The Week in Charts (10/11/24)
The most important charts and themes in markets and investing, including:
00:00 Intro
00:16 Free Wealth Path Analysis
00:54 Topics
01:41 Rising Prices at a Slower Pace
06:05 Market Expectations = Fed Expectations
13:24 The Rate Cut Tradeoff
16:39 Why Mortgage Rates Rose After the Fed Cut
21:50 What Are They Trying to Hide?
24:55 The Goldilocks Moment
29:56 Rising Real Wages
Video
Blog - 10/11 blog not currently available

I'm not going to try to dissuade you from staying with Plan F. Peace of mind has a certain intangible value that for you exceeds $372.
Regarding absence of bills with Plan F, that's the theory. And at worst, you may get a couple of bills that you're not responsible for paying. But you still have to deal with them. Crash gave an example. The result of our crazy quilt insurance system. [...]
"require prior authorization ... probably the reason why most good doctors shy away from Advantage plans". We can test that theory. Do most good doctors shy away from all commercial insurance - employer sponsored, ACA, etc.? The vast majority of these policies also require prior authorizations. [...]

Well, despite Crash's example, all I can say is that I have been on Plan F for over a decade and have never received a medical bill in my mailbox.
Regarding prior authorization, I recently came across an article in a local paper (City&State) regarding the so far unsuccessful efforts by the City of NY to force its retired employees from Original Medicare into an Aetna Medicare Advantage Plan. Here is an excerpt: "Opponents of Medicare Advantage say that the privately-managed plan will make it more difficult for retirees to receive care, citing investigative reports in The New York Times and Kaiser Health News that documented how private plans were ripping off the federal government while restricting retirees’ access to critical medical care through pre-authorizations.
The Times investigation, published in October, ran under the headline: “‘The Cash Monster Was Insatiable’: How Health Insurers Exploited Medicare for Billions – By next year half of Medicare beneficiaries will have a private Medicare Advantage plan. Most large insurers have been accused in court of fraud.”
According to the Times, “eight of the 10 biggest Medicare Advantage insurers – representing more than two-thirds of the market – have submitted inflated bills, according to the federal audits. And four of the five largest players – UnitedHealth, Humana, Elevance and Kaiser – have faced federal lawsuits alleging that efforts to over diagnose their customers crossed the line into fraud. … The additional diagnoses led to $12 billion in overpayments in 2020, according to an estimate from the group that advises Medicare on payment policies – enough to cover hearing and vision care for every American over 65.”

@BB
I have to admit that I am puzzled by your disappointment at this fund on the basis of a single data point -- 6 month returns.
Here are the metrics I see(per PV) and why I continue to hold. The 25% cash position does not bother me and I'm comfortable with managers being contrarian, not following the herd and willing to sacrifice short term returns in the interest of the long term.
From 1/1/21 to 9/30/24 as compared to VWELX
- CAGR 15.24% v 7.83%
- MaxDD -10.16% v -20.22%
- Sortino 1.78 v 0.68
- 3 month return 5.13% v 5.17%
- YTD return: 16.86% v 13.82%

I'm not going to try to dissuade you from staying with Plan F. Peace of mind has a certain intangible value that for you exceeds $372.
Regarding absence of bills with Plan F, that's the theory. And at worst, you may get a couple of bills that you're not responsible for paying. But you still have to deal with them. Crash gave an example. The result of our crazy quilt insurance system.
With a PPO, it doesn't matter (much) whether the doctor accepts the plan or not. Typically the plan will have a higher copay for out of network doctors. The doctors themselves are required to charge no more than they could charge under Original Medicare. If they won't submit a bill to an insurer, then you pay upfront and submit the bill to the PPO for reimbursement. (I know, less peace of mind, more paperwork.) The point is simply that doctors accepting only OM does not stop the conversation (for some people).
Prior authorization: it's a myth that OM never requires prior authorization. It does, albeit for just a limited number of services and for certain durable medical equipment.
https://www.cms.gov/data-research/monitoring-programs/medicare-fee-service-compliance-programs/prior-authorization-and-pre-claim-review-initiatives
And despite horror stories (there's peace of mind, again), things usually go smoothly.
"Of the 46.2 million prior authorization determinations [in MA plans] in 2022, more than 90% (42.7 million) were fully favorable, meaning the requested item or service was approved in full."
https://www.kff.org/medicare/issue-brief/use-of-prior-authorization-in-medicare-advantage-exceeded-46-million-requests-in-2022/
OM prior authorization approval rates were generally lower (below 80% for outpatient services, below 70% for durable medical equipment in FYs 2021 and 2022). But that's not a fair comparison, because CMS selected for review a limited number of services that are more likely to be abused. Hence the denial rate is expected to be higher.
https://www.cms.gov/files/document/prior-authorization-and-pre-claim-review-program-statistics.pdf
"require prior authorization ... probably the reason why most good doctors shy away from Advantage plans". We can test that theory. Do most good doctors shy away from all commercial insurance - employer sponsored, ACA, etc.? The vast majority of these policies also require prior authorizations.
I know of providers that have dropped various insurers because of slow payments or other difficulties receiving payment. But it is individual insurance companies and not commercial insurance in general that they are dropping.
I do know of one doctor (4.8* on HealthGrades) who stopped taking all insurance other than OM this year. He's near retirement and fed up with dealing with insurance companies, period. As he's phasing out his practice, he doesn't mind losing some patients because of this change. I suggest that he is the exception, that most doctors take commercial insurance despite their prior authorization baggage.

Thanks, Dennis.
Unfortunately, more of the same. The managers continue to say the market is very expensive. The fund did not participate in the early Aug and early Sept market pull backs. Cash is at 25.4%. There are so many stocks below the Mag 7 that are participating in this bull market. Since the September market pull back, RSP has outperformed this fund by 4%. If there is an ETF for 493, I should check the relative performance with this fund. The fund’s stated strategy is All Cap Value. I do not have a single value fund in my watch list that returned only 1% over the past six months.
50% of the portfolio is in consumer cyclicals and 30% is in financials. I hope the holiday season is good for these sectors and the good luck spills over onto this fund.
Lurkers, Note that this fund is highly concentrated, with only 16 holdings (per M*) and the top 5 taking up 50% of the fund.
Edit: it is impressive that fund inflows are unabated. September marked three months of increasing fund inflows. June had the lowest inflows for the year - every month had inflows. Who are these people plowing their wealth into this fund when MM funds out performed over the past 6 months. If this fund has a cult following, I must avoid it. Note that the management also manages separate accounts which if I recall correctly has $4B in AUM in the same strategy, far in excess of the fund AUM. SMAs are more sticky than a mutual fund AUM. So, may be this is cultish!

We are pleased to announce that the Intrepid Small Cap fund is Closing down.
Really ?
How about saying - Do to incompetent management and poor stock selection the Intrepid Small Cap Fund is closing down on November 22, 2024.
The 2 Star, negative rated fund by Morningstar has attracted just 38 million dollars in it's 19 years of operation, not enough to continue operations.

Oct 12 Episode:

Morningstar’s retirement guru Christine Benz discusses the often overlooked non-financial aspects of retirement planning during this conversation about her new book, How to Retire: 20 Lessons for a Happy, Successful, and Wealthy Retirement.

Link to "Fee Only" List of Personal Financial Advisors:
https://napfa.org/

@Crash - so much to unpack there about Medicare generally (i.e. not specific to Plan F or G).
Medicare does have a network; it's just very large and includes about 99% of non-pediatric physicians as of June 2023. Unlike Medicare Advantage plans, the Medicare network is opt-out, not opt-in. Physicians have to explicitly opt out of taking Medicare.
Mass. does have special rules and exemptions granted by CMS. Among those are the ability to offer Regional PPO (RPPO) Medicare Advantage plans with skinny networks and its own set of Medigap plans (not the usual A, B, ...). These days, they're called Core (analogous to Plan A), Supplement 1 (analogous to Plan F), and Supplement 1A (analogous to Plan G).
https://www.medicare.gov/medigap-supplemental-insurance-plans/#/m/plans?fips=25025&zip=02108&year=2025
Mass. is a community rated state, meaning that a plan must be sold at the same rate to all customers, regardless of age or other conditions, within a "community" (generally a county). But it allows the equivalent of gas station "cash discounts". If you're younger an insurer is allowed to offer you a larger discount off the "rack rate". (NY is different; it is also community rated but without age discounts.)
Even without declining discounts, Medigap premiums increase yearly. "Rates generally do go up over time, and that’s because of inflation and other factors."
Getting no bills is definitely an advantage of having a policy that covers everything (Medicare + Medigap). Whether that is the least expensive alternative in worst case scenarios is another matter. I'll use NY as an example since I'm more familiar with plans there.
HealthFirst, a nonprofit insurer, "has the largest Medicare Advantage membership in the NY metropolitan area". Good insurer, I've used their ACA plan. Their PPO (allowing you to go to any doctor in the Medicare "network") has $0 premium and caps out-of-pocket costs at $5K (in network), $8K total. Very large regional network (including Sloan Kettering), so it's very easy to get in-network coverage for virtually any care needed.
Compare that $5K cap (2025) with Plan F Medigap. The cheapest Plan F anywhere in NYC is $359/mo or $4308/yr. That $700 gap closes when one adds in the $1500 that Healthfirst will pay to any dentist ($0 deductible; $0 copay in network, small co-pay OON) for dental services. Not to mention superior drug coverage vs. standalone Part D plans that are available.
Universal coverage does not mean single payer, it does not mean government run. The Bismarck model (Germany, France, Japan, etc.) works with tight government regulation, non-profit insurers (like HealthFirst and some others), and of course mandatory coverage.
https://www.pnhp.org/single_payer_resources/health_care_systems_four_basic_models.php

Rick,
Many days my account balances at Schwab are wrong by a few percentage points. I stopped worrying about $$ reflected. I just hope that someone is not salami slicing my accounts slowly because I would not detect it as I do not check the History often. The big corporations have won the game of desensitizing me to their deliberate incompetence.
IBKR patrons talk highly about it. May be it is time to check them out?

I'm really not in a rush to change brokerages and Schwab's been mostly decent otherwise (not as good as the old TDA), but I'll look. It's been ages since I explored IBKR (back when I was futures trading 15 years go) but when I get some time I'll take a gander.

11 Oct, '24:
https://www.bloomberg.com/news/videos/2024-10-11/bloomberg-real-yield-10-11-2024
What to do? What to do? Mixed data signals make for iffy decisions about rate expectations, and whether to be short or in the belly, or to go long with bonds.
Further into debt, as promised by both Harris and Trump; one much worse than the other. (But will this country ever wake up and recognize the mountain of debt already hanging over our heads?)
S. Basak kept it interesting. Not too much to work with.

I am in High Deductible F, have had some unexpected hospitalizations and major interventions, and fortunately live in a state that allows changing Medigap policy within a certain period without medical underwriting, ages 65-75 ("birthday rule"; other conditions obtain). It's risky to get old.
At 65 I had none of the conditions listed under "Sample Underwriting Questions" on the link msf posted. Now I have 1.5.
(Thanks for the useful link, @msf !)

Today, BA preannounced their Q3 earnings and also announced a cut of 10% (17,000) workforce (at all levels) plus a delay of the introduction of 777X (passenger plane). That should preserve its investment grade rating.
New CEO has to start with cleaning house!

When Plan G came out, the expectation was that over time, its price advantage over Plan F would increase. The reason is that the pool of customers for Plan F would shrink (and age), thus adding risk to for the insurer and increasing potential payouts.
Right now, Plan G saves you $372 dollars, less whatever extra expenses you would have with it. Those include $240 (part B deductible) and part A deductible ($1,632 per hospitalization).
Each person evaluates odds differently, even before considering peace of mind. Personally, I would count on having to pay the part B deductible ($240). Good health or not, seeing a doctor for something other than preventive care over 12 months is likely.
Major edit Plan G covers Part A deductibles. With that in mind, since Plan G, including the cost of the Part B deductible (making it equivalent to Plan F) is already cheaper than Plan F, and that advantage should only increase in the future, Plan G seems like the obvious choice.
https://www.medicare.gov/health-drug-plans/medigap/basics/compare-plan-benefits
So in my mind, I'd be thinking about a $132 savings and comparing it with the likelihood of being hospitalized ($1,632 per incident). Those are 1:12 odds - you "win" $1 for every $12 you put at risk. While becoming hospitalized is not likely for someone in good health, those are still awfully long odds. I'd still stick with peace of mind (Plan F) for now. But that's just me.
Each year the price gap between plans should increase, so each year you'll need to do the same evaluation. And each year you'll be another year older.
An argument for switching sooner than later is that in most states, Medigap is medically underwritten - you have to be in good enough health to qualify for it. Renewal is guaranteed, but changing plans may not be.
https://boomerbenefits.com/medigap-underwriting/

Here's the Pub 590A section on withdrawing IRA contributions.
https://www.irs.gov/publications/p590a#en_US_2023_publink1000230703

You can generally make a tax-free withdrawal of contributions if you do it before the due date for filing your tax return for the year in which you made them. This means that, even if you are under age 59½, the 10% additional tax may not apply. These withdrawals are explained later.
...
In most cases, the net income you must withdraw is determined by the IRA trustee or custodian. [In this case, everything is withdrawn; the excess above the amount contributed is taxable income.]

The Pub goes on to say that it might be permissible to withdraw the contribution up to 6 months after the normal filing deadline.
This withdrawal is different from a withdrawal of excess contributions. An excess contribution is:

the amount contributed to your traditional IRAs for the year that is more than the smaller of:

• $6,500 ($7,500 if you are age 50 or older), or
  
• Your taxable compensation for the year.

https://www.irs.gov/publications/p590a#en_US_2023_publink1000230875
If she doesn't need the money, she could also consider recharacterizing the contribution as a Roth contribution.
Finally, here's a Bogleheads thread that is fairly useful on the subject of withdrawing mistaken contributions.
https://www.bogleheads.org/forum/viewtopic.php?t=212710

Boeing would be ”Biggest Ever Fallen Angel” - if cut to junk.
”On Tuesday, S&P Global Ratings said it’s considering downgrading the planemaker to junk as strikes at its manufacturing sites persist, hurting production. Last month, Moody’s Ratings said it’s considering a similar move.”
Considered adding this to a couple of other running threads dealing with fixed income / bond investing. The ramifications of the Boeing story are very far reaching.

”BlackRock Inc. pulled in a record $221 billion of total client cash last quarter, pushing the world’s largest money manager to an all-time high of $11.5 trillion of assets as it seeks to become a one-stop shop for stocks, bonds and, increasingly, private assets.
“Investors added $97 billion to exchange-traded funds and $63 billion to fixed-income overall in the third quarter, New York-based BlackRock said Friday in a statement. BlackRock has pulled in $360 billion of total net inflows so far this year, surpassing the full-year net flows of 2022 and 2023.“
Yahoo / Originally from Bloomberg
(A trillion here … A trillion there … Pretty soon you’re talking about real money.)

A young friend called, seeking advice on a problem that I'm not particularly well-versed in. She just graduated college, received a graduation check and decided to open an investment account at Schwab. (So far, so good.) Somehow she managed to click on the "traditional IRA" button rather than the "brokerage account" button. She would like to undo that mistake.
Any guidance? Her income is de minimis, so I guess withdrawing the deposit would cost her the 10% early withdrawal penalty and virtually nothing in taxes. I've read discussions of recharacterization that keep invoking the terms "complex" and "tax attorney." Hmmm ....
David

https://www.sec.gov/Archives/edgar/data/1300746/000089706924001946/497e.htm
497 1 497e.htm
Filed pursuant to Rule 497(e)
Registration Nos. 333-282272; 811-21625
Intrepid Small Cap Fund
Institutional Class (Ticker: ICMZX)
Investor Class (Ticker: ICMAX)
Intrepid Capital Fund
Institutional Class (Ticker: ICMVX)
Investor Class (Ticker: ICMBX)
Supplement dated October 11, 2024 to the
Prospectus dated January 31, 2024
We are pleased to announce the anticipated acquisition of the assets and liabilities of the Intrepid Small Cap Fund by the Intrepid Capital Fund pursuant to the reorganization of the Intrepid Small Cap Fund. The acquisition, which is expected to become effective after the close of business on November 22, 2024, is described in more detail in the information statement and prospectus filed as part of a Registration Statement on Form N-14 with the Securities and Exchange Commission in connection with the reorganization.
The information statement and prospectus will be sent to shareholders of the Intrepid Small Cap Fund. Shareholders of the Intrepid Small Cap Fund are urged to read the definitive information statement and prospectus when it becomes available because it contains important information about the reorganization. The information statement and prospectus may be obtained free of charge from the SEC’s website at www.sec.gov or by calling 1-866-996-3863.
Upon the acquisition of the Intrepid Small Cap Fund by the Intrepid Capital Fund, each shareholder of the Intrepid Small Fund will receive shares of the Intrepid Capital Fund, which have an aggregate net asset value equal to the aggregate net asset value of the shareholder’s shares in the Intrepid Small Cap Fund. The Intrepid Small Cap Fund will then terminate. The shareholders of the Intrepid Small Cap Fund will not be assessed any sales charges or other shareholder fees in connection with the acquisition, and the reorganization has been structured with the intention that it qualify for federal income tax purposes as a tax-free reorganization under the Internal Revenue Code.
Existing shareholders may redeem or exchange shares of the Intrepid Small Cap Fund in the ordinary course until the last business day before the closing of the reorganization. The redemption fee is waived with regard to the Intrepid Small Cap Fund in light of the proposed reorganization.
You should review the definitive information statement and prospectus carefully when available and retain it for future reference. In connection with the reorganization, the Funds are not asking you for a proxy and you are requested not to send a proxy.
The Funds have filed an information statement and prospectus as part of a Registration Statement on Form N-14 with the Securities and Exchange Commission in connection with the reorganization. The definitive information statement and prospectus will be sent to shareholders of the Intrepid Small Cap Fund. Shareholders are urged to read the definitive information statement and prospectus when available because it will contain important information about the reorganization, including the reasons of the board of trustees for approving the reorganization. The information statement and prospectus may be obtained free of charge from the SEC’s website at www.sec.gov or by calling 1-866-996-3863.
Please keep this Supplement with your Prospectus.

Once again, Schwab is having problems pricing preferred shares. I logged in this evening and was greeted with a nearly 10K 'loss' on an AT&T preferred position despite the share price being up on the day as confirmed by 3 other websites. It's the first time it's happened on this position.
I dumped out of my a different preferred stock months ago b/c they could never calculate the cost basis when it was DRIPped ... and now this. I don't get it.....
On a related note, I'm seeing TV ads trying to brand Schwab as a place for 'traders' which I find mildly concerning. We all know that's why they bought TD so they could get ThinkDesktop to replace SSE as their active trader platform -- which is interesting b/c I understand the company is torn between staying 'boring' for its older/wealthier clients and trying to be 'cool' and 'action-packed' for younger folks and/or traders.
Le sigh.

AMC was trading near $566 a few years ago....now trades at $4.
Gamestop was trading at $81 a few years ago...now trades at $21.
BBBY traded at $16 a few years ago...now its gone.
DJT was trading as high as $79 this year....but where should it be trading? I believe @rforno's $0.15 would be fair value.
DJT belongs in the meme pile.