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Low-Risk Investing. Without Industry Bets. Article Review
Investment Pros
Student’s Name
Institution
“Low-Risk Investing Without Industry Bets” Article Review
The authors begin by informing the reader that low-risk investing is based on the concept that safer stocks deliver higher returns than riskier stocks when all the risks are adjusted. They refute the notion that the high returns are delivered because of the fact that industry bets favour stable industries. They argue that the strategy of investing in safer stocks delivers positive returns in all industries irrespective of bets. The authors specifically tested the extent to which the benefits of low risk investing tilt within industries. Low-risk investing is thus not purely driven by low-risk industries or the value effect. They considered various Betting-against Beta (BAB) factors. The study disclosed that when more risk is hedged by investing in low-risk stocks, one can attain higher returns.
The reason why safe stocks tend to result in higher returns is because many investors cannot leverage beyond a certain extent, therefore raising the required return for risk-averse investors (Bodie et al., 2013). Low-risk investments work across industries and deliver higher returns when more leverage is needed per unit of risk. Industry neutral BAB investments deliver positive returns in every industry in the United States and in most global industries. The fact is true for every 20-year period since 1929 in the United States and since 1986 in the international markets.
The study conducted by the author reveals that low risk investment is useful both for selecting industries and for selecting the most optimal stocks within an industry. Betting against high-risk stocks earns positive returns for both industry and industry stock selection when the risk level is adjusted. This is true for 60 out of 70 global industries and for all 49 industries in the United States. The statistically and economically strong low-risk investment phenomenon is neither driven by betting on industries nor by exposure to value. It is an independent variable that functions on its own as an automatic response to routinely established investment patterns.
The article is very articulate and straight to the point as the authors express sentiments that are backed by evidence and can be evidenced by the trends in national and global stock markets. Risks lie at the core of every investment and are the driving force of the investment world. A basic principle of investment is that investors tend to settle on the assets with the highest expected percentage of return for every unit of risk. They then use leverage to match their personal preference for risk. Safer stocks tend to have higher returns because it is not all investors who can use leverage and some investors are completely precluded from any form of leverage. Marginal requirements act as a leverage barrier for some investors.
According to Assnes et. al (2014), risk-seeking investors often undermine the power of leverage by tending to overweight risky securities resulting in the overpricing of such securities. The ability to exploit overpricing is often limited through prohibition by charters, the high expenses of shorting, and the unwillingness of investors to accept such risks because of the high possibility of incurring unlimited losses. High-cost stocks tend to have lower returns because the prices often go up then come down, forcing investors to liquidate at a loss. The authors are, therefore, right when they state that safer stocks result in high returns across all industries. This is because the risks are less in such stocks and prices continue to be relatively stable irrespective of the industry. Low-beta stocks capitalize on leverage to earn higher risk-adjusted returns.
In conclusion, low-risk investing is based on the concept that safer stocks deliver higher returns than riskier stocks when all the risks are adjusted, at least according to the authors of the article. In this regard, Low-risk investments work across industries and deliver higher returns when more leverage is needed per unit of risk. Subsequently, low risk investment is useful both for selecting industries and for selecting the most optimal stocks within an industry. Whether low risk or high risk, it is important to note that risks lie at the core of every investment and remain the driving force of the investment world.
References
Asness, C., Frazzini, A. & Pedersen, L. (2014). Low-Risk Investing Without Industry Bets. Financial Analysts Journal, 70 (4).
Kane, A., Marcus, A. J., Bodie, Z., & Mays Business School. (2013). Investment analysis: FINC 421: special edition for Texas A & M University. Boston: McGraw-Hill Learning Solutions.
Medication Shortage Cost vs. Opioid addiction
Taylor Cunningham
EH102
Research Paper
10 September 2019
Medication Shortage: Cost vs. Opioid addiction
As of 2019, there are a total of 36,510,207 patients admitted into each of the big hospitals in the United States. With the recent medication shortages in the United States, hospitals are running out of the medicine needed and are having to turn to other solutions that are eventually costing them millions of dollars due to new things that are being tried. Trying new things are sometimes not a good idea because most likely it will lead to deaths and eventually liabilities that will soon be unaffordable for the hospital. As a result of too many people being admitted and some falling sick, there is medication shortage. Since medicine is not enough and patients have to relieve pain, man opt for opioid and they end up addicted. Between the high prices of medication and opioid addiction, the chances of becoming addicted is a daily trial.
First on medication shortage, too many people are admitted in hospitals and it gets hard for the pharmacy to provide enough drugs to the patients. Not only is that an issue, the fact that there are many people that have severe allergies are not able to get their medicine. There was a news report not too long ago that stated that, there was a major epi pen shortage and that several patients were not able to get there prescription every time they went to the pharmacy to pick it up. This is a serious issue because some cases are so server that it leaves them in a life-threatening state. Any of the epi pens that are available are now so costly and unaffordable it is nerve wrecking to know that the medicine that is needed is not available now. Lack of drugs is in turn expensive for the country since hospitals have to looks for alternatives which costs millions of money (Bowles 3). Also, due to scarcity, patients are charged a lot on drugs. The reason is that they up the price so high to the point that it is not covered by insurance and patients aren’t able to pay out of pocket for them as well. Which will eventually lead to the reason that the opioid crisis is up and out of control in the world today.
Lack of medication leaves doctors with no option rather than to prescribe painkillers with opioid being a key prescription in many hospitals. Drugs can be addictive when taken for too long. There was a time opioid was marked to be a hyper reactive drug and scientists suggested that it should not be given as prescriptions (Madras, 441). Opioids are found everywhere including local shops and some people sell them back street for those addicted but cannot obtain a doctor’s prescription. Since patients need to recover from pain and there are less drugs, they tend to write too many prescriptions for patients. It gets worse since some patients turn it to a business where they sell the opioids to addicted victims. Doctors as well make prescription a business since they prescribe and sell the drugs as well. Doctors are key causes of drug shortages and opioid addicted since prescription has become a business.
Medication shortage also comes with the burden of increased medical cost. Many insurance companies have realized that covering for drugs is costly than covering for patients examination and consultation fee. There are few insurance companies which cover for full cost unless one has a comprehensive medical cover which is way expensive for a middle class citizen. Many insurance companies only cover for half the total price. There was a complain that those paying in cash are always charged less compared to those with insurance cards thus these companies are modifying their terms and conditions. Some can a well say no and would only cover for inpatients. All these is as a result of scarcity of drugs and doctors giving too much prescriptions.
Not to forget, business can bloom more if there is plenty of medicine but then there is less thus they get affected too. Many sellers shy off to buy expensive medicine since they end up expiring in the chemists and pharmaceuticals. Who would want to buy expensive pain killers yet one can get opioids easily from the counter? Also, businesses fail because some medicines prescribed are not available since there is drug shortage in the country. It is boring for patients to walk miles just to get one drug. Research in 2017 found out that Shortage medications demonstrated a quarterly price growth of −0.5 % (95 % confidence interval [CI] −1.6, 0.6) in the period preceding a shortage, 4.3 % (95 % CI 3.6, 4.5) during a shortage, and 4.1 % (95 % CI 2.6, 5.5) in the post-shortage period (Alevizakos, Michail, et al. 1556) Medications not affected by a shortage had a quarterly price growth of 0.2 % (95 % CI −0.3, 0.6) (Alevizakos, Michail, et al. 1556). Many patients opt for opioids which can be obtained from corridors and backdoor in some shops. Since opioids are addictive then patients end up using them even after getting well. There are limited medications/ drugs yes there are variety of prescriptions. It is hard to get a drug with more than three required contents indicated by the doctor. Pharmacists end up giving cheap drugs where each one had less than two components. Remember not everyone can take the same medication there are some patients who have allergies. Patients are left with no option than to adjust to the medication shortage crisis.
Conclusively, as a result of medication, patients have to pay the price by using addictive drugs such as opioids. Meth is also addictive and can be made from cough syrup. There has never been an alternative of the cough syrup since funding such projects is expensive. Government should set aside funds for medical research to curb the issue of medication shortages before it becomes a crisis.
Work Cited
Alevizakos, Michail, et al. “The impact of shortages on medication prices: implications for shortage prevention.” Drugs 76.16 (2016): 1551-1558.
Bowles, Susan K. “Drug Shortages: More than Just Background Noise.” The Canadian journal of hospital pharmacy 72.1 (2019): 3.
Madras, Bertha K. “The surge of opioid use, addiction, and overdoses: responsibility and response of the US health care system.” Jama Psychiatry 74.5 (2017): 441-442.
Medication Shortage Cost vs. Opioid addiction (2)
Medication Shortage: Cost vs. Opioid addiction
Introduction
Thesis: Between the high prices of medication and opioid addiction, the chances of becoming addicted is a daily trial. High demand for medication
Large impact on hospitals
Costing them millions of dollars for new strategies
Big liability for them
Several people with severe allergies need their medication
Epi pens are hard to get
The cost is up on the ones that are available
Opioid Crisis (Issue)
Pain medications are being over prescribed
Doctors are writing too many prescriptions
Are being sold by several patients
Doctors are the reason/concern
They are the source of getting the drugs
May be due to payment from prescriptions prescribed
Cost is high
Insurance companies not wanting to pay the full cost
They may only pay half of the payment
Requires them to pay for several things
If too high, they may say “No”
Medicine is out there, but can be short due to businesses
Businesses may cant afford to buy certain medications
1. The demand may be too much at one time
2. Certain medicines may not be in
Some medications must be made
1. These are limited prescriptions
2. Not everyone can take the same medications
Conclusion