Eric's top 5 articles and other good reads of October 2014

There were some great articles that I stumbled upon this past month. Let’s start with my top five:

What I Learned When I Asked How Much My MRI Would Cost

The introduction of the high deductible health insurance plans was designed to make consumers smarter about how they shopped for their health care. Prices, under traditional PPO and HMO plans never mattered to the consumer, as there was always an expectation that their insurance would pay. The biggest hurdle for most, was that their HMO wouldn’t approve a test or procedure.

However, Forbes contributor, Kate Ashford shines a spotlight on the biggest problem with the theory of creating more informed consumers: the providers are not informed of the prices. It’s a bizarre world of no price tags and unlike your local used car lot, no manager in the back to negotiate a final price. This article brilliantly tells the author’s frustrating story as she attempts to find out the price of an MRI.

What I Learned When I Asked How Much My MRI Would Cost, by Kate Ashford, Forbes Magazine

Giving Back to Your School in a Meaningful Way

For most, making a donation to your alma mater comes about by writing a check after receiving a solicitation letter espousing all of the wonderful things that the university has done since your days as an undergrad. Or maybe a successful football season brings back fond memories, prompting a token contribution to the university’s general fund. For those who have the wealth and desire to make a donation on the scale of having a building or school named after them, the process is considerably different. Gifts of that magnitude generally come about as a result of a continued relationship between the donor and the school.

In 2008, David Booth, co-founder of Dimensional Fund Advisors, gave $300 million to University of Chicago School of Business (now known as the Booth School of Business) in what was the largest donation to any business school at that time. Mr. Booth sought to give back the the University which he credited for his success as a result of both the education he received and the connections that he made, such as his former professor, Eugene Fama, who won the Nobel Prize in Economics last year.

Giving Back to Your School in a Meaningful Way by Paul Sullivan, New York Times

Was Bill Gross the Last Star Manager?

Every decade or so we have a small handful of superstar fund managers. In the 80s, it was Peter Lynch, whose Fidelity Magellan outperformed its competitors and the benchmark. Lynch retired in 1989 and subsequent Magellan managers were never able to replicate his success. In the 90s through the mid-2000s, Bill Miller’s Legg Mason Value Trust fund concluded a run of edging out the S&P 500 15 years in a row. I have written previously about the spectacular end to Miller’s run of success. Gross held the unrivaled status as “Bond King” by founding and presiding over the largest bond fund in the world. Since his announced departure, the fund has seen unprecedented outflows.

Was Bill Gross the Last Star Manager? by Tom Lauricella, Wall Street Journal

Strange Financial Advice

I read Robert Kiyosaki’s “Rich Dad Poor Dad” book back when it was released in 2000. I thought that he made some interesting points about changing some common perspectives about money. Since the success of the first book, he has gone on to release countless further books, tape programs, and other ventures that smack of “get rich quick” schemes. They typically encourage high risk, high debt real estate investment programs and are critical of traditional education, employment and stock market investing.

In this article, Motley Fool writer, Morgan Housel, reviews a Kiyosaki video called “Shooting the Sacred Cows of Money.” “Review” may not be the right word, as it’s really a point by point take down. It’s an enjoyable read, despite a bit of snarkiness.

Strange Financial Advice, by Morgan Housel, The Motley Fool

The surprisingly simple way to get people to stop buying soda

One of the most effective ways to help an overspender understand the impact of their spending it to point out how many hours of working it will take to pay for a purchase. For example, if you’re considering a new TV for the living room that costs $1,500 and you make $20/hr, but take home $15/hr after taxes, you’re working 100 hours for that purchase.

A similar experiment was conducted for high calorie soda, in which signs were posted bringing attention to the quantity of sugar or number or calories the soda contained. Alternative signs notified consumers of the minutes of running that would be required to burn off the soda. The most successful sign at curbing high calorie soda purchases stated the number of miles of walking required work off the soda.

The surprisingly simple way to get people to stop buying soda, by Roberto Ferdman, Washington Post

Other Good Reads:

Should you tip for takeout?, by Allen Wastler, CNBC

Most Financial Research Is Probably Wrong, Say Financial Researchers, by Pat Regnier, Money Magazine

Beware of Shifting Options Within Medicare Plans, by Tara Siegel Barnard, New York Times

Same-sex couples weigh financial pros, cons of wedding vows, by Ilana Polyak, CNBC

Spare the Money, Spare the Child?, by Eileen Ambrose, AARP Magazine

Don’t Let Past Returns Fool You: Ritholtz Chart, by Barry Ritholtz, Bloomberg View

Find a financial adviser who will put your interests first, by Barry Ritholtz, Washington Post

Some fun and interesting reads that are not about money:

5 Habits That Will Actually Change Your Life for the Better by Jeff Haden, Time.com

Our Understanding of Giraffes Does Not Measure Up, by Natalie Angier, New York Times