.

I know everyone just can't wait to start this circus all over again.

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Location:AA Flight 2324: somewhere over Illinois

Friday, October 22, 2010

The Smoking Gun

Ok, the latest gadget that I'm food fascinated with is The Smoking Gun from the folks at Polyscience.

As someone who is a student, read: kindergarten student, in the world of molecular gastronomy, I've been playing around with sous vide and other new age cooking techniques for quite some time.

But when one of my culinary friends mentioned that he had been able to dramatically alter the flavor profiles of common dishes just by adding in flavored smoke I was intrigued.

I mean, I live in Texas, so if there is one thing we know how to do its smoke meat. But what about food you really don't want to cook....just have that smoky flavor?

Like, for instance, raw oysters.

Recently I participated in a little gourmet food covered dish supper with one of my great friends Lelia Hamilton. For my contribution I made a smoked oyster shooter -- fresh gulf oyster that I had infused with cherry wood smoke from the Smoking Gun.

It was really, really good. I'm not a big fan of "smoked oysters", but a "smoked raw oyster" -- that was cool.

Anyway, although it has the potential to be one of these kitchen gadgets that becomes a one hit wonder, you might want to give this little jewel a chance.

Just think how impressed your wife would be if she uncovers an upside down cereal bowl filled with apple wood smoke plus macaroni and cheese. Just might be a new cult hit and wind you up on Food Network.

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Location:Magnolia Dr,Stephenville,United States

Friday, October 15, 2010

Great story on why PowerPoints are bad and how to fix them from CNN

Why we hate PowerPoints -- and how to fix them

By Nancy Duarte, Special to CNN
Army officer fired after publishing essay complaining about useless PowerPoints
Nancy Duarte says bad presentations obscure or conceal key points
She says successful presentations don't win because of a wealth of data
Duarte: What makes a PowerPoint work is great storytelling

Editor's note: Nancy Duarte is the author of "Resonate: Present Visual Stories that Transform Audiences." She is CEO of Duarte Design, a presentation design firm based in Mountain View, California, that worked with Al Gore on the presentation featured in "An Inconvenient Truth" and whose clients include Cisco, Facebook, Google, TED and the World Bank.

(CNN) -- A few weeks ago Col. Lawrence Sellin, a Special Forces officer stationed in Afghanistan, fell victim to a particularly modern hazard of war: PowerPoint fatigue.

Col. Sellin was fired from his post at NATO's International Security Assistance Force after he wrote an essay for the UPI wire service in which he voiced his frustration about PowerPoint-obsessed officers who spend more time worrying about font size and bullet points than actual bullets.

Col. Sellin's was just the latest in a series of complaints about the military use of slide presentations -- you may recall public ridicule of the famously incomprehensible "spaghetti slide," and a recent New York Times article, that cited other officers just as frustrated with the emergence of the military bureaucracy's "PowerPoint rangers."

But PowerPoint isn't inherently bad -- just misunderstood. And bad PowerPoint presentations aren't just a concern of the military. We've all sat through presentations -- or suffered or even dozed through them. The truth is, most are poorly constructed and instantly forgettable.

Why does this matter? Because presentations decide elections, military strategies and multibillion-dollar business deals; they educate our children and they spread the ideas that shape society's most important goals and directives.

Ultimately, a presentation succeeds or fails on the strength of its message and how well it's told. And those elements have nothing to do with the brand of the software package involved in its production. You know instantly when you're watching a great presenter at work -- you may even own the ShamWow to prove it.

Sometimes, presenters try to punch up weak content with stunts. I remember one speaker who rode onto the stage on a motorcycle -- and promptly lost control and crashed. (He was okay.) Another presenter rappelled down to the stage like a mountain climber. I remember the stunts, but not the messages.

Poor presentations can have disastrous consequences. Edward Tufte, perhaps the most important writer on the display of information, demonstrated how the disintegration of the space shuttle Columbia in 2003 might have been averted by a more objective presentation of the damage inflicted on Columbia's wing by a piece of foam debris during takeoff.

As it was, Tufte wrote in his article, "PowerPoint Does Rocket Science: Assessing the Quality and Credibility of Technical Reports," NASA officials came away from PowerPoint-driven briefings by Boeing engineers with an overly optimistic view of the situation, in part as a result of hard-to-understand slides overloaded with bullet points. In other words, a bad presentation may have caused that disaster, and a good one might have prevented it.

Of course, we can't be naive: a persuasive presentation isn't necessarily a good presentation. In 2001, Enron Corp. executives Ken Lay, Jeff Skilling and Richard Causey presented PowerPoint slides at an employee meeting that winningly depicted the company's robust health and the bright future of its projected earnings. By the end of that year the company was worthless. Eventually, the U.S. Department of Justice charged those executives with 10 counts of a variety of crimes -- based on their presentations.

Meanwhile, the Enron scandal may have been preventable by the right presentation. In 1999, a presentation by the Arthur Andersen accounting firm feebly warned the Enron Board of Director's audit committee of the company's sketchy accounting. Had that presentation sounded a bold warning, the audit committee might have been able to save the company. For that matter, it might have saved Andersen, which did not recover from its role in Enron's dealings.

Unfortunately, the development of presentations is a skill that is rarely taught and for which few sources of best practices exist. Bad presentations kill ideas, waste money and impede progress. Great ones illuminate, persuade, generate consensus and spark action.

How do you create a great presentation? I've been in the business for 20 years, but until recently even I couldn't define the deep structures and elements of truly superior presentations.

My research into this question led me in unexpected directions. The answers I found had nothing to do with technology or the internet; they were revealed in screenwriting, Greek and Shakespearean drama, mythology and literature.

Great presenters employ the basic narrative techniques used throughout history to connect with audiences and move them to action and new understanding.

The presentations that work are not the ones with the most data or the most elaborate charts and graphs; the winners are those with the most compelling and convincing narratives.

We're a distracted, multi-tasking society. So presentations need to lure and re-lure an audience simply to keep their attention. Audiences are looking at the clock or fiddling with their handheld devices throughout a presentation. You don't connect with your audience by throwing information at them -- you do it by taking them on a journey toward your perspective.

Whether you're a CEO, a salesperson, a general or a biochemist, you must understand how to connect with an audience, how to construct a powerful narrative argument, and how to visually display information for maximum audience comprehension.

I read recently that our nation is suffering a crisis of literacy, with only 35% percent of high school seniors able to read proficiently. Yes, you read that correctly (assuming you're not part of the 65% of high school seniors.) But literacy really means the ability to communicate effectively. For professionals and citizens in every strata of society, true literacy now includes the ability to communicate effectively through presentations.

The stakes could not be higher for our country. If corporate executives communicate poorly, businesses and the economy suffer, and jobs are lost. If teachers communicate poorly, our children don't learn and advance. If generals communicate poorly, our troops and their missions are put at risk. These are dangers we cannot ignore.

The opinions expressed in this commentary are solely those of Nancy Duarte.

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Location:Barton Springs Rd, Austin, United States

Friday, October 8, 2010

Is Obamacare in critical condition?

Check out this CNBC video from the Kudlow Report asking the question: is Obamacare heading for a repeal?

Do we have an end to "value investing"?

As someone who likes to study stocks and investments, I have always considered myself a "value investor."

Probably from reading Warren Buffett's books in college and being the nerdy type who actually enjoy's reading The Valueline Investment Survey, it always made sense to me to invest in companies with growth in earnings or same store sales with good fundamentals.

And, it's difficult to argue with this logic. I mean, why wouldn't solid companies that make money be good investments?

If you look at the recent history of the stock market (over the last 15 years or so) you start to see a change in the way stocks are traded that seems to erode this value logic. Although there has been general growth in the number of dollars invested overall, the amount in straight equities has been relatively stable.

So where is this extra investment?


There has been an explosion in the both the number of option contracts -- everything from the typical stock and futures, but also on positions like the index markers. So what does this have to do with "value investing"?

Well options of course give you the right but not the obligation to purchase stock at a set price within a given time. They are extremely sensitive to both the underlying stock (or index or future) price and also the time value (that is, the time until expiration of the contract).

By their very nature they are a short term investment. I know, I know, there are LEAPs and other issues where this isn't true, but far and away the majority of option contracts terminate in the short run.

To me at least, this has given the stock market a different flavor and bias in investing your hard earned cash. There is now a tremendous number of dollars being invested in short term price movements -- and therefore away from the long term positions of holding the stock.

Now, technically, if someone was going to purchase an option wouldn't there have to be a willing seller that "owned" the stock?

Well not so fast. Now comes leverage. Most of the time that option contract you purchase is from someone who doesn't own the stock -- instead using their margin account to promise you they will deliver if if you decide to exercise.

Options aren't the only reason I think value investing has tamed a bit. The other is "robo-trading". Or as one of my friends put it: "to be robbed trading."

You only have to look at the recent report concerning the "Flash Crash" that the stock market had in May and you can see the effect that one broker and one trade had in drying up the liquidity in multiple markets with a computer based trade algorithm. The result was millions of dollars of loss in a single afternoon.

These computer exercised trades open and close positions in milliseconds -- a far cry from working out your trade at night with a pencil and a copy of Valueline on end of day trading numbers.

So for me, both options and robots have changed the way I see investing.

No, I haven't cancelled Valueline (although I read it on the computer now), but I have spent time educating myself on option contracts and how they can be used to my advantage. And I have changed brokers (after a decade) to one with a more sophisticated trade screen with Level II quotes (its free now) so I get to see these short term price movements.

I've also come to believe that my previous thoughts that technical analysis was voodoo were wrong.

Unfortunately when all investors are at least to some extent lemmings, and more and more institutional investing is short term and therefore based on technical indicators, we small timers have to be able to read a chart too.

If for no other reason than to determine market entry and exit timing.

I still don't think pure technical indicators are a reason to buy a stock (I don't care how much price change there is in an insolvent company), but I think they do play a role in the overall gain or loss of an investment.

So for me, pure "value investing" is over. I think I've come to terms that there has to be a good blend between both long and short term investments.

I know that Charlie Munger and the folks at Berkshire Hathaway may disagree with me (and they are a lot smarter), but in this economy I think expecting to hold an investment for three to five years has to carry some inherent risk that the companies market share will change or there will be a decline in the fundamentals.

So the question now is, do you lower or exaggerate the risk by blending in some short term positions?

I don't know the answer. Ask me in again in 5 years.

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Location:Caruth Haven Ln,Dallas,United States

Sunday, October 3, 2010

Obamacare - You want fries with that?

A recent article in the Wall Street Journal and the followup editorial concerning McDonald's decision to consider ending health care coverage for its work force has sparked controversy.

But it is a very compelling message.

Obamacare, or more correctly, the new federal health legislation passed in the spring by the Democratic Congress, promised to "keep your current health coverage intact."

But as the law goes into effect, it is confirming what we pundits have been screaming from the beginning: it will impact everyone in America.

Read: everyone. From the uninsured (which hopefully will see expanded coverage but still be challenged with with limited access) to tax payers to small business and yes, to physicians, everyone will see an impact.

And it will vary from the potential double digit increases on private indemnity insurance for those 25 year old new entrepreneurs to the seemingly bizarre requirement that small business owners will now have to issue thousands of additional 1099 forms to virtually every vendor they purchase products or services from.

So for McDonald's to be considering eliminating health care coverage may not come as a surprise. Now before my faithful readers start sending me emails about "how these were minimum benefit plans" and "these workers deserve better care," let me preempt you.

McDonald's offers ground level employment for thousands of young people -- and many part time workers. So for them to be offering any health care benefits to begin with was extraordinary.

And now to have them being forced to either enrich the plan with added benefits and cost, or abandon their current entry level health benefit structure is an example of how they too will be impacted by the legislation.

But for all the bad that has been said about the federal health regulations, the most chilling concern that I have is that at the end of the day despite the super-sized money and new statues that have been created -- we may not see an improvement in the access and quality of care.

There is no value meal here.