Many physician groups, including the American Medical Association, have declared that ICD-10 will be an “onerous burden” to the industry and will cost thousands of dollars to implement during a time when physicians are facing reimbursement cuts and other changes. To the contrary, ICD-10 has many advantages for the healthcare industry and the first step in realizing these advantages is to begin the transition.

The ICD-10 mandate was finalized January 1, 2009 which gives organizations until October 1, 2013 to transition.

It is imperative that this transition begin in 2012 to have all of the necessary documentation and training in place to submit claims under the new system beginning October 1, 2013.

The most significant challenge in moving to ICD-10 is the specificity in the new codes which will require significantly more documentation than is used currently. Many physicians are under the assumption they are paid solely based on the CPT codes (procedures and services) along with the associated RVU’s.  Physicians are paid based on the CPT/HCPCS codes which is driven by RVU, however, CMS cites medical necessity as the “overarching criterion” for selection of any type of medical service.  Most insurance carriers agree with CMS.  In essence, the diagnosis code is the key driver for reimbursement.

To become familiar with ICD-10 implementation, start with “ICD-10 Basics for Medical Practices” and “Talking to Your Vendors about ICD-10. Tips for Medical Practices,” both available at: www.cms.gov/ICD10/05a_ProviderResources.asp.

Other important steps to take now include the following:

1. Appoint a person to be responsible for successful implementation.  That person should learn what is needed to comply with the new coding system and develop the implementation plan.
2. Conduct an impact assessment to understand how the new coding system will affect the practice.  This entails looking at what consumer systems use ICD-9 codes, what forms, and what processes involve coding.  Perform a complete analysis of all workflow and processes that could be affected by ICD-10.
3. Contact computer vendors to start planning for ICD-10.
4. Perform quarterly ICD-10 documentation readiness coding reviews to analyze documentation deficiencies with the new codes.
5. Create a budget for converting to the new coding system. Depending on the maintenance agreement, a computer vendor may be responsible for the software updates. On the other hand, some computer hardware may not be robust enough to handle the new software, which could mean an additional expense. Don’t forget expenses such as education and training, and documentation readiness coding reviews.
6. Identify the staff members who will need to be trained, and budget for their training and lost productivity. Highly experienced coders will be able to learn the new system more quickly than new coders.
7. Physicians will need to be trained, even if they do not do their own coding, because they will have to document with the level of detail needed to support the new codes. Make sure physician training is tailored to their specific needs.
8. Create a solutions analysis which will identify the current state of the organization, where the practice needs to be in 2013 with ICD-10, and the steps the practice will take to get there. Creating a solutions analysis with a timeline will keep the practice on track with ICD-10.
9. Utilize a consultant to assist with ICD-10 implementation and education for providers and staff if internal expertise is not available. To receive guidance or assistance with ICD-10 implementation, contact dgrider@blueandco.com.

Deborah Grider, a senior manager with Blue & Co., LLC, is one of the top leading industry experts on ICD-10 Implementation and Training.  She has been in the healthcare industry for over 30 years and an author of many coding books for the American Medical Association including “ICD-10 Implementation Guide; Make The Transition Manageable”, “Principles of ICD-10-CM, and the ICD-10-CM workbook.  She had developed education and training on ICD-10 Implementation for hospitals, payers, and physicians for various organizations and in 2009 testified at the National Committee for Healthcare Vital Statistics meeting on the challenges physicians face with ICD-10 implementation. She is also the author of many articles on ICD-10, is the Past National Advisory Board President for the AAPC, and an approved ICD-10 Instructor with the American Health Information Management Association.

When it comes to investing and the markets, there is a lot of noise out there, and for the casual observer, it can be rather confusing.  Even professionals, with all their resources, have a difficult time beating their benchmarks.  So what makes you think you can do a better job?  As it turns out, most individual investors do not perform well in the markets.

The stock market can be cruel.  A lot of money is paid to pundits and analysts to explain the unexplainable and make order out of chaos.  But no matter how diligent one is in their approach to the markets, truth be told, you cannot predict the future.  We often hear what a great leading indicator the market is, but I wonder what the market was thinking at the October, 2007 highs.  12 months later the major market indices had lost half their value.  There are no absolutes in the markets.

There are many reasons for individual investors to underperform in the markets including but not limited to lack of knowledge, chasing hot stocks, lack of diversification, poor understanding of money management, and on and on.  The market is a tough game to “master”, and like any difficult endeavor, it takes hours and hours of practice and study, and even then there are no guarantees.  My advice is to seek professional help.  It is money and time well spent.

But what should you look for in a financial advisor?

Trust. An investment advisor is meant to be someone you can trust, and they have a fiduciary responsibility to put your interests first.  They are not a broker whose purpose is to sell “stuff” for the firm.

What do they offer?  Not all advisors are financial planners, yet most financial planners do advise on securities.  At ARL Advisers, we specialize in one thing: providing security analysis and constructing risk adjusted portfolios for our clients.

What about performance?  This is a difficult question to answer as there is no simple benchmark to measure against. Suffice it to say most professionals and lay persons underperformed the markets in the past 10 years.

Do you understand the investment strategy?  Although hard, investing isn’t rocket science.  All that is usually required is to execute a well thought out plan.

Can your adviser tailor a strategy that will reach your goals?  Does your adviser offer alternative investments and strategies?

Is the adviser concerned with risks as well as the rewards?  Avoid promises of wealth and instant riches.

Fees.  The lower the better.

You go to the trainer at the gym to get yourself in shape.  You seek medical attention when your health is deteriorating.  Get your financial health in order.  Don’t go at it alone….Get an advisor!

Guy M. Lerner, MD has been writing about the financial markets for over 8 years.  Lerner is the principal partner in ARL Advisers, a registered investment adviser in the State of Kentucky with clients throughout the country.  ARL Advisers provides investors an alternative to passive money management and the limited asset allocation models of financial advisers.  To learn more about the author or ARL Advisers: call 502 552 0018; email: guy@arladvisers.com; website: www.arladvisers.com.

Does your doctor tweet?

Dr. Kurt Frederick of Premier Family Physicians in South Austin posts comments and news for patients on Twitter, but he’s one of few doctors who uses social media professionally.

Although most doctors follow the latest whiz-bang devices and other advances in medical technology, they have been slow to embrace new technologies for interacting with patients, according to experts and studies.

Frederick said they are missing a vital opportunity, not only to attract new patients who will find them online but to build deeper, lasting ties with patients.

“I think people want to see us as more than a white coat twice a year,” said Frederick, 51. “They want to know what we read; what we think about things. They want to know about our families, and … that creates a bond.” But he doesn’t know any other doctors in Austin who are using social networking to the extent that his practice of nine doctors and eight physician assistants does.

Doctors and experts say barriers to social networking include concerns about breaching patient confidentiality, naiveté, liability concerns, and a lack of time and money.

“It’s the payment system,” which doesn’t reward doctors unless they provide treatment, Frederick said, “and inertia on doctors’ parts.”

Physicians traditionally have not been paid for activities that keep people well, but that’s changing. And Frederick said those changes will fuel more social media use.

Doctors’ online patient interactions, including those involving Twitter, Facebook and other social networking sites, “certainly are growing, and it’s growing a lot over the last year,” said Jonathan Nelson, a spokesman for the Texas Academy of Family Physicians. But he estimates that roughly 15 percent of doctors are regular users.

“Everybody is going online to search for health information,” Nelson said. What a doctor like Frederick is doing with social media is “extending the care he is providing beyond the clinic walls.”

Dr. Howard Luks, an orthopedic surgeon in Hawthorne, N.Y., wrote in an online column that “only the oil refinery business lags healthcare in digital media adoption.” That’s a mistake, he wrote, because “in 2011 it is simply no longer advisable to simply have a static, template driven online ‘presence’ or no presence at all.”

A survey this year of 4,000 physicians by QuantiaMD, an online information exchange for doctors, found that 15 percent used Facebook professionally, 8 percent used YouTube and blogs, and 3 percent posted on Twitter.

An American Medical Association policy on social media use urges caution and constant monitoring to ensure that standards of patient privacy are maintained. It also warns that failing to take care with content could harm reputations and taint careers.

Although caution is advisable, Frederick said, he has not encountered problems.

At Premier Family Physicians, he has championed the cause and pushed some of his more reluctant colleagues to get involved.

The patients are responding, said Rich Steinle, the practice’s CEO.

“It’s a way of creating community,” Steinle said. “When you know your doctor … then you have trust.”

He sees a broad spectrum of patients participating.

“Everyone assumes it’s for millennials, but the fastest-growing group of social media users are baby boomers and older folks,” Steinle said. “Out of 40,000 active patients, 13,000 are signed up for the online practice. That’s jaw-dropping around the country.”

Two years ago, Premier moved into electronic medical records in a big way and has become a show-off site for its technology vendor, Greenway Medical Technologies of Carrollton, Ga. Premier has hosted visits and tours to about 40 physician groups and clinics from across Texas and from states ranging from Mississippi to California, according to Dr. Kevin Spencer at Premier. The Greenway system allows patients to send emails, review lab reports, refill prescriptions and make appointments, Frederick said.

Patients have a user name and password and can access confidential health information and pay bills online.

The Web portal also directs patients to the practice’s social media, including Facebook, Frederick said.

He writes an occasional blog post to let people know what the doctors are saying about flu shots, allergies and other topics. He posted a video of a colleague, Dr. Rita Schultz, discussing the human papillomavirus vaccine.

Frederick got interested in social media when his three daughters started college, and he didn’t want to be left behind, he said.

The endeavor has not been costly, he said. His son, Johnny, a sophomore at Westlake High School, helped him make the videos and post them online.

“I spent about $500 on consulting, and I bought my son a couple of hamburgers,” said Frederick, a doctor for 21 years. “It comes easy. It’s not intimidating.”

Nor does it take a lot of time — just a few hours a week, he said.

He gets six or seven emails a day from patients, while another 25 to 30 go to staff for refills and appointments.

“You would think people would pester you to death, but it’s rare that I get abused in email from a patient,” he said.

One of his patients, Meg Kells-Murphy, 28, of Austin, said she follows the practice on Facebook, especially trying to solve the medical mysteries that Frederick features under the heading “Are You Smarter Than a Medical Student?”

“I love that. I try not to Google it,” Kells-Murphy said. She also likes reading what Frederick posts.

“I get to see more of his personality than I do in the office,” she said. “It’s interesting because I’m interested in health care. It’s another dimension in our doctor-patient relationship.”

Molly, a 10-year-old Labrador retriever, occupies a soft spot in the hearts of Dr. Janine and Joe Malone. And for good reason.

The cherished pet alerted the Oldham County family to a fire in the early morning hours of November 2, 2010. That saved the lives of the Malones, their daughters Kendall, 16, and Grace, 9, and two houseguests. They quickly fled the house before it became engulfed in flames and suffered no injuries. A cause for the fire has not been determined, but electrical problems are suspected.

“Molly gave us exactly 6 ½ minutes’ notice before the smoke alarms went off,” Joe Malone, 47, said. “I heard a crackling sound and smelled some smoke. The alarms went off as I was checking an upstairs bedroom. My wife and I were able to get everybody out with only the clothes on their backs.”

What’s even more remarkable about Molly is that she is blind and suffers from congestive heart disease. But she still managed to tap her tail on the hardwood floor in the hallway outside the master bedroom to alert the family of the impending disaster.

“Just a month before the fire, the veterinarian gave Molly only three to six months to live,” Joe Malone said.  “Something good did come out of this bad situation.”

Dr. Janine Malone, a dermatopathologist at Associates in Dermatology in Louisville and an associate professor of medicine at the University of Louisville, said neighbors, friends and perfect strangers turned out to help the family in so many important ways after the fire.

“They gave us gift cards to buy food and a place to stay while we looked for another home,” Dr. Malone, 43, said. “My colleagues in the practice gave me a purse and scarves. A total stranger sent a gift card for Molly to PetSmart, and we used it to buy her some pet food. And St. Francis School in Goshen and St. Francis High School, where our children attend, offered so much welcomed support as well.”

Neighbors and friends brought the family clothes and gave them a place to stay until they could locate another house in their subdivision to rent.

Members of Northeast Christian Church and others showed up to dig through the debris to find keepsakes. Little was located, but one important find stands out: Dr. Malone’s mother’s wedding and engagement rings that she bequeathed to the couple’s daughter, Kendall.

The charred family heirloom has been restored and stands as a symbol of a close-knit family rising from the ashes to reclaim their lives.

Another strong symbol of that rebirth is the construction of a new home on the very spot where the fire occurred. The family expects to move in by Christmastime, and is already planning a housewarming where those who helped them in their time of need will be feted as special guests.

But at the center of attention will be Molly, who earned the “Pet Hero of the Year” award for 2010. In February, it was bestowed upon the Lab by Pets Group United, which recognizes pets who saved their masters from harm.

Joe Malone said Molly is a happy, beloved pet. “In spite of all of her health problems, she’s still wagging her tail,” he said.

Morton Kasdan, M.D., a plastic surgeon, is one with his work, his concentration complete, controlling the instrument in his hands. The result will be beautiful.

Dr. Kasdan is turning a piece of wood on a lathe, shaping it with a sharp tool, deliberately, but also learning what visual surprises the wood holds.  He is one of a number of local physicians who make things from wood. It’s natural enough – that healers are also artists.

“You use your hands and your brain,” Dr. Kasdan says.

On this Saturday, he is joined by three others who have come to work in his shop: Sharon Bohannon, a high school college counselor; Laura Carter, a surgical nurse; and Neal Garrison, M.D., a vascular surgeon. All are at lathes, machines that spin lumber so the turner can bring a cutting edge to it, coaxing objects from rough chunks of wood.

Fun and Games

Dr. Garrison started turning about six years ago, when Dr. Kasdan invited him over. He “kind of caught the bug,” he says.

So did Ms. Bohannon and Ms. Carter. “When I retire, I would do this every day,” Ms. Bohannon says. “I love this.”

Ms. Carter says she likes working on bowls best. The woods she prefers are cherry and some varieties of maple. Dr. Kasdan favors maple, walnut, ash and osage orange for turnings.

Not everything is a bowl. Other types of turnings include platters, Christmas ornaments, and Dr. Kasdan’s signature shoehorns.

Turning is one of several types of woodworking local doctors enjoy. But Roy Foster, D.M.D. goes in another direction. He has built furniture items. One is a changing table. The plans called for medium density fiberboard, but he decided it would look great in oak.

Going With the Grain

The piece has a large top surface, drawers, and open shelving. Dr. Foster selected the boards individually, looking for the most attractive grain patterns. “I just love oak,” he says. “It’s very solid, very sturdy.”

He used oak also in a simple desk he built. It has subtly tapered legs and an organizer on top that he designed. He has also made sanding blocks – tools that hold sandpaper – in walnut and maple. His next project: built-in shelving. “I like larger things,” Dr. Foster says, “things that get used.”

Barton Reutlinger, M.D., makes things that get used, too. He also makes things on the whimsical side.  As an example of the functional, there is his oak kitchen table. The base, a set of arched supports that meet at a central point, is constructed so weight on the tabletop transfers to these components, pressing them together and adding strength.

Imagination in Wood

At the other end of the spectrum is his miniature fairy house. Made mostly from a hollow maple log, it also incorporates a piece of dogwood, and its conical top, which opens, is lichen-covered, creating a shingled effect.

Dr. Reutlinger, an orthopedic surgeon with Louisville Bone and Joint Specialists, further expanded the inside and used chiseled-out chips to accent the roof’s edge. Inside are furniture pieces and a tiny guitar whose tiny strings are surgical thread.

But his grandchildren couldn’t really play with the fairy house, so Dr. Reutlinger built a dollhouse. “I do this for myself and for my grandchildren.”

He has entered projects at the Kentucky State Fair. There is a butcher block table; it took a blue ribbon. A backgammon game in walnut, maple, mahogany, and yellowheart; another blue ribbon. And the dollhouse: It won a blue ribbon and was named Best in Show this year.

“I can spend hours out in my workshop,” Dr. Reutlinger says. “I have great fun.”

See pictures of the doctor’s artwork at

A combination of on-the-go convenience and faster access to patient data is driving the implementation of smartphone applications at several Louisville-area hospitals.

The latest generation of the technology allows doctors to consult X-rays, review patient lab results and even write electronic prescriptions for most medications. The apps are available on a variety of platforms, including BlackBerry, Android and iPhone.

Some of the apps allow access to online vendors’ web-based services, while others have been developed in-house to provide access to electronic medical records.

Dr. Steve Heilman, vice president and chief medical officer at Norton Healthcare, said the popularity of Apple’s iPhone has forced a change in the hospital’s information technology strategy.

“We had always been a BlackBerry system for office use until two or three years ago,” Dr. Heilman said. ”More doctors were using the iPhone for their personal communications, and were coming to us asking if we could make it work with our system.”

Norton physicians use two categories of smartphone apps: one for accessing cloud-based electronic medical records and another for using the nationwide Surescript e-prescribing network. (The term ”cloud computing” refers to accessing data over the Internet or other network, rather than on a hand-held device’s own built-in memory.)

Addressing Security Concerns

Higher security is a compelling advantage of e-prescriptions, and a move is on nationally to incentivize their adoption. According to the American Medical Association, Medicare is giving doctors annual incentive payments to ensure that at least one percent of their total Medicare prescriptions are electronic. Dr. Heilman said the iPhone and BlackBerry apps Norton doctors use are helping them meet this mandate.

”Electronic prescriptions should be more fraud-resistant than hand-written ones,” Dr. Heilman explained. “Doctors have a verified code they use to log in to the service, which is harder to forge.”

Adopting the new technology raises thorny issues regarding patient confidentiality and security. Online prescriptions may be more secure, but how about cloud-based electronic medical records? Migrating patient information onto an electronic platform is a mandate of President Obama’s Patient Protection and Affordable Health Care Act (a.k.a. “Obamacare”).

From a security standpoint, the potential problems seem alarming. Would patients want strangers to hack into their X-rays?

Dr. Diana Han, a physician practicing internal medicine at Baptist Hospital East, said concern about patient confidentiality has delayed the hospital from full implementation of Allscripts, an e-prescribing service she and her colleagues use. Full implementation would allow mobile access to a patient’s medical records and lab tests.

In the meantime, Dr. Han uses Allscripts for writing prescriptions and Epocrates apps for researching drug interactions, correct dosages for patients who have pre-existing conditions, and other medication-related information.

“To realize a fully integrated system would provide secure access not only across an institution, but also between institutions,” Dr. Han said. “Right now, it’s a manual process. If I have a patient who receives care at another hospital, the records have to be manually entered before I can see them.”

Dr. Heilman said Norton has taken steps to ensure the data in their cloud-based medical records are secure. iPhones or other devices issued to employees are encrypted and password protected. Once an incorrect password is entered too many times, all data on the device is automatically erased as a precaution.

“All of our applications require passwords and are audited on a regular basis,” Dr. Heilman explained. “If someone was trying to hack the system, they would have to get past the device security, then the network security, and finally the application login security before they could ever access a patient’s record.”

Healthcare Consumer Apps

The revolution in smartphone technology for health care has not been limited to doctors. In the last two years or so, three area hospitals have launched apps targeted at health care consumers. The goal is to provide patient education and market the facilities.

For example, Jewish Hospital and St. Mary’s HealthCare launched an app for the iPhone, iPad and BlackBerry that delivers a news feed of health tips, a physician finder, food diary, video links and emergency room wait times.

”We joke that in Louisville, you’re only 20 minutes away from anywhere,” said Lesley Dorris, marketing and communications manager for JHSMH. “Since you might be an equal distance from competing hospitals, the app lets you find the facility with the shortest wait time.”

Norton’s consumer app is offered on Android and Apple devices and offers similar features, including a physician database searchable by location and specialty, video links and symptom checker.

All this was unimaginable only a few years ago. As mobile device technology continues evolving at its lightning-fast pace, the development and adoption of medical applications will continue apace – for hospitals, physicians and patients.

Wealth can be a mixed blessing — one that creates great opportunity as well as weighty responsibility — especially for children. As a parent, grandparent, or concerned relative, you hope to pass on what you have learned about managing and preserving wealth to the younger generation. However, you want the family legacy to be about more than astute money management; you want it to reflect your personal values, which may include a social conscience and philanthropic ideals.

How do you combine financial knowledge and charitable intent in your wealth management lessons? Following are some thoughts for your consideration.

Shared Concerns

Multi-billionaires Bill Gates and Warren Buffett have vowed to leave the majority of their fortunes to charity, reasoning that a large inheritance would do their children more harm than good. Wealthy families across America face similar concerns.

To counter these and other potentially negative effects of wealth, many parents are committed to educating children about finances from an early age. Studies show that marketers start targeting children as early as age two. So the sooner you start talking about money, the better. Explain the meaning and purpose of employment, the importance of managing credit and paying bills, and the best way to handle cash through banks and ATMs. Let children practice what they have learned about earning, saving, spending, and giving money through their own experiences with allowances and after-school jobs.

As a child matures, his or her financial education should become more rigorous. Learning how to balance a checkbook, create a budget, respect the role of credit and debt, and develop strategies for funding important goals such as a college education helps teens make the important transition from child to adult.

While parents generally are competent educators about financial matters and can serve as a child’s most important role models, they could use some support. In that regard, schools need to be proactive in teaching, motivating, and creating a greater awareness of both the benefits of money management and the short- and long-term impact of poor financial decisions. Many high school graduates are unable to balance a checkbook and lack the basic financial survival skills involved with earning, saving, and investing money. Parents should urge schools to incorporate personal finance topics into their core curriculum or to offer personal finance as a stand-alone “required” life skills course.

Set a Charitable Example

If we want to ensure future generations of volunteers and donors, we must teach our children how to give of their time, skills, and money. Adult family members can set an example by pursuing their own philanthropic and volunteer activities, or by encouraging the whole family to get involved in charitable activities based around a shared interest, such as the outdoors, sports, or religion.

Ensure Your Legacy through Incentive Planning

Wealth holders often worry that the important values they pass on to heirs during their lifetime will be lost once they are gone. For these individuals, creating testamentary trusts that allow you to reward your children’s desired behaviors or discourage undesirable activities can be a meaningful addition to an estate plan. For instance, a trust may offer educational support for heirs who pursue a specific field of study or attend a particular institution.

A trust may promote “family values” by providing income support to heirs who choose to stay at home to raise children or who foster or adopt children in need. Alternatively, a trust can withhold benefits from heirs convicted of a crime or who fail conditional drug or alcohol testing.

Financial advisors play an important role in the creation and success of a legacy by helping you articulate the values, beliefs and priorities you want to perpetuate and the methods to achieve your goals. Working together, you can offer meaningful relationships that go beyond a financial inheritance.

For More Information

If you’d like to learn more, please contact Stephen E. Fischer, 502-562-5081, http://fa.morganstanleyindividual.com/steve.fischer/

Morgan Stanley Smith Barney LLC, its affiliates and Morgan Stanley Smith Barney Financial Advisors do not provide tax or legal advice.  This material was not intended or written to be used for the purpose of avoiding tax penalties that may be imposed on the taxpayer.  Clients should consult their tax advisor for matters involving taxation and tax planning and their attorney for matters involving trust and estate planning and other legal matters

The author(s) and/or publication are neither employees of nor affiliated with Morgan Stanley Smith Barney LLC (”MSSB”). By providing this third party publication, we are not implying an affiliation, sponsorship, endorsement, approval, investigation, verification or monitoring by MSSB of any information contained in the publication.

The opinions expressed by the authors are solely their own and do not necessarily reflect those of MSSB.  The information and data in the article or publication has been obtained from sources outside of MSSB and MSSB makes no representations or guarantees as to the accuracy or completeness of information or data from sources outside of MSSB. Neither the information provided nor any opinion expressed constitutes a solicitation by MSSB with respect to the purchase or sale of any security, investment, strategy or product that may be mentioned.

Morgan Stanley Smith Barney LLC. Member SIPC.

It’s no secret that the stock market has been an overall disappointment for investors the last 12 years.  Sure, we’ve had a couple good years thrown in with the bad ones.  But for many, the prolonged bear market has shattered a belief that long-term investors will reap rewards of a buy-and-hold investment strategy.  Unfortunately, many investors lost this faith (and pulled their money) at precisely the worst time, in the trough of one of the worst bear markets in our history.  But before throwing in the towel, it helps to embark on a brief history lesson of a couple long-term “secular” markets over the last 50 years.  What you’ll find is that we’ve been here before, and strategies now exist to utilize in this type of market.

The current secular bear market, which began in 2000, is especially painful because it comes upon the heels of the most prolific period of stock market returns in the 20^th century.  From 1982-1999, the Dow Jones Industrial enjoyed almost uninterrupted gains.  This followed the secular bear from 1966-1981, where a dollar invested would have lost money over a prolonged period.  Our most recent market cycle was unique from other secular bull markets in not only the strength of its gains, but also its low frequency of short-term “cyclical” bear markets within.  Typically, long-term secular markets are made up of shorter term cyclical markets.  These give investors opportunity to gain in a bear market (as has been the case recently), or lose money in a secular bull.  The strength of the secular market ultimately drives returns over a longer period, but cyclical movements are felt along the way.  The impact of the secular bull that popped amid the tech crash of the late 1990s is felt today in several ways.  First, it shaped the way that many Americans invest in the market.  The number of mutual funds available and dollars invested in mutual funds skyrocketed in that time period.  Buy-and-hold investing became conventional wisdom.  Many individuals came to question active or tactical money management, preferring instead to find low cost ways to ride the easy gains of the market.  After all, a buy-and-hold passive strategy just made sense – and it worked.

Fast forward to today, and see the typical investor utilizing the same investment strategy that excelled in the last secular bull market.  It’s no surprise that the result is disappointment.  Most mutual funds target a relative return, meaning that the fund managers seek to beat a benchmark.  It’s hard to get excited when your investment loses “only” 35% if the tracked index loses 40%.  Tactical strategies may be more effective, and alternative assets classes can be valuable if they provide little correlation to market indices.  Absolute return strategies, which seek positive returns irrespective of any benchmark, can also serve value.  No one can predict where the market will move next, but in this environment a mix of different “sailing” and “rowing” strategies may just be the all-weather portfolio that you need.

By: Nathan McNulty, MBA, CFP^®

Meritrust Wealth Management

Securities offered through LPL Financial, member FINRA/SIPC

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. All performance referenced is historical and is no guarantee of future results. This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.

When speaking with potential clients about their current relationship with an investment adviser, they often describe a scenario that goes something like this:  They only hear from their adviser at the end of the year review.  Most of the time, it is steady as she goes.  But then there might be the week that the markets are down 8%.  They then get a call from their adviser asking, “what do you want to do?” We all know that the market is very uncertain, but what are you paying those fees for if you are the one having to make the tough decisions?  Or even worse, why are you paying those fees, if no decisions are being made with regards to your portfolio?

Let’s face it.  This is not the bull market of the 1980’s and 1990’s when a passive approach (i.e., buy and hold) was a winning strategy.  Since 2000, investors have weathered 2 bear markets, experienced a lot of angst, and have little to show for their efforts.  In hindsight, a more active approach was required, but going forward, this will likely be true as well.  Few of us remember investing in the 1960’s and 1970’s, but the Dow Industrials went nowhere for 20 years, and recent research by the Federal Reserve suggests similar such dynamics as an aging baby boomer population looks to take money out of the stock market as opposed to invest.

Clearly, a more active approach is required, but active doesn’t mean you have to be a day trader.  In fact, I would highly discourage such activity not only because it is costly (i.e., all those trades cost money), but it is also very difficult to do consistently well.  Active money management could be something as simple as rebalancing your portfolio on a periodic basis like every month or even yearly.  With rebalancing you are taking money away from your winners and investing in your losers.  Such an approach would likely reduce portfolio volatility without sacrificing gains.  In other words, you would avoid the big losses while achieving market beating returns.

Employing strategies to navigate the market means you are active.  Active doesn’t mean you are a day trader.  All you want and (should expect I might add) are strategies (or expert advice) that allocate investment funds towards assets with the greatest potential for appreciation and away from asset classes with the greatest potential for loss.  And in today’s market, there is no reason that your portfolio should only contain stocks and bonds.  Investors have access to multiple markets and trading products that have created multiple opportunities for those willing to exploit such an approach.

Guy M. Lerner, MD has been writing about the financial markets for over 8 years.  Lerner is the principal partner in ARL Advisers, a registered investment adviser in the State of Kentucky with clients throughout the country.  ARL Advisers provides investors an alternative to passive money management and the limited asset allocation models of financial advisers.  To learn more about the author or ARL Advisers: call 502 552 0018; email: guy@arladvisers.com; website: www.arladvisers.com.