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Q: I read that Zoom Video Communications had a secondary offering. What does that mean? — T.R., Cedar Crest, New Mexico
A: It means Zoom sold more of its shares to raise money — in this case, about $2 billion. When a company debuts on the stock market, it usually has an “initial public offering” (IPO), selling shares to the public and collecting money from the sale. (The shares will then trade hands on the market, but the company doesn’t profit directly from that.) If the company later needs a cash boost, perhaps to grow faster, it has choices: It could sell off some assets, borrow money — or sell more shares of stock, via a “secondary offering.” If a company’s shares have skyrocketed, as Zoom’s have, due to videoconferencing demand during the pandemic, it will collect a lot of money for each share.
The downside of offering new shares for sale is that doing so dilutes the value of existing shares. Imagine, for example, a company with 100 shares of stock outstanding. If you own 10 of them, you own 10% of the company. If it issues 20 more shares, though, your 10 shares will only be 1/12th of the company, or 8.3%.
Q: What are the best books about Warren Buffett? — P.L., Wilkes Barre, Pennsylvania
A: Try Roger Lowenstein’s “Buffett: The Making of an American Capitalist” (Random House, $20) for a great review of his personal and business history, along with his investment thinking. You can learn a lot through Buffett’s own words via Carol J. Loomis’ “Tap Dancing to Work: Warren Buffett on Practically Everything, 1966-2013” (Portfolio, $18) and Lawrence A. Cunningham’s “The Essays of Warren Buffett: Lessons for Corporate America” (Carolina Academic Press, $35).
Medicare Advantage Plans
Anyone signing up for Medicare gets to choose either “original Medicare” or a Medicare Advantage plan. (They can switch between them at least once a year, too, during the annual enrollment period.) Close to 38 million people were recently enrolled in original Medicare — which consists of Part A (hospital services) and Part B (medical services) — while more than 23 million had chosen a Medicare Advantage plan (sometimes referred to as Part C).
Medicare Advantage plans are well worth considering. Offered by private insurance companies such as Anthem Blue Cross and UnitedHealthcare, they’re regulated by the U.S. government. This is key: They’re required to provide at least as much coverage as original Medicare — and they typically offer much more.
While original Medicare doesn’t cover vision, hearing and/or dental care, many Medicare Advantage plans do; they often include prescription drug coverage, too, which those in original Medicare have to pay extra for. Original Medicare will often charge you 20% of many bills, with no upper limit, while Medicare Advantage plans might charge you a low copayment for each doctor visit or service — and they cap your out-of-pocket spending. There are some drawbacks, though. While original Medicare lets you see any health care provider who accepts Medicare, Medicare Advantage plans typically limit you to a network of doctors — though these networks can be large. Original Medicare usually won’t cover you outside the U.S., but some Medicare Advantage plans offer limited coverage abroad. So, what’s best for you? Start by making a list of the prescription drugs you take and the doctors you see. Also list the kinds of health care services you need and use, noting any upcoming surgeries, travel or big-ticket expenses. When reviewing the plans you’re considering, compare how well each will meet your needs — and how much you’ll likely spend out of pocket with each option.
The Medicare.gov website offers a “Medicare Plan Finder” to help you compare and choose. Note the star ratings of your candidate plans and favor four- or five-star plans.