Some call them clients, others guests or customers. Costco (Ticker: COST, revenue $141B) calls them members, a term that makes you feel like you're part of a special club. It's a club that will not sell you junk*. They do not exaggerate. Theirs is not fake-Enron-style-ethics-bragging, and they actually list shareholders' interests last. Focus on the … Continue reading Costco: Lessons from Member Obsession.
In 2008 Warren Buffett made a bet against active investing, or more specifically the active-active, triple-fee side of investing, the hedge funds of funds. This group charges fees for placing money with hedge funds, who typically charge their own two types of fees. hedge fund's ability to pick funds that would outperform the S&P 500 … Continue reading Why I’m Betting Against Berkshire
I've always liked understanding the world through numbers, and markets are the beautiful impartial scorekeeper. When I was a teenager I used to compare the price of things to Wendy's cheeseburgers. "That's like 35 Jr. Bacon Cheeseburgers!" I would say in disbelief. When I was hungry I was more price sensitive of the ratio of … Continue reading Averages are Overrated
Today the cost of healthcare landed on the front page of The Wall Street Journal, just below a story on bond yields, and next to the dancing UK Prime Minister, Teresa May. The angle of the story is how the cost of family healthcare premiums in the United States now approaches $20,000. The genesis of … Continue reading The $20,000 Price Tag: Insights into the 2018 Kaiser Family Foundation Employer Survey.
Now known in some circles for something beyond its array of cheesecakes, 2,000 calorie dishes, and cruise ship-meets-Las Vegas décor, The Cheesecake Factory (CAKE) added a second consecutive quarter of negative healthcare news, a cost that’s hidden in most companies' income statements. The impact of this quarter’s negative healthcare surprise was $4,600,000, or 44% of … Continue reading Part 2: Is The Cheesecake Factory in The Healthcare Business?
The 2006 book The Wal-Mart Effect describes the retailer's impact on communities and suppliers. Since it was written, a lot has changed. Amazon has outperformed Walmart in the stock market by 20x. Walmart has also dropped the hyphen from its name. Walmart still does $57,000,000 per hour in sales, or $500B per year, and has 2.3M … Continue reading The Walmart Effect on Healthcare
It's July and that means earnings season. We get a view of the workings of UnitedHealth Group ("UHC"), the "diversified health care company dedicated to helping people live healthier lives and helping make the health system work better for everyone." We've all carried a United Healthcare card at one point. UHC is the largest healthcare company … Continue reading Trends, Big Numbers, and Risks: Lessons from UHC’s Earnings
No economist, junior high student, employee, or small business owner* in the United States thinks healthcare should be tied to employment. Ask around. It's equally unpopular across the political spectrum. But we have it, and it's not by accident, but rather an unintended consequence of the 1942 Stabilization Act. The WW2 era Act led to … Continue reading Why Employer-Provided Healthcare is Here to Stay
My article today in the American Journal of Managed Care: Kaiser Survey Data Offer More Reasons to Rethink Health Risk Assessments
Charlie Munger reminds us that inversion helps us to solve problems we may not be able to solve in other ways. As an example, he says if you want to help India it's helpful to first ask "what's doing the worst damage in India....and how do I avoid it?" Said in a personal way: What … Continue reading The Power of Inversion, or What to Avoid.