Update 6/24/2021: The Doximity Reserved Share Program (RSP) has ended. Doximity (DOCS) started trading today on the NY Stock Exchange. The stock ended the day at $53/share, more than doubling its IPO price of $26/share. For those of you who opted into the RSP, your shares must be paid for in full by the settlement date of Monday, June 28, 2021.

Full disclosure: I was a former Doximity Fellow from 2017-2018 so this is not a completely unbiased view. That said, I tried to approach this as objectively as possible. Doximity had no input in the writing of this post. All opinions are my own.

If you are a user of the physician social network Doximity, you may have received an email from cofounder Nate Gross, MD regarding the company’s intent to become a publicly-traded company. As part of that email, you may have been invited to participate in the “Doximity Reserved Share Program”. Now you can read all about the company’s business operations in its SEC Form S-1 filing and the Reserved Share Program in its FAQ page. But I went thru both so you don’t have to. Here are my thoughts about Doximity as a company and the Reserved Share Program.

Please note this post is not to be interpreted as individual investing advice. Investing has real risks. Before investing in a company, do your own research and consult your financial advisor.

What is Doximity?

Think of Doximity as the LinkedIn for doctors. Launched in 2011, Doximity was started by Jeff Tangney, former COO and Co-Founder of Epocrates and Nate Gross, MD, Co-Founder of Rock Health. As of March 31, 2021, Doximity has over 1.8 million medical professional members, covering over 80% of all physicians across all 50 states. This makes Doximity the largest HIPAA-secure physician network in the world. In addition to functioning as a social media network for physicians, Doximity also offers curated medical news/CME, career related tools including job listings, a HIPAA compliant messaging service, a fax service and a suite of telehealth services.

How does Doximity make money?

Most tech startups are interested in growth in the early phases of the company. At some point, early investors will be itching for a return on their investment. Doximity has come a long way since 2011 and matured into a profitable business, recording net profits of $29.7 million and $50.2 million for years ending March 31, 2020 and 2021 on revenues of $116.4 million and $206.9 million, respectively. So how does Doximity make money? Well, the same way every other social network makes money - by leveraging its user base. Currently there are 3 main sources of income for Doximity - Marketing Solutions, Hiring Solutions, and Telehealth Solutions.

• Marketing Solutions - customers include pharmaceutical companies and health systems.

• Hiring Solutions - customers include health systems and medical recruiting firms.

• Telehealth Solutions - customers include health systems, group and individual medical providers.

In fiscal 2021, Doximity had over 600 subscription customers, of which 200 contributed at least $100,000 of subscription revenue. Of these 200 customers, 29 contributed over $1,000,000 in subscription revenue.

What is the Doximity Reserved Share Program?

A Reserved Share Program (RSP) - also sometimes known as “Friends and Family” shares, or a Directed Share Program - allows a company to reserve a percentage of their initial public offering for eligible participants. In Doximity’s case, the company is setting aside up to 15% of its initial public offering (IPO) shares for purchase by eligible Doximity users. This is not a novel concept. For example, AirBNB set aside 7% of its shares for its hosts when it went public last December and Uber did the same for 3% of its shares when it went public in 2019.

For those interested in the offer, there are some hoops to jump through. You can read the FAQ for details, but here are the CliffsNotes:

• You must be a verified US physician member. Prioritization given to those members with a profile photo and has more days of mobile app usage in the last quarter.

• Participation capped at ~$5,000 per participant.

• You will need a Fidelity account to participate.

Yay or Nay?

Now we have the basics out of the way, the million dollar question remains - should you invest in Doximity? I can’t answer that question for you. But for me personally, the answer is a resounding YES. Let me explain…

As a rule, I don’t invest in individual companies. However I have made exceptions in the past, some with happy outcomes (e.g. Apple, Amazon), some were disasters (e.g. SolarCity). The inability to consistently pick successful companies led me to a predominantly index mutual fund/ETF approach to investing. However, I do get plenty of questions from family and friends regarding whether a particular company is a good investment. Whenever this topic comes up, I ask 2 questions first:

1. How useful and necessary is the company’s product/service offering?

2. What is the addressable market?

An example of a useful and necessary product with a large addressable market would be the Apple iPhone. However it’s difficult to evaluate companies within the tech sector as sometimes the answers to these questions are only obvious in hindsight. Sticking with the iPhone example, there were plenty of companies that made smartphones before Apple, but it wasn’t until the iPhone did the smartphone go mainstream. In Doximity’s case, the company’s offerings are both useful and necessary. I use the network to connect with physician colleagues, the fax service to send/receive faxes, the HIPAA compliant messaging services to communicate with referring physicians, the medical articles for CME, the career tools to look at salaries and job postings and the Dialer/Dialer Video services to communicate with patients. What about the addressable market? Well healthcare is the largest sector of the US economy, accounting for approximately $4.0 trillion in annual spending.

Once a company has satisfied those 2 requirements, the next question I ask is “What is the competitive advantage for this particular company compared to other companies in the same sector?” In Doximity’s case, the competitive advantage is simple - the largest network of physicians and other medical providers.

Now let’s look at some companies whose business model is similar to Doximity’s and how they have performed in the public markets:

Within the social media space:

• Facebook (FB) - IPO price $38/share on May 18, 2012. Current price $329.66.

• Twitter (TWTR) - IPO price $26/share on Nov 7, 2013. Current price $60.85.

• Linkedln (LNKD) - IPO price $45/share on May 19, 2011. Purchased in 2016 by Microsoft for $26.2 billion. Last price $195.96.

Within the medical technology space:

• TeleDoc (TDOC) - IPO price $19/share on July 1, 2015. Current price $156.31.

• Amwell (AMWL) - IPO Price $18/share on Sep 17, 2020. Current price $13.48.

• GoodRx (GDRX) - IPO price $33/share on Sep 23, 2020. Current price $37.63.

Now I’m an Interventional Radiologists, so I also have an interest in some of the medical device companies that’s been shaking up the minimally invasive intervention space:

• Inari Medical (NARI) - IPO price $19/share on May 22, 2020. Current price $92.68.

• Shockwave Medical (SWAV) - IPO price $17/share on March 9, 2019. Current price $188.17.

• Penumbra (PEN) - IPO price $30/share on Sep 18, 2015. Current price $267.57.

For the record, there is no guarantee that Doximity will perform like SWAV. Because for each winner in the medtech space, there’s a Lucira Health (LHDX). But Doximity provides a sticky set of services that is hard to quit once you’ve signed on. It is already profitable as a business which is more than you could say for a lot of other companies by the time they went public. Moreover, by offering reserved shares to selected physician users, it will incentivize those users to become even more motivated to use Doximity. Combine that with the proposed stock ticker of “DOCS” and the maximal loss potential of $5,000 if the company goes belly up - Sure I’ll gamble.

I’ve been meaning to write a post about jobs for the residents and fellows nearing end of their formal medical training for some time now. For a variety of reasons and excuses, that never happened. Now that I am transitioning to a new job myself, I want to share some of my experience and thoughts on choosing my first job as a interventional radiology fellow and now on transitioning to my second job as an attending interventional radiologist. My decisions and opinions are shaped by my own life circumstances and personal expectations. Your mileage may vary.

The Background

Most of you know that I am an interventional radiologist (IR). For those of you not familiar with IR, it is a rather strange medical specialty. While most medical specialties are defined by a disease process, organ system or a specific patient population, IR is defined only by 2 things - imaging guidance and an interventional radiologist’s capability and desire to perform a particular procedure. For example, it is fairly reasonable to expect a cardiologist to treat heart disease, a gastroenterologist to treat GI problems and a pediatrician to deal with illnesses of children no matter where you practice. But the same cannot be said of an interventional radiologist. Depending on the location, practice environment and other available specialists in your health system, your expected job responsibilities as an IR may differ wildly from one job to another.

I graduated from interventional radiology (IR) fellowship in 2019. Having trained at a respected IR fellowship, I was fortunate to receive interview invites from most of the jobs I applied for. I went on several interviews and ultimately chose the position I ended up in. It was a challenging process but I hope to condense my experience for you in the next few paragraphs.

The 3 Key Factors

It has been said there are 3 key factors that one should consider when choosing a job: Location, Vocation and Compensation. A tolerable job will offer at least 1 of the 3 factors. A good job will offer at least 2 of the 3 factors. A great job will offer all 3 of the key factors.

• Location is easy to evaluate. If there is a particular geographic region you want to live in, then obviously positions in that particular area will be more desirable to you.

• Compensation is also easy to define. Add up the total dollar value of your potential income, benefits and vacation time. Adjust for the cost of living by location and you should be able to compare what each job is willing to pay for your high skilled labor.

• Vocation or the job itself is the most opaque and difficult component to evaluate for a job seeker. As author Malcolm Gladwell described in Outliers: The Story of Success, the 3 qualities that make a job satisfying for most people are “autonomy, complexity, and a connection between effort and reward.”

  • Complexity is inherent in medicine and should be easy to find in most physician job opportunities.

  • Whether the job will offer autonomy and a connection between effort and reward however, are very difficult to ascertain from an interview day. Everyone is on their best behavior during an interview and promises of autonomy/practice support as well as rewards based on your performance, whether financial or otherwise, may be made. I personally know physicians who signed up for jobs that promised practice support and performance-based incentives, only to find out otherwise once they’ve started. Several of these physicians have moved on from those jobs.

It is important to realize that these 3 factors are not independent of each other. That is to say, your potential income will likely vary depending on location. It is well known that physician jobs in desirable places to live - Los Angeles, CA for example - will often offer compensation below the national average, despite higher taxation and cost of living. Similarly, your ability to practice medicine to the full extent of your training may also be limited in a competitive marketplace simply because more physicians are willing to offer the similar services to the same patient population.

Furthermore, these factors are also not static. As your life situation changes - getting married or divorced, having kids, need to move closer to aging parents etc. - the relative weight of each factor may change as well. More commonly, changes in your personal life will drive changes in your professional life.

The Most Important Thing…

So far we’ve talked about factors that help you evaluate a job once it’s made available to you. These are factors over which you have a certain level of control. For example, you can decide how important it is to you to live in a specific city, to make a certain salary, or to practice medicine in a particular way. However, the most important factor in choosing a job is not under your control at all. It is blind LUCK. For most of us who worked hard to complete our medical education and training, recognition that we have very little control over the job market is deflating, but it’s also true.

For example, if you had graduated fellowship during the depth of the Great Recession, all of the planning in the world would not have done you any good. In contrast, the current job market for interventional radiologists is wide open. If you can fog a mirror, you can get a job as an IR. Indeed, one practice actually sent me an offer 10 weeks before my scheduled interview!

The FPMD Story So Far

As I explained above, IR jobs can have very different responsibilities and expectations depending on the practice. In addition to procedural skills, my IR training had a heavy focus on clinical management and patient ownership. As a result, I had a very specific practice scenario in mind when I started my job search as a fellow - I was looking for an 100% clinical IR position. I had just completed a fellowship with heavy vascular disease management training so that was a must-have. I also had an interest in medical education so I was looking at academic jobs. And my then girlfriend-now fiancée lived in Los Angeles so I was most interested in jobs in the greater LA area.

As it turned out, a 100% clinical IR position with vascular disease ownership in the greater LA area was quite rare, at least in the late 2018 - early 2019 time period during which I was looking for my first job. More importantly such a practice would have their pick of any applicant and as a newly minted IR, I was not the most competitive candidate. That’s how I landed in Upstate NY in my current job - a private practice position that offered me everything else I was looking for in a job except the location.

Fast forward 2 years, I couldn’t be happier with my job. I have supportive partner IRs I trust, staff and nurses who function as a family unit, a collegial hospital environment where most other physicians respect and appreciate what IR can offer. I also had the opportunity to learn new skills (wound care) and grow new service lines including Endovascular Aortic Aneurysm Repair (EVAR) and a Pulmonary Embolism Response Team (PERT). We also developed a partnership with the local academic medical center where we help train their IR residents in vascular disease management. In short, I have it pretty good when it comes to job satisfaction. I am also satisfied with my compensation.

But I am changing jobs. Why? Well, the location factor has taken on more and more weight as my life situation changed. As my fiancée and I join our lives together and contemplate starting a family of our own, being able to visit family without wasting an entire day traveling to the west coast has become the most important consideration.

In Closing…

Changing jobs is exciting, but also scary. Especially when I’m departing a position that offers me great job satisfaction. I am hopeful I will find great job satisfaction in my new position as well. But there is always a certain level of trepidation associated with the unknown. Only time will tell. I hope you will find some of my thoughts to be helpful to your own job search, whether it is for your first job as a trainee or evaluating a potential transition from your current position.

One of the victims of the pandemic was the specialty board exams. As a recent graduate, I was supposed to take the Radiology board certification exam last year but the American Board of Radiology (ABR) decided to delay all of the exams to this year and transition them to a remote format administered online. As I approach my board exam date, I started to look for review resources. I’ve had a good experience with BoardVitals in the past - see REVIEW: 2017 ABR CORE Exam (June 8-9, 2017). So I decided to try their review product again…

Luckily BoardVitals is running a Doctors’ Day Sale from March 21 - April 1, 2021. To take advantage:

1. Use the FPMD BoardVitals Referral Link (a percentage of your purchase will go to support FPMD)

2. Use code DOCTOR for 20% off review products or

3. Use code DOCTORCME for $100 off CME bundles.

Good luck studying!

It is difficult to ignore the biggest business/financial news story of 2021 so far. The r/WallStreetBets and GameStop (GME) story has all the makings of an entertaining Hollywood movie. The meteoric rise and fall of GME’s stock price has captured the attention and imagination of millions. I have been having many conversations with friends and family members about this story. Often, the conversation starts with the question - “Should I buy GameStop?” Like most of the questions worth asking in life, the answer is a resounding “it depends”. Let’s review what we know about the GameStop saga and what exactly is a “Short Squeeze”.

Introduction

There’s no shortage of media coverage of GameStop given the most recent news developments. Simply type “GameStop” into the search box on YouTube and you would find more videos than you have time to watch. There are a lot of ways to tell the story, here’s the most common narrative:

GameStop (GME) - A publicly traded, predominantly mall-based, video game and electronics retailer headquartered in Grapevine, TX, GameStop operated thousands of retail stores in the US, Canada, Australia, New Zealand, and Europe. Unfortunately, the overall decline in physical retail and transition to online retail and gaming has led to significant declines in GameStop’s core business since 2016. For reference, GameStop recorded $673 million in losses in 2018 and $470.9 million in 2019, compared to a net profit of $34.7 million in 2017. Of course, this was all before 2020…

Given these headwinds, some professional investors such as hedge funds made calculated bets that GameStop’s business will continue to decline and took significant short positions in the stock. GME became the most shorted company in the US by the beginning of 2021, reaching a high of ~140% of all shares sold short. It’s important to realize that GameStop was not the only company to attract attentions of short sellers. Other familiar names such as AMC Theaters, BlackBerry, and Bed Bath & Beyond have also generated significant short interest.

What is a “Short”?

Before we continue, it’s important to understand what is meant by “Short selling” or simply “Shorting” a stock. Traditionally, when we invest in a company’s stock, it is usually because we believe in the company’s business prospects - say the company produces a income generating product (e.g. iPhone) or service (e.g. iCloud storage). Shareholders benefit in a couple of ways: Profits made by the company can be returned to the shareholders in the form of dividends. In addition, the price of each share increases as more people want to become part owners of a profitable company, increasing the financial value of the shares you own. This is often considered the “normal” way of investing, or “going long”.

Short selling, or shorting, is when an investor borrows shares of a company and sells them at the current market price, hoping to buy the shares back later at a cheaper price and return them back to the lender. If the price of the shorted stock were to increase in the interim, the investor would lose money on the short position. In essence, to short a stock is to bet against a company.

Now let’s continue with the story…

r/WallStreetBets (WSB) is a subreddit forum on Reddit.com which members come together to discuss investing. The FAQ section of WSB describes itself as “a community for making money and being amused while doing it. Or, realistically, a place to come and upvote memes when your portfolio is down.” As of this writing, WSB has over 8.6 million members.

Starting in early January, WSB members started targeting GameStop as a potential “short buster” stock. Some touting the company as a legitimate turnaround prospect after bringing onboard Chewy.com co-founder and former CEO Ryan Cohen who has plans to transform the brick & mortar retailer into “the Amazon of gaming”. Some simply seeing it as a way to stick it to the 1%…

What is a “Short Squeeze”?

Now we have an understanding of what a “short” is, let’s address what is meant by a “Short Squeeze”. When an investor takes a short position in a stock, they are counting on the price of the stock to fall before they have to return the shares they borrowed. When the price of a share of GME rises instead of falls, it pressures these investors to exit their short position by buying back those shares before the price rises even further. If enough of these investors decide to exit their short positions by buying GME, it further drives up the price of the stock due to the increased demand. The cycle feeds on itself and becomes a frenzy that’s described as a “Short Squeeze”. This is what happened to GameStop between January 13-31, 2021.

Final Thoughts

While recent, GameStop is not the only short squeeze in our lifetime. In fact, the 2008 Volkswagen short squeeze has been referred to as the “Mother of all Squeezes.” Likewise, shorting is not a recent invention either, there has been plenty of famous shorts throughout financial history. Personally I don’t short sell stocks for the following reasons:

1. Limited benefit, unlimited risk - When you purchase a stock, your losses are limited by what you paid for that position. For example, you buy $100 worth of a stock and the company subsequently goes broke, you lost $100. But the potential benefit is infinite as the stock can go as high as the market lets it. To short a stock is the exact opposite. In our example, if you short $100 in a stock, the maximum amount you can gain is $100 if the stock goes to $0, but the potential loss is infinite.

2. Bad feelings - To short a stock is to actively bet against a company. As much as you may disagree with the missions of big oil, big tobacco or other "evil" companies on a philosophical level, you probably won't wish ill on the people they employ once you realize they have jobs, families and ambitions just like us. I simply don't have enough hate in me.

3. It's really not all that fancy - There are a lot of Type A personalities among FPMD readers. As such, we are often attracted to things that sound exotic, complex and challenging. Unfortunately, as you can see, short selling is really none of those things. It is not difficult to grasp conceptually, neither is it reserved for members of an exclusive club.

The GameStop story is still ongoing and depending on what happens in the coming days and weeks, there will be further lessons to be learned. For me personally, the risk is too high to stomach. Your mileage may vary.

FPMD Market Timing Experiment Update

One of the things I get asked the most is the big bet I made trying to time the market by liquidating my stock investments in May of 2020. I detailed the reasons in Why I Sold All My Stocks and provided a short term update in FPMD Market Timing Experiment Update - Navigating the FOMO Market. If you have been paying attention to the stock market at all, you would not be surprised to learn that my market timing experiment was a huge success in proving that market timing DOES NOT work. Below is a graph of my investment portfolio return compared to that of the S&P 500.

As you can see, my hubris has caused serious damage to my retirement nest egg. That’s the bad news. The good news is I pulled the plug on the experiment in September and have returned to passive investing by dollar-cost averaging into a portfolio of index funds that is approximately 90% stocks and 10% bonds on a monthly basis. Arguably, my returns would be even more anemic if I had continued the experiment til the end of the year. 2020 left a lot of lessons to be learned. For me, a big one is that I am not smart enough to time the market, even in the shadows of an unprecedented global pandemic.

First Year VIR Attending Update

Some of you may know me not for the FPMD financial content, but rather for posts related to my chosen medical specialty - Vascular & Interventional Radiology (VIR) or just IR. Indeed, Future Proof Detour - Why Interventional Radiology? and How to Evaluate an Interventional Radiology Training Program have remained very popular posts despite my recent lackluster blogging efforts.

2020 was my first year as a full-fledged VIR attending and I have to admit there were some growing pains. I will go into more detail in later posts once I have gathered my thoughts a little better. But the key to me that makes or breaks a job is really the people you work with. For me as an interventional radiologist, “people’ translates into my partners, my staff, my patients and physicians in other specialties that I frequently interact with. Honestly that’s not something one can figure out from an interview day. It’s really by dumb luck that I landed in such a supportive work environment.

My partners are fantastic and supportive. Working with 3 other IRs who have anywhere from 2-10 years’ experience, I can always rely on their added experience whenever I need a second set of eyes or hands. My diagnostic radiology partners are equally supportive of our IR practice and understand the fact that our focus is on taking care of patients first - a rather progressive viewpoint compared to other groups who pressure their IRs to generate wRVUs by reading diagnostic imaging. I have a great staff of nurses and techs as well. It’s a diverse group with differing levels of experience but everyone is invested and engaged in doing the best we can for the patient. In contrast to the large tertiary medical centers where I trained, patients in my current practice are noticeably less entitled and usually very appreciative of my efforts to help them, even in cases I may not be successful. I also have a great working relationship with majority of the physicians in other specialties. For example, I almost never get non-urgent thoracentesis/paracentesis calls after hours or on weekends - the so called “BS calls” for IR. Overall, people seem to appreciate what we as IRs can do to help and are respective of our time.

2021 Outlook

As we enter the new year with a pandemic that appears to be on the resurgence, my 2021 outlook is mirky at best. Will the newly available vaccines eliminate the stress on our healthcare institutions before the sheer volume of patients overwhelm our capabilities? Will my practice survive another Spring 2020 style shutdown? Will my retirement nest egg take another massive hit if we have to shut down the economy again? Your guess is as good as mine. For now, I am simply thankful. Thankful I, my family & closest friends still have our health, thankful I still have a job and income, and thankful I can continue to care for patients who may not be as fortunate…

Here’s to 2021… may it wake us from the nightmare that was 2020 and turn it into a distant memory.

I apologize for the long lapse between posts, not sure if everyone is experiencing a surge in patient & procedure volumes, but work has been keeping me quite busy. If you’ve followed the blog, you saw how I embarked on my very own market timing experiment and the disastrous results thus far. Indeed, if we use the S&P 500 as a reference, my market timing experiment has cost me 13.4% in lost gains as of 10/2/2020. I will be writing another update post regarding that topic shortly. But one of the questions I’ve gotten consistently since I moved sold all of stocks is this - “Where do you keep your cash?”

First - Let’s talk about “cash”

Let’s get one thing out of the way, when I say “cash", I don’t mean I am physically hoarding hundreds of thousands of dollars in greenbacks buried somewhere in my backyard. We have all grown accustomed to “cash” being simply digits on a screen when you log in to your bank account online. And the advances of modern information technology have given us more and faster ways to move those digits around. I’m not complaining. But I do have to clarify that when I say “cash,” I’m referring to an FDIC insured account at an insured bank, backed by the full faith and credit of the US government.

The world of near zero interest rates

If you’ve looked at interest rates on bank accounts recently, you may have found they are depressingly low.

So I keep my cash here…

Now I’ve painted a bleak picture where your money earns almost nothing from a traditional bank account, I want to share with you that I have been keeping my cash at T-Mobile Money. Yes that T-Mobile - the cellular carrier who just merged with Sprint this year.

To be sure, T-Mobile isn’t running its own bank. Rather, T-Mobile partnered up with BankMobile, a division of Customers Bank to offer a mobile first, FDIC insured online checking account. The service launched in November 2018 and I’ve been a customer since April 2019.

Key features of T-Mobile Money include:

For all customers:

• 1.00% APY on all balances

• No account minimums

• No monthly fees

• No overdraft fees

• Access to 55,000 no-fee ATMs

• FDIC-insured up to $250,000

Additional benefits for T-Mobile (and former Sprint) customers:

While anyone can use T-Mobile MONEY, T-Mobile and legacy Sprint customers with qualifying wireless plans in the continental US, who deposit $200 each month into their T-Mobile money account, get the following extra perks:

• 4.00% APY on balances up to $3000 when you deposit $200 each month, with 1.00% APY for anything over that balance.

• Got-Your-Back Overdraft: Once $200 has been deposited in a single calendar month, you won’t be declined for up to $50 in overdrafts as long as you bring your bank account to a positive balance within 30-days.

• On every wireless line: Every line on your wireless account can potentially sign up for a T-Mobile MONEY account and be eligible for customer perks.

I’ve been a happy customer since April of 2019. Over the last year as interest rates have dropped to almost nothing, I’ve slowly migrated nearly all of my cash to T-Mobile Money.

One annoying downside to T-Mobile Money is despite it being nearly 2 years old, the service still does not work with third party aggregators such as Mint or Personal Capital.

If you are a recent medical grad, chances are good you have outstanding student loans. I’m sure you are tired of the downpour of bad news that has been 2020 so far. Here’s a bit of good news: President Donald Trump has extended student loan relief to December 31, 2020 by executive action. This comes on the heels of the CARES act that suspended student loan interest and payments until September 30, 2020.

There are still a lot of unknowns about how this extension will be applied. For example, the presidential memorandum does not mention whether the additional months of suspended payments will count toward those required payments for someone on Income Driven Repayment plans (IDR) or those pursuing Public Service Loan Forgiveness.

In addition, the student loan extension is only one of four executive orders issued by President Trump over the weekend. While there is bound to be court challenges regarding the constitutionality of these executive actions, it’s unlikely the student loan provisions will be challenged given popular support.

Dave Denniston, creator of the Freedom Formula for Physicians podcast and author of The Young Physicians Guide to Money & Life, has been a long time friend of the blog. I was fortunate enough to be invited back for a 3rd time as a guest on the podcast. The episode was recorded back in March during the depth of the first COVID-19 surge - which now feels like a lifetime ago! You may find that I have made some major changes in my personal finances since the podcast. But hey, you live and you learn right? Please check out Staying the Course Despite CovID19 with FutureProof MD.

If you are inclined, you can travel back in time and hear from me and Dave from years ago in these 2 prior episodes of the Freedom Formula for Physicians podcast:

• Soak It Up Like A Sponge (Dec 27, 2019)

• Making It Rain Dollars in Debt Forgiveness (Dec 2, 2016)

The Ride Thus Far

Since I sold my stock investments on May 18, 2020, this is what has happened to the S&P 500:

• New high since May 18 - 3,276.02 on 7/22/20 (Up 10.9% from 5/18, within 4% of all time high)

• Latest closing price - 3,239.41 on 7/27/20, (Up 9.7% from 5/18, within 5% of all time high)

• From the low of 2,237.40 achieved on 3/23/20, the S&P has risen an astonishing 45% to 3,239.41 by 7/27/20.

By cashing out, I’ve benched myself while watching the recent market rise. If I had held onto these investments and sold on July 22, I would have gained an extra 10.9%. Or if I had sold on July 27, I would have gained an extra 9.7%. Another way to look at this is to say my ongoing market timing experiment has cost me ~10% in lost gains thus far.

Thoughts and Outlook

It’s no fun to lose money, especially when you don’t have much to start with. Do I regret selling? You bet I do! But that’s with the benefit of hindsight. Honestly I thought I would be feeling a lot worse about my decision to sell. But surprisingly I don’t feel as bad as I normally would. For example, when I miss a sale on an item I really wanted. Why is this? I believe it is because the reasons I outlined in my previous post continue to remain valid:

• Continued historic unemployment - the US unemployment rate fell to 11.1% in June, down from a historic high of 14.7% achieved in March. However, we need to consider this number in context. The unemployment rate in June of 2019 was 3.7%. And compared to the worst previous economic downturn in my lifetime, the Great Recession saw unemployment rate peak at 10.0% in October of 2009.

• The US GDP decreased at an annual rate of 5.0% in the first quarter of 2020 according to the Bureau of Economic Analysis. Similarly corporate profits from current production decreased $262.8 billion, from domestic financial corporations decreased $37.5 billion, and domestic non-financial corporations decreased $181.8 billion in the same time period.

• In May of 2020, personal income decreased $874.2 billion (4.2%). Disposable personal income (DPI) decreased $911.1 billion (4.9%) and personal consumption expenditures (PCE) increased $994.5 billion (8.2%).

• As of July 28, 2020, there have been over 4.3 million cases of COVID-19 cases diagnosed throughout the US, causing over 148,000 deaths. More importantly, cases numbers are surging throughout most of the states, with 30 states reporting growing number of newly reported cases over the last 14 days. This has led to over 150 health experts calling for the country to shut down once again in this open letter.

In short, my outlook on the economy hasn’t changed. I believe there is more damage to come as the COVID-19 pandemic rages on. Despite the recent bull run in the stock market, I personally believe that at some point, the market will have to respect the dire economic reality. I predict this FOMO market will end at some point. As a result, I continue to sit in cash without losing too much sleep. I’m not the only person to think this way. As Nobel laureate Paul Krugman explained to CNBC:

‘It’s very hard to escape the sense that there’s mania now, that this is a FOMO market. When you look at the way that people have piled into the stocks of bankrupt companies like Hertz there’s clearly something, a bit of mania going on.’

Implicit in the recognition of this FOMO market is the unspoken prediction that it will end at some point.

But hey, I’ve been wrong so far…

Throughout my adult financial life, I’ve always believed that the long term approach to investing is the winning approach - buy good quality companies and hold forever. As I progressed in my medical career and have less and less time to look into investments that strategy transitioned to “buy the S&P 500 and hold forever.” I am far from unique. Indeed, I’m simply one of many followers of the Warren Buffet Strategy. In a previous post about the upcoming COVID-19 Recession, I mentioned that I continue to make regular weekly investments in US stocks. I also cautioned against cashing out your investments unless you had good reasons to sell. So why did I liquidate my stock investments on Monday May 18, 2020? Read on to find out…

COVID-19 and the economy

Before I go into the reasons for why I sold off all my stocks, let’s review some of the most recent data on COVID-19 and the economic damage it’s causing:

• As of May 19, 2020, COVID-19 has infected over 4.7 million people worldwide, causing more than 316,000 deaths.

• In the US, COVID-19 has infected over 1.5 million people, causing over 91,000 deaths.

• According to the US Bureau of Labor Statistics, 20.5 million people lost their jobs in April, bringing the nation’s unemployment rate to 14.7%, the highest rate since record keeping began in 1948.

• According to an advance estimate by the US Bureau of Economic Analysis, US GDP decreased at an annual rate of 4.8% in the 1st quarter of 2020. This contrasts with a 2.1% increase seen in the 4th quarter of 2019.

There are many other data points that can be reviewed including projections by academic and financial institutions alike. Without getting into the weeds, it suffices to say that the COVID-19 pandemic is doing unprecedented damage to the US economy.

What are my Good Reasons?

As a long term investor who has always preached for “time in the market” and against “timing the market”, I will be the first to admit that liquidating my stocks in the middle of a financial crisis is exactly that - timing the market. So why did I go against all that I believed in to attempt to “time the market” at this time? Let’s review what the S&P 500 index has done since the COVID-19 pandemic began.

On February 19, 2020 the S&P 500 hit an all-time-high of 3,386.15. In the following 5 weeks, the index crashed 34% to 2,237.40 by March 23, 2020. Since then, through many ups and downs, the S&P has regained 32% to end the day at 2,953.91 on May 18, 2020. This represents a 13% decrease in value from all-time-high achieved on February 19, 2020. Say you are an oblivious investor who had no idea that COVID-19 is spreading and bought $100 worth of S&P 500 on February 19, 2020, as of May 18, 2020, you would have only lost $13 of that investment. Not too bad considering the economic fallout currently developing all around us. Here lies the biggest reason why I sold. The S&P 500 index which is made up of the 500 largest publicly traded companies in the US. Which is suppose to reflect the state of the US economy, is simply not doing that. In short, I believe that US stocks are significantly overvalued at this time.

Of course, believing that stocks are overvalued does not automatically lead to liquidating all of your stocks. And you may have heard the saying the stock market can remain irrational a lot longer than you can remain solvent. But here is my thought process. If the S&P 500 index is a reflection of the US economy (a big if I concede), then in order for the index to recover to the pre-COVID level obtained in February of 2020, it would require COVID-19 to completely go away and every sector of the economy to return to functioning at the same level as if COVID-19 never existed. While we would all love for COVID-19 to simply disappear, I believe that is unfortunately impossible. So the maximum potential gain in the market in the near term is at most 10-15%. Yet if you believe the economists including Federal Reserve Chair Jerome Powell, we are looking at unemployment levels that will rival the Great Depression. And if you look at the total market declines during past recessions, each downturn has resulted in much worse performances in the S&P 500. This leads me to believe that we have not seen the worst in the COVID-19 induced market downturn, at least not yet. And that the potential loss for staying in the market is anywhere between 50-80%. To summarize: I am choosing to risk 10-15% in potential gains to avoid 50-80% in potential losses.

An additional data point that led me to eventually pull the trigger on the sell orders is the fact that my personal investing role model, Warren Buffett, the Oracle of Omaha himself has been selling stocks rather than buying. In the month of April, Buffett’s investing company Berkshire Hathaway (BRK.B) sold a total of $6.5 billion worth of stocks, compared to buying only $426 million in the same time period. This tells me that the man that many considers the best investor of our lifetime is bearish on US stocks.

Counter points

As with any opinion, there are plenty of reasons to think I may be wrong. I am going to list a few reasons below why bullish investors may believe that the stock market will see better days ahead in the near term.

1. Federal Reserve’s Unlimited Quantitive Easing (QE) Program - the US central bank has committed to creating an unlimited amount of money to keep the US economy running. Given that all of what we know about economics and market mechanisms are based on a world where resources are finite. It is possible that QE unlimited will detach the stock market entirely from the real economy. You have probably heard this before - “The stock market is not the economy.” There is no fundamental law of physics dictating that the stock market values to be correlated with the economy.

2. The economy will reopen - indeed we are seeing more and more states exiting their lock-downs. It is reasonable to expect economic indicators to improve once life starts to return to normal. As the economy improves, the markets should follow.

3. The US is a safe haven of last resort - when the world is in trouble, the US remains the safe haven for investors. It makes sense that capital will exit the developing markets for the US markets in times of crisis. Therefore propping up equity prices.

Final Thoughts

The COVID-19 recession has caused me change how I approach investing. While I still believe in the mantra of long term value investing, I no longer believe that it is taboo to time the market. After all, it is human nature to want to buy low, sell high and profit. While there is plenty of evidence that most market-timers fail miserably, it is also true that none of us has ever lived through a pandemic as impactful as this one. It is truly unprecedented and unique situations demands unique reactions. Think of it this way - the National Comprehensive Cancer Network (NCCN) publishes guidelines on cancer care. But the guidelines do not dictate how you approach every patient. After all, every patient is unique and that’s why we have a weekly multidisciplinary tumor board to discuss what the best plan is for each patient. Every once in a while, you may end up deviating from what’s considered “best practice” but that’s ok.

Time will be the judge on whether it was a good financial decision to liquidate my stocks on May 18, 2020. But I definitely put my money where my mouth is and will report back on how this decision impacts my future financial freedom.

Betterment is a venerable name in the roboadvisor business. Since launching in 2010, Betterment has grown rapidly. As of March 6, 2020, the company boasts more than 500,000 accounts with over $22 billion under management. Betterment’s success has led many traditional financial firms to launch their own Roboadvisor products - Vanguard Digital Advisor, Fidelity Go, and Schwab Intelligent Portfolios are just a few familiar names. Betterment has fought back with additions to its product offering as well, the latest of which - Betterment Checking - went live on April 21, 2020 to the public. Is it the checking account we’ve been waiting for? Read on to find out.

Betterment Checking Basics

At its core, Betterment Checking is a free online checking account that does away with a lot of the pesky pain points of a traditional bank based checking account. Here are some of the selling points:

• All ATM fees reimbursed worldwide - ATM fees are automatically reimbursed to your account at all ATMs where Visa is accepted (~2.8 million worldwide). After you’ve withdrawn your cash, you’ll get a push notification confirming that the fee will be reimbursed by Betterment (see screenshot below). 

• Visa foreign transaction fees reimbursed - Betterment will reimburse Visa’s 1% fee on foreign transactions, purchases, and ATM transactions. Combined with the worldwide ATM fee reimbursement, this effectively takes away all costs associated with using your ATM card abroad.

• No monthly maintenance fees, no minimum balances, and no overdraft fees - Who likes fees?!

• Balance is FDIC insured up to $250,000 - Really it wouldn’t be a checking account if it wasn’t FDIC insured, would it?

• Tap-to-pay debit card - Added convenience to using your card.

In addition to these core offerings, there are some Betterment specific features which may entice you to open an account:

• Seamless transfers between Betterment accounts - Similar to other banks, Betterment will let you easily move money between your Betterment accounts, including Investing and Cash Reserve (Betterment Savings account).

• Mobile-first User Experience - One of the things that Betterment has gotten right from the start is a mobile-friendly user experience. The new checking account is no exception to this rule. From signing up for an account, activating your debit card, locking your card if you’ve misplaced it, or resetting your PIN can all be done through the Betterment mobile app.

There are also several features that Betterment has promised to add in the future which were not available at launch:

• Mobile Check Deposits

• Physical checkbooks

• Joint accounts

• Simplified, easy-to-read transaction information

• Effortless direct deposit switching

FPMD Verdict

Betterment may have been in the vanguard of the roboadvisor revolution, but their new checking account is far from revolutionary. In fact, I am very much underwhelmed with Betterment Checking. all of the touted features are already offered by other checking accounts on the market, many of which are arguable more competitive in direct comparison. For example, if you want a checking account that reimburses you ATM fees worldwide, Charles Schwab High Yield Investor Checking offers you exactly that and pays you 0.03% interest. And for a checking product that debuts in 2020, the lack of a mobile check deposit feature at launch is simply inexcusable. In my opinion, Betterment Checking is only a product for people who are invested in the Betterment ecosystem who wants a no-frills cash account to move money in-and-out of their Betterment Investing and Cash Reserve accounts.

TL;DR

Far from revolutionary, Betterment Checking is an anemic newcomer in the crowded field of online checking accounts. Only consider if you are a hardcore Betterment fan.

In less than 3 months, COVID-19 has dramatically changed life around the world. For those of us living in the United States, social distancing, face masks and a rising unemployment rate has become the new normal. While the nonstop bad news may generate a surge in SSRI and Benzodiazepine prescriptions, there have also been some good news out of this crisis. For one, the pandemic has lead to an outpouring of love and support for healthcare workers around the world. Below you will find a collection of perks and discounts for healthcare workers in this time of COVID-19.

Updated 4/29/2020: Please email me with any perks that I’ve missed.

Wholesale:

• BJ’s Wholesale Club - “Appreciation Hour” from 8-9 am on Sundays for first responders and healthcare workers. You do not need to be a member. BJ’s is also offering a free, four-month Inner Circle membership to all first responders and healthcare workers.

• Costco - Priority access for members who are healthcare workers and first responders such as police officers, EMTs and firefighters. Healthcare workers (which include all hospital employees with a hospital ID) and first responders who present a Costco membership card and official ID of their role, will be allowed to move to the front of any line to enter the warehouse.

• Sam’s Club - Special “Hero Hours” for members who are healthcare workers and first responders every Sunday from 8-10 am starting April 19, 2020.

Grocery & Pharmacy:

• Dollar General - 10% discount to first responders and healthcare workers though April 30, 2020.

• Giant Eagle - Healthcare workers and first responders can shop an hour before stores open to the public every Thursday and Friday. Additionally, GetGo is offering a free cup of coffee or fountain beverage to health care workers and first responders.

• Meijer - Healthcare workers and first responders can shop from 7-8 am Mondays & Wednesdays.

• Publix - Publix is designating Thursday evenings, 8-9 pm, and Friday mornings, 7-8 am, as special shopping hours for first responders and hospital staff. Publix Pharmacy will also be open during these times.

• Save Mart - Save Mart, Lucky and FoodMaxx Stores will have special shopping hours - one hour before and one hour after posted store hours daily - for first responders, including law enforcement, fire and medical personnel with “proof of credentials.”

• Southeastern Grocers - The parent company of BI-LO, Fresco y Más, Harveys Supermarket and Winn-Dixie grocery stores, is extending hours on Mondays and Tuesdays to add a special shopping hour from 8 to 9 pm. for health care providers and first responders.

• Walmart - Special pick-up hours from 7-8 am for customers over the age of 60, as well as first responders, customers with disabilities and anyone designated high-risk by the Centers for Disease Control and Prevention.

Free Food & Drink:

• Bojangle’s - Free Legendary Iced Tea to healthcare workers, first responders and law enforcement (no purchase necessary) through June 10, 2020.

• Circle K - First responders and healthcare workers can get a free coffee, tea, or Polar Pop Fountain Drink when they show an ID. Valid through April 30, 2020

• Cumberland Farms - Free coffee (any size, hot or iced) for healthcare workers and first responders.

• Krispy Kreme - Free dozen of Krispy Kreme Original Glazed Dozen Doughnuts every Monday through National Nurses Week (May 6-12). Just show your ID at the drive-thru.

• McDonald’s - Free “Thank You Meals” for first responders and healthcare workers, valid through May 5, 2020. Sorry, no toy included.

• Nando’s PERi PERi - Free meal to anyone with a valid hospital ID, once a day. Valid through May 3, 2020.

• Progressive Insurance - Offering up to $50 Uber Eats promotional code ($25 for single driver households, $50 for 2 or more drivers in the same household) for medical professionals and first responders., Promo codes expire 11:55pm PT on May 15, 2020.

• Starbucks - Free coffee (hot or iced) for first responders and healthcare workers through May 3, 2020.

• Wawa - Free coffee to healthcare workers and first responders. 

• White Castle - Free Castle Combo #1-6 or any breakfast Combo through April 30, 2020. You will need your ID and this coupon from Whitecastle.com.

Auto & Transportation:

• AAA - Free roadside assistance to healthcare workers and first responders, whether you are a AAA member or not. Call 1-800-AAA-HELP (1-800-222-4357).

• BP/Amoco - 50 cents off per gallon discount on 1 fuel-up up to 20 gallons. Verify via ID.ME to claim your discount. You have til April 30th to claim your discount code and codes expire on 5/31/2020.

• The Parking Spot - Free parking at any of the company’s facilities through May 12, 2020. You will need to join the Spot Club loyalty program and enter corporate code HHERO6918 during signup.

Other:

• Adidas - 40% off for medical professionals, first responders, nurses and military members. Verify with ID.me for discount.

• Asics - 60% off full priced products for medical professionals and first reponders. Follow instructs on this page to register for your discount.

• Big Lots - 15% off purchase in store and online, at least through April 30, 2020. Online code: use BIGHEROES at checkout.

• Crocs - Crocs is donating 10,000 pairs of shoes a day to those working in healthcare. Request your free Crocs HERE. The website opens at 12 pm ET each day and stays open until they’ve given out 10,000 pairs.

• Danform Shoes - Healthcare workers can use code SUPERHERO20 for 20% off online footware purchase.

• Nike - 20% for first responders and medical professionals. Verify your status for discount.

• The North Face - 50% discount to healthcare workers for purchase of non-sale items on thenorthface.com and at The North Face-owned retail stores in the United States. 10% discount on non-clearance items at outlet stores. Verify your eligibility HERE.

• Reebok - 50% off discount for teacher, nurse, military, first responder or government employees. Verify your eligibility with ID.me.

• Under Armour - 40% off for military, first responders, healthcare workers, teachers and more. Verify your eligibility with ID.me.

The Coronavirus Aid, Relief, And Economic Security Act, also known as the CARES Act was signed into law by President Trump on March 27, 2020. The CARES Act represents the largest economic stimulus package in US history and aims to support many aspects of the economy in the face of the COVID-19 pandemic. Included among its many provisions are several that target federal student loan borrowers which I’ve talked about before HERE. But what if you’re enrolled in Public Service Loan Forgiveness (PSLF)? What kind of relief will you receive? Read on to learn more.

Public Service Loan Forgiveness (PSLF)

Readers of FPMD are familiar with the PSLF program. The program forgives federal student loans after 120 payments (10 years) for borrowers who work full-time at a nonprofit institution, including many hospitals and academic practices. It is no surprise that PSLF has become very popular among medical school graduates. For more information, please visit Public Service Loan Forgiveness (PSLF) and Public Service Loan Forgiveness (PSLF) Revisited.

CARES Act and Federal Student Loans

If you are a borrower of federal held students loans including:

• Defaulted and nondefaulted Direct Loans

• Defaulted and nondefaulted FFEL Program loans

• Federal Perkins Loans

Then you are entitled to the following relief actions by the US Department of Education:

• Your payments will automatically stop from March 13, 2020, through Sept. 30, 2020.

• During this forbearance period, interest rate on your federal student loans are automatically adjusted to 0%.

• If you continue to make payments during the 0% interest period, the full amount of your payment will be applied to the loan principal once all the interest accrued prior to March 13 is paid.

What this means is that you are given a 6 month free pass on paying your federal student loans without any penalty. Great news right? But what if you’re on PSLF?

CARES Act and PSLF

Those of you already in repayment on PSLF will be very pleased to hear that not only will you enjoy the benefits of suspended payments and 0% interest during this 6 month period, your suspended payments will also count toward the 120 required for PSLF. Yes, you get 6 free payments checked off the counter as long as you meet the other requirements for PSLF during the period of suspension, namely working full time for a qualifying employer.

Given the COVID-19 pandemic, many are facing tough economic times ahead. It becomes even more important to save and watch where your money is going. However chances are good you won’t be able to cut off all of your spending. For those necessary expenses, here are the 5% cashback rotating categories for April - June 2020 to help you save. Be sure to sign up!

I have no financial relationship with any of the credit cards listed below. This post is provided for your information.

CHASE FREEDOM

Earn 5% cash back on up to $1,500 in combined purchases from April 1 - June 30, 2020 at Grocery stores, and on fitness club & gym memberships, and select streaming services. Note that the “Grocery Stores” category does not include grocery purchases at Walmart or Target. Activate by June 14, 2020.  For more information, see Chase Freedom Frequently Asked Questions. You always earn unlimited 1% cashback on all your other purchases.

CITI DIVIDEND

Earn 5% cashback on eligible purchases at Drug stores and Amazon.com from April 1 - June 30, 2020.  The offer becomes active within 2 business days of when you enroll in this offer, or April 1, 2020, whichever is later.  Note that there is no quarterly cashback limit but your cashback is limited to $300 per year.  See this link for details.  Like the Chase Freedom card, you also earn 1% cashback on all other purchases.

DISCOVER IT

Earn 5% Cashback Bonus on up to $1,500 in purchases at Gas Stations, Uber, Lyft and Wholesale Clubs from from April 1 - June 30, 2020.  The offer becomes active on April 1, 2020 or the date on which you sign up, whichever is later.  Purchases made using tap-and-pay, mobile or wireless card readers, virtual wallets or similar technology may not be eligible.  See Terms and Conditions for more information

FOR PURCHASES FALLING OUTSIDE THESE ROTATING 5% CASHBACK CATEGORIES...

My go-to cashback credit card is the Citi Doublecash card.  Unlimited 2% cashback on all purchases - 1% when you buy and 1% when you pay your bill.  No annual fee.  No watching the calendar.  No category tracking.  No headaches.  You can learn more about it here.

Let’s face it, COVID-19 news is pervasive, immersive and unavoidable. Even if you don’t pay close attention to the news broadcasts, chances are your daily lives are now affected by the mitigation strategies currently being implemented around the country. If restaurants, schools, stores, gyms, and theaters closings aren't enough to strike fear into your heart, the inability to find toilet paper or hand sanitizer on any store shelves should inform you how much damage this invisible foe has done to our collective psyche. If you’re like me, you also watched, in horror, as a large chunk of your net worth evaporated into thin air over the last 3 weeks. You may be wondering: how long is this going to last? Should I stay in the market or cash out my investments? Should I invest more while stocks are cheap?

The Economy

To understand how COVID-19 is affecting the US and the world economy, you first need to have an understanding of how a economy works. Unfortunately that’s a topic too vast to address in a brief blog post. Luckily just like how you’ve learned how to perform every medical procedure since 2010, there is a Youtube video for that…

Health crisis becomes economic crisis

The Severe Acute Respiratory Syndrome Coronavirus 2 (SARS-CoV-2) may have originated in Wuhan China, but it has now spread across the globe, achieving pandemic status. If you live in the United States, then it is now very much an American problem. To keep up-to-date on the spread of COVID-19, bookmark and follow the FPMD COVID-19 tracker. As of this writing, the United States of America has the most number of known COVID-19 infections in the world.

So how did this health crisis become an economic crisis? It’s actually very simple. To control the spread of the health crisis, governments around the world had to implement policies that force people to give up their livelihoods in order to protect their lives. Starting in late January, China - the world’s manufacturing hub - has enacted a series of draconian quarantine measures that effectively cut off the movement of hundreds of millions of people. The closing of Chinese factories lead to a decrease in goods and products flowing into the world markets, the so-called “supply shock”. More importantly, the shuttering of non-essential economic activity such as restaurants, public transit, bars, theaters, gyms, malls, sports events, concerts and countless other businesses caused a drastic decrease in the number of transactions in the market. Nowhere is this more apparent than in the airline industry, where on Wednesday, the TSA screened almost 90% fewer air travelers than it did on the same day in 2019. Once transactions start to fall, spending falls. Since one person’s spending is another person’s income, so follows income and borrowing power, starting a vicious downward cycle. Over the last few weeks, it has become more and more apparent that the COVID-19 induced economic crisis may indeed become a recession, and some even suggest that another great depression is on the horizon.

How to respond

Now we are fully aware of the economy hardships ahead, what should we do? As with any question worth asking, the answer is alway it depends…

Let’s get one thing out of the way first. The COVID-19 pandemic is out of your and my control. Sure, we can follow social distancing guidelines and do our best to flatten the curve, but the overall scale and impact of the pandemic is out of the control of individuals. Fortunately governments around the world, including our own, are recognizing that fact and acting in rapid and significant fashion to support the economy and lessen the pain. For example, both the US central bank (Federal Reserve) and the US federal government has taken unprecedented action to date. Here are a couple of headlines from the last week:

• The Federal Reserve just pledged asset purchases with no limit to support markets

• Coronavirus: Trump signs into law largest bailout in US history

Recognizing the overall economic effects of COVID-19 is out of our control is a good thing, it gives us mental relief that we’re all in this together. But it does not make us powerless to act. Here is what I believe every medical professional can do financially to better prepare for the incoming recession:

COMMON STEP - Build an emergency fund. This applies regardless of the stage of your medical career and is just good practice, even in times without economic hardship. I recommend an amount equal or greater to 6 months’ living expenses. DO NOT cash out your investments if they have depreciated in value unless you have considered reasons to sell other than the market crashing. For example, if you’ve held onto Eastman Kodak stock (KODK) thru all these years but you really don’t think they’re coming back.

MEDICAL STUDENTS - Ignore all this noise about the economy. Focus on acquiring the knowledge and experience that will make you valuable no matter what the economic environment will be when you enter the job market in the future. DO NOT choose pulmonary & critical care as a career unless you are truly passionate about it.

RESIDENTS & FELLOWS - Read up on your pulmonary & critical care medicine, there’s a decent chance that your expertise will be needed on the wards and in the ICUs if we fail to flatten the curve. Invest if you can, but only once you have built up an emergency fund. Investing while the markets are falling may seem like a crazy idea, but understand this economic crisis is over as soon as an effective vaccine or antiviral for COVID-19 is developed.

EARLY CAREER ATTENDING PHYSICIANS - Same as for residents & fellows, except I would increase your auto-investments if circumstances allow. Again, we rarely face an economic crisis that has such a defined and certain endpoint. An effective vaccine or antiviral for COVID-19 will be discovered. The only question is how long we need to wait. Caveat: given the decrease in non-COVID-19 volume, hospitals and practices may be cutting back staffing, pay and benefits. So carefully consider your income stability before significantly increasing your investments.

MID & LATE CAREER ATTENDING PHYSICIANS - While not the usual FPMD audience, mid and late career physicians have important and more nuanced financial decisions to make. How you approach this crisis depends on how accurately you can predict the future. Luckily by virtue of having years of practice behind you, you should have built up some assets on which you can fall back. At least a portion of those assets should be in less volatile securities such as treasuries, real estate and cash equivalents, allowing you some degree of freedom in approaching this recession. Think this recession will be over in a year or two? Perhaps this is a good opportunity to invest in stocks. Think this is going to last into your retirement years? Then your money may be better used towards treasury bills and other cash equivalents.

The FPMD Approach

Given that I am in my first year of practice, I am following my own advice for early career physicians. I recently re-evaluated my income stream and consider it relatively stable given my current contract terms. I have built up my emergency fund of 6 months’ living expenses and recently increased my auto-investments to double the previous amount. This is also facilitated by the significant decrease in my monthly expenses due to the closure of non-essential businesses and social distancing measures in NY state. Given my strong belief that the American economy will roar back once COVID-19 is history, I’m choosing to invest nearly all of my money in US stocks.

This crisis will not be the end of our economy, nor will it be the end of our healthcare careers. So in the coming months, if you are feeling the pain, just remember - this too, shall pass…

If you are a healthcare provider, Crocs is donating 10,000 pairs of shoes a day to those working in healthcare. Request your free Crocs HERE. The website opens at 12 pm ET each day and stays open until they’ve given out 10,000 pairs.

Updated 4/5/2020 to reflect updates included in the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

You may have already heard about the COVID-19 student loan interest waiver that was introduced by President Trump earlier this week. I’ve held off on a blog post until the Department of Education finally issued some official guidance. So let’s dig into what is being provided in terms of student loan relief by the Department of Education and what this means to you.

What is being offered?

If you are a borrower with federally held student loans, here’s what’s happening to your loans:

1. Student loan interest rate set to 0% from March 13, 2020 to September 30, 2020.

2. Borrowers with qualifying federal student loans will be automatically placed in an administrative forbearance (payment suspension) until September 30, 2020.

3. For those borrowers who continue to make payments, the full amount of your payment will be applied to the principal of the loan once all interest accrued prior to March 13, 2020 has been paid.

So how much money will this save you? Let’s assume you’re a medical graduate with $200,000 in student loan debt with an interest rate of 6.5%. The student loan interest waiver will save you $200,000 x 6.5% x 201/365 days = $7,158.90 in interest over 201 days coverage period.

In addition, the automatic forbearance puts your monthly loan payment right back into your bank account. Obviously that amount will differ depending on your personal situation. For me personally, that amounts to nearly $600/month. This is a benefit that any borrower can immediately appreciate. Just imagine having an extra $600 in your bank account each month.

In total, for the average medical graduate, I estimate the benefit of these emergency actions to be worth at least $11,000 over the covered period.

How to take advantage?

Most of these changes will be implemented automatically by the Department of Education without you having to lift a finger. However if you would like to continue making payments during this period to pay down your loan faster, please contact your federal student loan servicer.

• CornerStone - 1-800-663-1662

• FedLoan Servicing (PHEAA) - 1-800-699-2908

• Granite State – GSMR - 1-888-556-0022

• Great Lakes Educational Loan Services, Inc. - 1-800-236-4300

• HESC/Edfinancial - 1-855-337-6884

• MOHELA - 1-888-866-4352

• Navient - 1-800-722-1300

• Nelnet - 1-888-486-4722

• OSLA Servicing -1-866-264-9762

• ECSI - 1-866-313-3797

It’s unavoidable, COVID-19 is all over the news. The viral infection that started out as a particularly Chinese affliction has spread to over 60 countries causing nearly 3,000 deaths. With American cases now numbering over 70, and an increasing number of cases that are considered “community spread” - meaning we don’t know how the patient contracted the virus. Chances are good that you will come in contact with COVID-19 patients in the not-so-distant future. As medical professionals, I hope you have been studying up on COVID-19 and are ready to take care of patients with the disease. But this is a personal finance blog, so let’s talk about the market crash.

The market so far

If you have been following financial news over the last week, or just any news in general, you are well aware that the financial markets have been taking a beating. It’s true. Since hitting an all time high of 3,393.52 on 2/19/2020, the S&P 500 index has fallen to 2,954.22 by market close on Friday 2/28/2020 - a drop of 13%, which is why you are seeing and hearing many stories about market correction in the last few days.

Market Correction - a decline of 10-20% in the price of a financial market.

There are many reasons why the stock market is going through a rough time, the biggest of all being COVID-19. As the pandemic spreads across the globe, it has already shown its ability to devastate the economic productivity of the world’s secondary largest economy and has lead to serious consideration as to whether the Tokyo Olympics should be cancelled in the world’s third largest economy. As the virus spreads within the United States in the coming days and weeks, it is only reasonable to anticipate some level of damage to the US economy and that will be reflected by further shocks to the stock market. The real question is how badly, and how long will this damage last? That however, is anyone’s guess. My guess is that when the COVID-19 becomes more widespread, we are not going to stop with a market correction, but rather slip into a bear market.

Bear Market - a decline of >20% in the price of a financial market.

Here is the thing about bears

They are big, they are scary, they can be surprisingly fast for their size and they can hurt you really really badly… Turns out it’s a pretty good description of bear markets as well. If you’re a recent medical grad, chances are good you didn’t have much skin in the investing game during the last major bear market from 2007-2009, the so called Great Recession. So let’s learn a little about bear markets. According to Invesco, there has been 10 bear markets since 1957 lasting 11.7 months and losing 34.33% in market value on average. Of course, these bear markets were interrupted by bull markets where the market increases >20%. In the same time period, there has been 10 bull markets lasting 55.1 months and gaining 153.71% on average.

As you can see, the average length and gain of bull markets dramatically outpaces the length and loss of a bear market. If you are a newly minted physician just starting your medical career, it means any bear market is really a good opportunity to invest. You may have heard that if you encounter a bear in the wild, do not turn around and run. Similarly, you won’t want to sell all of your investments during a bear market either…

How to stay calm

Here is the problem, you may understand that you have a good chance of coming out ahead in the long run by investing during a market downturn. But when all the news around you is consistently forecasting doom and gloom, it is very difficult to overcome your fear and rise above the noise. Giving up watching financial news for Lent is also unlikely to be effective given how constant and pervasive news is nowadays. So what is the secret to not panicking amid an avalanche of negative news? Distractions. You need distractions to pull yourself away from the fear and anxiety of the upcoming market crash. Here are some of my suggestions of what to spend your time and attention on rather than the negative financial news:

• COVID-19: as medical professionals, we need to be prepared for this emerging threat to public health. Given the novelty of this virus, there is still much we don’t know, but now is the perfect time to start making friends with resources such as the CDC, WHO, Uptodate and your local health department to learn more about COVID-19. Equip yourself with knowledge so you can better protect those you love and serve patients who need your help.

• Your own medical specialty: even though COVID-19 seems to be the only topic people care to talk about, chances are good that you are not all infectious disease specialists. Come Monday you will most likely go to work treating patients afflicted by a variety of non COVID-19 illnesses. The more you can learn about your particular domain of medicine, the better you’ll be able to take care of your patients.

• Election 2020: No matter what your political leaning and viewpoints are, it is safe to say you would be hard pressed to find a more polarizing president than Mr. Trump in recent memory. Whether you love him or hate him, the race to replace him is off to a very entertaining start. Sure political news rarely bring joy to our hearts the same way learning to perform a new life saving procedure can. But hey, it can help keep your mind from wondering whether you should liquidate your 401k account.

What I’m doing

The most recent study from the Chinese Center for Disease Control offered the first epidemiological study of COVID-19. Given its findings, I am among the 30-39 age group with a 0.2% mortality rate. I figure I have a good chance of surviving through this pandemic. Combining this with what we know about bull markets and bear markets, I increased my auto-buy frequency from every 2 weeks to weekly. Now whether I have enough liquidity to last through the market downturn into the next bull market, only time will tell.

February is already here and chances are good tax forms are showing up in your mailbox or your email if you opted for electronic delivery from your employer and financial institutions. While April 15 is still a couple of months away, It’s never too early to start preparing. Like one of my old attendings liked to say regarding IR procedures - “you always want to set yourself up for success.” Let’s go over some of the common tax forms you will likely need to make your tax season a success.

Form W-2

The W-2 form is the wage and tax statement that every employer must file if they’ve paid you more than $600 for the year and if any of your income was withheld for income tax, social security or medicare. If you’re a resident, fellow or an employed attending physician, this is likely going to reflect your most significant source of income and how much taxes you’ve paid. These days, many employers will send an electronic copy so you can rest easy if you lose the paper form.

Forms 1099

The 1099 form is used to report additional compensation you have received from someone other than your employer. There are many different kinds of 1099 forms that denotes different types of payment. Chances are good you will receive one of more 1099 forms. Just like the W-2 form, you’ll want to hang onto these because they may have a big impact your income taxes. Here are the most common 1099s that you’re likely to receive:

• 1099-INT: You’ll receive a 1099-INT form if you've received more than $10 in interest from a bank or brokerage. This is a very common 1099 form to receive.

• 1099-B: You’ll receive a 1099-B form if you’ve received income from sales of any securities (stocks, bonds, mutual funds etc). Think B for Brokerage.

• 1099-R: You’ll receive a 1099-R form if you’ve received any distributions from your retirement plans (401k, IRA, pensions etc). This applies even if you didn’t receive the distribution directly. For example, if you performed a Backdoor Roth IRA or a Mega Backdoor Roth IRA contribution.

• 1099-MISC: This is the catch-all form for income that doesn’t fit into other established 1099 categories. For example, I once received a trainee travel scholarship to attend an interventional radiology conference and that income was reported on a 1099-MISC.

Forms 1098

The 1098 form is used to report payments you’ve made that may be deductible on your tax returns. Like the 1099, there are several variations of the 1098 form. The most common 1098 forms for medical professionals are the 1098, 1098-T and the 1098-E forms.

• 1098: Form 1098 is used to report any mortgage interest you’ve paid. Mortgage interest is a common itemized deduction that can help lower your income taxes. For more information, here is a guide provided by Turbotax.

• 1098-T: Form 1098-T is used to report any tuition and fees that you’ve paid for your higher education. The payments may qualify you for the Lifetime Learning Credit (LLC) which may reduce your tax bill by up to $2,000. This will likely only be beneficial for interns who can claim the tuition paid for their final year of medical school education.

• 1098-E: Form 1098-E is used to report interest paid on student loans during the year, which can reduce your tax bill by up to $2500. It is sent by your student loan servicer if you’ve paid more than $600 in student loan interest during the year. With the average student loan debt creeping beyond $200,000 for medical school graduates, this is a very popular deduction for residents/fellows. Attending physicians are unlikely to benefit due to the low income limits required - student loan interest deduction starts to phase out starting at modified adjusted gross income (MAGI) of $70,000 for single filers and $140,000 for married couples filing jointly.

Forms 5498

Form 5498 forms are informational statements used to report your contributions to certain tax advantaged accounts that may be tax deductible. 2 common flavors are the 5498 and the 5498-SA.

• 5498: Form 5498 reports the amounts you contributed to various individual retirements accounts (IRA), which may be deductible on your tax return. If you’re making an income, you really should be contributing to an IRA, preferably a Roth IRA.

• 5498-SA: Form 5498-SA reports the amounts you contributed to an Health Savings Account (HSA), Archer MSA, or Medicare Advantage MSA, which may be deductible on your tax return. The HSA is by far my favorite retirement account, in fact, I am such a big fan I’ve written 2 posts on it here and here.

There you are, the most common tax forms you are likely to need to set yourself up for success for tax season. Filing your tax return is never fun. But hopefully this post can help make it a little less painful.

Hey everyone, it’s been a while. I had planned to reboot the blog long before now. But it’s insidious how days turn to weeks and weeks turn to months…. Well, I recently turned 34 and decided that I shall procrastinate no more! As you know, 2020 is off to a pretty depressing start - America’s pride on its knees, Kobe, and of course, the 2019 Novel Coronavirus (COVID-19) outbreak. As a medical professional, I am keenly interested in the rapid development of this new fast spreading virus. However I’ve been personally frustrated by the lack of a centralized source that kept track of all the cases - a “live tracker” if you will. So I decided to make my own. Here is the FPMD 2019 Novel Coronavirus (COVID-19) Tracker. I plan to keep this page updated as often as I can throughout this pandemic.

(Note: page best viewed on a desktop browser.)