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Listen to Ron Goetzel’s Stock-Picking Advice…and then Do the Opposite

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A good rule of thumb is that when Ron Goetzel publishes something, you should reach the opposite conclusion.  TEASER: In this case, had you done the opposite 5 years ago of what he (retrospectively) recommends now, you’d be sitting on a pile of cash.


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Yesterday, the Journal of Occupational and Environmental Medicine, fresh off its Aetna wellness DNA collection debacle (which, in all fairness, one of their board members did candidly admit should never have passed peer review — see the comments), published Ron Goetzel’s article claiming that Koop Award-winning companies outperform the averages, thus showing that outstanding wellness programs “favorably affect a company’s stock valuation.”

Try telling that to Gary Loveman.  He was the head of the Business Roundtable’s Health and Wellness Committee.  As such, he was the biggest supporter of wellness among all corporate CEOs.  He even leveraged the Business Roundtable’s formidable financial resources to convince a bunch of senators to take time off from their real jobs in order to host a fact-finding committee hearing with the title: “Employer Wellness Programs: Better Health Outcomes and Lower Costs.”

Ask Mr. Loveman how his company, Caesar’s Entertainment, is enjoying their bankruptcy proceedings.  (He might not know because he is no longer allowed to run the company.)

But we digress…

Let’s look at what happens if you had invested in other companies with “outstanding” wellness programs five years ago.  Below is the entirety of companies that have won Koop Awards since 2010 — all of which made up their outcomes, as we’ve noted — that are also publicly traded.  (There might be 1 or 2 more.  The Koop website is down this morning, so I am going off the list I have.)  In each case we tracked 5 years of stock prices ending yesterday, and compared to industry indexes.  We’ve linked to the indexes.

2010 — Pfizer.

Pfizer stock has risen about 85% — but simply investing in a drug company index would have made you a 156% return.

Highlight of their wellness program: participating employees lost 3 ounces over a year while non-participants gained 2 ounces. Or maybe it was the other way around.  

2011 — Eastman Chemical

Eastman Chemical has outperformed the chemical industry index by 33% over this period.

Highlight of their wellness program: Ron Goetzel doctored the original application recently and then covered it up, because this was the company that “showed savings” 2 years before the program even started.  Removing the embarrassingly accurate x-axis labels of the original while claiming “the original is still online and available for review” would have been a very effective cover-up had we not kept a screenshot of the original original.

2013 — Dell (the 2012 winners are not publicly traded)

Dell underperformed the tech stock index by 31% before it stopped trading in October of 2013.  (We don’t comment on their wellness program so as not to embarrass them, so there aren’t highlights.)

2014 — British Petroleum

Long after underperforming due to the oil spill before this most recent 5-year period, they continued to underperform the oil stock index by 13%.

Highlight of their wellness program: Mercer “validating” outcomes that were not only mathematically impossible, but were also 100 times greater than what the vendor itself, Staywell, had said was possible. Staywell never explained this discrepancy, shockingly.

2015 — McKesson

There is no good drug distribution stock price index, but McKesson did outperform the drug stock price index by 12%.  The closest thing to an “index” might be its close competitor, Cardinal Health.  McKesson outperformed them over the 5-year period, but over the most recent 3-year period, Cardinal did somewhat better.

Highlight of their program:  They boast one of the highest tobacco use rates in the country, but that didn’t stop them from winning an award because employees who attended a bevy of Weight Watchers meetings lost a few ounces.


 

Put it all together, and you would have been much better off shorting these companies and hedging with the industry index than actually buying stock in them.  As noted at the beginning of this article, had you done this hedge, you’d be sitting on a pile of money right now.  As they say in the stock market, the only person as valuable as the person who is always right is the person who is always wrong. Perhaps Mr. Goetzel has a future in securities analysis.

 

 

 

 


13 Comments

  1. Tom emerick says:

    Another brilliant post.

    Like

  2. […] In another demonstration of why peer-review is so important, Dr. Fabius and his colleagues correctly point out that correlation is not the same as causation. As a result, there is no evidence that importing wellness programs into other companies will translate into better stock performance. In addition, elementary statistics tells us that corporate wellness and TSR won’t necessarily correlate over shorter periods of time for individual…. […]

    Like

  3. […] In another demonstration of why peer-review is so important, Dr. Fabius and his colleagues correctly point out that correlation is not the same as causation. As a result, there is no evidence that importing wellness programs into other companies will translate into better stock performance. In addition, elementary statistics tells us that corporate wellness and TSR won’t necessarily correlate over shorter periods of time for individual…. […]

    Like

  4. […] In another demonstration of why peer-review is so important, Dr. Fabius and his colleagues correctly point out that correlation is not the same as causation. As a result, there is no evidence that importing wellness programs into other companies will translate into better stock performance. In addition, elementary statistics tells us that corporate wellness and TSR won’t necessarily correlate over shorter periods of time for indivi…. […]

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  5. […] and practically as very likely to damage individuals) outperformed the inventory market place. The opposite is essentially accurate.  That’s no surprise supplied the proven simple fact that regular place of work wellness […]

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  6. […] in ineffectiveness, and almost as likely to harm participants) outperformed the stock market. The opposite is actually true.  That’s no surprise given the proven fact that conventional workplace wellness loses money, […]

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  7. […] and just about as very likely to damage members) outperformed the inventory market place. The reverse is basically accurate.  That is no shock given the tested actuality that common workplace wellness loses dollars, time […]

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  8. […] in ineffectiveness, and almost as likely to harm participants) outperformed the stock market. The opposite is actually true.  That’s no surprise given the proven fact that conventional workplace wellness loses […]

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  9. […] in ineffectiveness, and almost as likely to harm participants) outperformed the stock market. The opposite is actually true.  That’s no surprise given the proven fact that conventional workplace wellness loses […]

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  10. […] in ineffectiveness, and roughly as expected to mistreat participants) outperformed a batch market. The conflicting is indeed true.  That’s no warn given the proven fact that required workplace wellness loses money, period. […]

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  11. […] in ineffectiveness, and almost as likely to harm participants) outperformed the stock market. The opposite is actually true, if one uses sector indexes as benchmarks. (This is the correct methodology with small numbers of companies concentrated in a few industries. […]

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  12. […] in ineffectiveness, and almost as likely to harm participants) outperformed the stock market. The opposite is actually true, if one uses sector indexes as benchmarks. (This is the correct methodology with small numbers of companies concentrated in a few industries. […]

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  13. […] into a better performance of the shares. In addition, elementary statistics tells us of which TSR corporate welfare in addition to also also not necessarily correlate over periods of time short…. Bottom line? PHB does not believe of which investors in public companies are necessarily […]

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