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How to Save Thousands on Your Food Bill
Issue #522, May 14, 2018

MoviePass and Other Things
Issue #521A, May 10, 2018

Degree Inflation, Long Training Periods, and “Certification”  Part III
Issue #521, May 07, 2018

Degree Inflation, Long Training Periods, and Certification” Part II of III
Issue #520, April 30, 2018

Follow-up on Several Things
Issue #519A, April 25, 2018

Degree Inflation, Long Training Periods, and “Certification”: Part I of II
Issue #519, April 23, 2018

The Kids Birthday Party Hustle
Issue #518A, April 18, 2018

A Pension Question: Part II of II
Issue #518, April 16, 2018

A Physician is an Executive
Issue #517A, April 11, 2018

A Pension Question: Part I of II
Issue #517, April 09, 2018

Is the Correction Over?
Issue #516A, April 05, 2018

Used Car Dealers, Student Loans, the Chinese, and Uncle George’s Rule
Issue #516, April 02, 2018

Starter Homes
Issue #515, March 26, 2018

Redecorating: Beware!
Issue #514, March 19, 2018

NASDAQ Closes at Record High
Issue #513, March 12, 2018

A 40% Chance
Issue #512, March 05, 2018

Several Things
Issue #511, February 27, 2018

Human Capital, Education and Wealth
Issue #510, February 19, 2018

Another Stock Market Update
Issue #509A, February 18, 2018

Some Thoughts on Savings
Issue #509, February 12, 2018

A Stock Market Upfate
Issue #508S, February 10, 2018

Who Can You Trust? Part II of II
Issue #508, February 05, 2018

The Christmas Decoration Pre-worn Jeans Hustle
Issue #Interim Bulletin #507A, February 03, 2018

2018 Outlook for Financial Markets
Issue #507, January 29, 2018

Who Can You Trust? Part I of II
Issue #506, January 22, 2018

Life Insurance Settlements
Issue #505, January 15, 2018

Commodities and Buying the Breakout
Issue #504, January 08, 2018

Buffett Wins His Bet
Issue #503A, January 04, 2018

Practice Real Estate and Free Agency
Issue #503, January 01, 2018

Outlook for 2018: Part III: Stocks and Bonds
Issue #502, December 25, 2017

My Outlook for 2018: Part Ii: Precious Metals
Issue #501A, December 21, 2017

Outlook for 2018: Hard Assets: Part I of III
Issue #501, December 18, 2017

More Thoughts on Bitcoin
Issue #500A, December 14, 2017

Fees and Good Relations with Bankers
Issue #500, December 11, 2017

Salvator Mundi
Issue #499A, December 07, 2017

Should You Rent or Own a Home?
Issue #499, December 04, 2017

A Gift Subscription
Issue #Interim Bulletin #498A, December 02, 2017

Stocks vs Real Estate: Asset Allocation: Part II of II
Issue #498, November 27, 2017

When Good Enough is Fine
Issue #497A, November 22, 2017

Stocks vs Real Estate: Asset Allocation. Part I of II
Issue #497, November 20, 2017

The Saudi Arrests and the Perils of Foreign Investing
Issue #496, November 13, 2017

Gambling and Las Vegas
Issue #495, November 06, 2017

Some Tips on Auto Insurance
Issue #494, October 31, 2017

Bitcoin and the Digital (Crypto) Currencies
Issue #493, October 23, 2017

The Coming Bear Market: Part II How to Prepare
Issue #492, October 16, 2017

Some Observations on Cemeteries
Issue #Interim Bulletin #491A, October 12, 2017

The Coming Bear Market: Part I: The Myth of Buy and Hold Forever
Issue #491, October 09, 2017

The Market makes New Highs
Issue #490, October 02, 2017

The Importance of a New High
Issue #489, September 25, 2017

A Little Insurance: Wealth, War and Wisdom
Issue #488, September 18, 2017

Some Observations
Issue #487, September 11, 2017

How to be Successful in Your Career
Issue #486A, September 07, 2017

How NOT to Buy a Home
Issue #486, September 04, 2017

This Week in the Market
Issue #485, August 28, 2017

Is the “Trump Bump” Running Out of Gas?
Issue #484, August 21, 2017

Gold is on the Move
Issue #483, August 14, 2017

The Importance of Estimation
Issue #482, August 07, 2017

Buying Art and Collecting: Part II of II
Issue #481, July 31, 2017

Buying Art and Collecting in General, Part I of II
Issue #480, July 24, 2017

Physicians need to be More Forceful: Follow-up
Issue #479, July 17, 2017

Physicians need to be More Forceful
Issue #478, July 10, 2017

Your First “Real” Investment
Issue #477, July 03, 2017

Leasing a Watch: Don’t
Issue #476, June 26, 2017

The Importance of Your Children having a Job
Issue #475, June 16, 2017

The Problem with Medical Student Debt is—the Med Schools
Issue #474, June 12, 2017

Critters and Varmints in your Home and Yard
Issue #473A, June 07, 2017

Leveraged ETFs
Issue #472, May 29, 2017

Leasing a Vehicle: Don’t!
Issue #471, May 22, 2017

Escheat
Issue #470, May 15, 2017

More on Buying Jewelry
Issue #469, May 08, 2017

Buying Jewelry: Gold, Diamonds and Pearls
Issue #468, April 30, 2017

Thomas Sowell: Part III of III
Issue #467, April 24, 2017

Thomas Sowell: Pat II of III
Issue #466, April 17, 2017

Live Close to Where You Work
Issue #465, April 10, 2017

Medtronic in Hospital Management
Issue #Interim Bulletin #464A, April 07, 2017

Thomas Sowell: Part I of II
Issue #464, April 03, 2017

A Political Contribution a an Investment: Part II of II
Issue #463, March 27, 2017

A Political Contribution as an Investment: Part I of II
Issue #462, March 20, 2017

Buffett Selling Vacation Home
Issue #461, March 13, 2017

Advanced Placement (AP) ourses
Issue #460, March 06, 2017

The Importance of a Credit History
Issue #459A, March 02, 2017

A Credit Card Scam
Issue #459, February 27, 2017

The Electronic Health Reord
Issue #458, February 20, 2017

Contracts
Issue #457, February 13, 2017

Platinum and Palladium
Issue #456, February 06, 2017

Economic Outlook for 2017: Part II of II
Issue #455A, February 02, 2017

Economic Outlook for 2017: Part I of II
Issue #455, January 30, 2017

A Story From Vegas
Issue #454A, January 25, 2017

Land Donation Deals and the IRS
Issue #454, January 23, 2017

The Theory of Gambler’s Ruin
Issue #453, January 16, 2017

Student Loans: But Wait, There’s More!
Issue #452, January 13, 2017

A Second Home
Issue #Interim Bulletin #451A, January 04, 2017

The Consumer Confidence Index
Issue #451, January 02, 2017

Social Security
Issue #450, December 26, 2016

My Outlook for 2017: Part II of II
Issue #449, December 19, 2016

My Outlook for 2017: The Market
Issue #448, December 12, 2016

Medicine in 20 Years
Issue #447, December 05, 2016

Higher Interest Rates
Issue #446, November 28, 2016

Trump and the Markets: The Bad and Ugly
Issue #445A, November 23, 2016

Trump and the Markets: The Good
Issue #445, November 21, 2016

THE PHYSICIAN INVESTOR NEWSLETTER

HELPING PHYSICIANS ATTAIN FINANCIAL SECURITY
By Robert M. Doroghazi, M.D., F.A.C.C.

2018 Outlook for Financial Markets

Issue #507, January 29, 2018

    I’ll finish reviewing Who Can You Trust? and discuss the weakness in the US Dollar and the corresponding strength in the precious metals and hard assets in the next 2 weeks.
    But first: Every year in January, Scott Colbert and Joe Williams, joined now by Don McArthur, of Commerce Trust in Kansas City, a division of Commerce Bankshares (CBSH), give a presentation in Columbia on their 2018 Outlook for the Financial Markets. I have always found these useful, and will summarize it here.
    Emerging markets are growing faster than the advanced economies. With the synchronized global growth, people are finally believing things are better. They estimate world GDP increased 3.6% in 2017 and will increase 3.7% in 2018.
    Since the recovery coming out of the 1979-80 recession, every recovery has been less robust, and they feel this trend will continue. Headwinds are the 3 Ds 1) Debt, 2) Demographics, and 3) Deficits.
    Debt can be divided into 1) Financial, 2) Household, 3) Business, 4) Federal government, and 5) State and Local governments. Cumulative debt peaked at 370% of GDP in 2009. There has been significant deleveraging since that time, with total debt now 331% of GDP. Debt is now being added at about the same rate as growth in GDP . Unfortunately, the one area of debt that continues to grow is Federal. The Feds take 20% of your paycheck and spend 23%.They consistently over-promise and under-deliver.
    RMD comment: Savings creates wealth, debt destroys wealth. Borrowing pulls growth forward to the present at the expense of the future. The US, and all major countries, will never pay off their debt. Rather, all they need to do to prevent default is service the debt: make the interest payments and roll over the debt when it comes due. Even this is becoming more problematic, esp. when the next recession comes. The only (unfortunately) practical answer is to inflate it away. I believe we are already seeing this with the weakness of the dollar and the strength in the precious metals.
                                            Labor Force
                                  Median Age   Participation Ratio
                        1994         37.7             62.7%
                        2004         40.3             65.9%
                        2014         41.9             62.7%
                        2024 (est.)  42.4             60.9%
    Job growth is the key to the economy. Wages and salaries are 2/3 of everything we do in this country.  Unemployment is falling while wages are rising. Housing has picked up while autos have leveled off.
    Since 1900, the average economic expansion lasted 47 months, the average recession 15 months. This is currently the 3rd longest expansion. 2017 was the first time ever that the market was up every month, and there has not been a 5% correction since June, 2016, also the longest ever.  They feel there is currently no evidence of a recession, companies are optimistic, and banks are in good shape. Personal, and especially, business confidence, has taken off since the election.
    RMD comment: Lowry’s numbers continue to improve. Probabilities suggest this rally still has a good amount on time to go. Don’t get shaken out. Likewise, there will eventually be a bear market, but the best way to survive a bear market is to make a lot of money in the preceding bull market.
    The normal interest rate yield curve slants upward: people must be paid more to tie their money up for longer periods of time. Occasionally the curve inverts: the yield on the 2-year Treasury is higher than the 30-year. This invariably presages a recession. The current yield curve has flattened, but not invested.
    However, with the upward movement in interest rates, people are getting antsy, and moving money from bonds to stocks. They feel you should continue with the traditional portfolio rebalancing, in this case, taking money from the winners (stocks) and moving it to bonds like the 30-year Treasury. When the next recession does come, the bond position will provide protection for your portfolio. They also feel municipal bonds are attractive (This week’s Barron’s disses munis big-time).
    RMD comment: My dislike for long-dated bonds is well known. Warren Buffett calls them “certificates of confiscation”. Lowry’s has convinced me it is possible to discern the general direction of the market. When the market tops, I prefer selling stocks and raising cash compared to buying bonds.
    Current asset allocation: 10 ½% in money markets, an all-time low, 21-22% in bonds, and 62% in equities. When equities rises to 63-64%, people will be “all-in”, and this should represent the top. The current P/E is 24. The market is over-valued, but not “very” over-valued. Tech performed best last year, up 38.8%, and now represent 24% of the S&P 500. Energy and telecom were last year’s losers.
    The tax reform will increase earning 7-8%. This will be in addition to the 7-8% increase in profit growth this year (this will somewhat mute the high P/E). Companies with mostly domestic revenue, such as small caps, retail and telecom, will benefit the most from tax reform, while the international stocks won’t benefit as much. They feel the outlook is positive for equities, and favor international markets over domestic, and that materials will benefit from the synchronized global expansion.   
                                                        RMD
    More companies, led by (ounce-mighty) General Electric (GE), are having problems meeting their obligations on Long-Term Care Insurance (LTCI).
    RMD comment: One of my earliest Newsletters (Issue #12, 3/19/07) was on LTCI. At the time I said I was neutral to negative. As time has gone on, I’ve become more negative. This is the final straw. I recommend against it. Think about it: you’re 40 years old and buy LTCI. The company needs to be around 40-60 more years to meet their obligations to you: that’s a very long time. If you have an investable net worth of $2M, which a retired physician who has been careful with their money should have, you are “self-funded”, the income from $2M is enough to cover the nursing home. Plus the money remains under your control. Avoid LTCI.
    An original subscriber from the fall of 2006 laments how the current college-age kids pile up student debt while treating themselves to a $5-6 Starbuck’s every day.
    RMD comment: remember this number: I’ve used it before and will again. $2.74 per day x 365 ¼ days = $1,000 per year. The avg. college student graduates with $38K of debt. The avg. med student is $190K in hock. Not spending just $2.74 per day would decrease student debt by 10% (plus years of interest). Thrift creates wealth, debt destroys wealth. 
    This is from younger son Michael, who has collected comics for 25 years.
    “Prices have been great on early Bat Man and Super Man (6 and 7-figure comics), sometimes going for 2-3x of just 5 years ago. The current market for most comics $10K and above is strong as well. Anything below $3-5K has been stagnant.
    However, in the last 2-3 months there has been a noticeable pop in the $200-3,000 range. Books are bringing minimum 25-30% over previous resistance, and often even more. There is a big auction in February with lots of premium stuff, so it will be interesting to see if this pops as well.
    This seems to coincide with the new tax bill. In my opinion, the comic collectors on a professional salary that would be buying 3 and 4-figure comics are going to have a noticeable bump in their take-home pay, and prices shot up”.
    RMD comment: I include this because 1) I hope you find it interesting, and 2) it shows the importance of collateral knowledge, of reading and knowing as much as you can about as much as you can. It all goes into the brain computer files to give perspective and help decision making.
    The Origin of the Jews: The Quest for Roots in the Rootless Age (Weitzma, Princeton U Press) received great reviews. I couldn’t finish it.
    Stalin: Waiting for Hitler: 1929-1941 (Penguin Press). This is Kotkin’s 2nd vol. in his bio of Stalin. Long and detailed, but straightforward and insightful. Stalin 1) had a phenomenal memory, 2) read widely, 3) had an iron will, 4) had an impressive world view, 5) and was absolutely evil. Don’t under-estimate the bloodthirstiness of Bolsheviks    

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