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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

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

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

Negative Trends: The Suits aren’t Makin’ Steel
Issue #444, November 16, 2016

The New DOJ Fiduciary Rule
Issue #443, November 07, 2016

Barron’s Conference, Part IV of IV
Issue #442, October 31, 2016

Barron’s Conference, Part III of IV
Issue #Interim Bulletin #441A, October 26, 2016

Barron’s Conference, Part II of IV
Issue #441, October 24, 2016

Barron’s Conference, Part I of IV
Issue #440, October 20, 2016


By Robert M. Doroghazi, M.D., F.A.C.C.

Barron’s Conference, Part II of II

Issue #390, November 02, 2015

Jeff Gundlach
    RMD comment: This was Gundlach’s first appearance at the conference. Some have described him as brash, etc. After seeing him interviewed on TV, and after this conference, I would describe him as direct, and with an ability to look at things from a different, refreshing perspective. I think what rubs some people the wrong way is that he is usually right.
    The Fed is in a funny place; 1/2 the people thought they should have raised interest rates 2 years ago, ½ think they won’t raise for 3 years. Averaging that out, they will raise rates in 6 months. If the Fed unilaterally raises rates, the dollar will strengthen (see below), which will cause problems, especially since much of the debt of emerging markets is denominated in dollars. Raising rates will not decrease uncertainty, and once they raise, it will be difficult to stop. The market says they won’t raise rates. We will be in this state for a long time.
    There is little evidence QE helped the economy. Instead, there is a 1:1 correlation between QE and the rise in the stock market. The Fed is the market’s best friend. (RMD comment: The market popped two Thursdays ago after Draghi made dovish comments, and again the next day after China cut interest rates for the 6th time in a year. Because of the ease that money moves around the world, all central banks are the market’s friends).
    If the economy weakens and you can’t do more QE, what do you do? He hopes we never see negative interest rates. Where will it go from there?
    Bond yields, broadly speaking, have bottomed, will rise gradually, then at some time in the future will shoot up. Many corporate bonds mature in 2019. Also at that time, the Fed needs to disgorge the trillions on its balance sheet. This might be when rates take off. 
    The most important metric for the economy (and the market) is that profit margins are dropping. Six of the last 7 times this occurred, it was followed by a recession.
    Global growth may be as low as 1%, much due to slowing in China. They don’t have a birthright to grow at 10% per year. Brazil is -2.5%. Countries will try to steal growth from somewhere else = currency wars. Avoid Italy: they are facing a 39% decline in population. Russia is similar: facing the largest population decline in the history of the world. (RMD comment: this is why immigration is so important to the US. The only 2 ways that GDP grows are increased productivity and more people. China has caught on and scrapped their one-child policy). The power vacuum we have created in the Middle East invites dictators. It is crazy to cozy up to Castro and let Puerto Rico drift.
    The best investment for your grandchildren’s college education is the Indian stock market. A huge number of people are coming into the work force. INDA is the ETF.
    Because of the need for revenue, in 4-6 years there is a good possibility that muni bonds will be taxed. (RMD comment: this is why I advised against a Traditional IRA to Roth IRA conversion when the rules changed 5 or 6 years ago, and why I am neutral to negative on College 529 Plans: When the government makes the rules, they can change them at any time, never to the benefit of the citizen).
    He doesn’t think oil will go below $40. OPEC wants oil at $45-50: they are feeling pain, but want to drive the frackers out of business. Many of the investment-grade bonds from energy companies will fall into the junk category. Sell junk bonds on strength.   
Gregory Valliere
    Valliere is Chief Strategist for Horizon Investments, and has followed Washington for 40 years. He notes he is neutral, attempting to make unbiased observations.
    All big institutions want a rate increase
    Republicans don’t have the votes to over-ride a veto, so they must deal with Nancy Pelosi. Paul Ryan is one of the 10 smartest people he has ever met. If he is elected Speaker (he was) and deals with Pelosi, the far right will target him forever.
    The big issues won’t get settled. 1) Immigration. 2) There is no traction for individual or corporate tax reform (see below), but reform of international taxes has a possibility, as more than $1T currently kept overseas by corporations could be brought back to the US. 3) No deficit reduction.
    Chicago is in trouble. This is what happens when politicians won’t address unfunded liabilities. 
    There are many things in the upcoming election he hasn’t seen before. The Democrats are concerned about Hillary: is there more out there? (RMD. I again suggest Clinton Cash, Schweizer, Harper Collins). Two poll findings worry them: 1) her negative ratings are higher than her positive ratings. 2) People don’t trust her.
    Trump will probably drop out by February 1. He can never accept a public defeat, so won’t risk one. Who would you trust with the nuclear trigger?
    These are his choices for the Republicans, from least to most likely.
    5) Chris Christie.
    4) Ted Cruz. Will benefit when Trump fades.
    3) John Kasich. Successful while in the US House of Representatives. A 1st-rate governor. Moderate. His problem: the Democrats like him, which is a curse.
    2) Jeb Bush. Was a 1st-rate governor. Needs to get off decaf to expresso.
    1) Marco Rubio. He is a complete package, the most talented politician, like the best athlete in the draft. Young at 44, but so were Obama, Kennedy and TR.
    In the last 25 years, the Democrats have received at least 240 electoral votes in every election. Just winning 5 or 6 states, like Virginia, Colorado, Ohio, etc., would do it. Republicans must stop antagonizing women and Hispanics. Obama won 71% of the Hispanic vote in the last election. Even if Hillary wins, the House will remain Republican, so check mate. Bloomberg would make sense, but he is so adamant about gun control that he is probably un-electable nation-wide.
    Conference summary:
    1) some were downright bearish. Some made no comment on the general direction of the market. No one was strongly bullish. (RMD comment: Lowry’s feels the bear market has begun. No bull market lasts forever. Please be careful).
    2) Bond yields will remain low for the near future. Then the three decade long bull market will end, and rates will turn up.
    3) Commodities, including oil, will remain weak.
    4) The Dollar will strengthen (see below).
    5) Emerging markets will be weak.
    6) Few were impressed by the political candidates.
    This week Pfizer (PFE, headquartered in the US), announced they are in merger-takeover talks with Allergan (AGN, headquartered in Ireland).
    RMD comment: I hate to see it, but it’s difficult to blame a corporation moving overseas for better tax treatment. We need corporate tax reform.
    To study for an upcoming poker tournament, I looked at the highlights of the 2015 World Series of Poker Main event on YouTube. They were down to about 30 from the more than 6,000 that started. The camera showed one of the players and his name. I said “I went to med school with a guy named Jim M. Oh my Gosh, that’s him”. He was knocked out 27th, and took home more than $262K.
    RMD comment: In the last 2 years, only 1 or 2 people older than 30 have made the final table. This year, one at the final table is older than 70 and one older than 60. (Unfortunately), the body and mind peak at about age 26-28. Ex: there are few in professional sports older than 40, and none older than 50. So, what has changed for us old coots to be more competitive in this year’s tournament? I think it’s the style of play.
    The most important chart of the week is the US Dollar. After the Fed announced no change in rates, although there is still the possibility of an increase in December, the market and the dollar shot up. If (when) the dollar breaks out to the upside, commodities, the precious metals, and many emerging markets will be crushed.

    Hurricane Patricia is described as the most powerful hurricane “ever”.
    RMD: forever is a long time. One of the first things we were taught in medical school is to avoid the words “always and never”.
    I suggest you read Hemmingway’s Hurricane: The Great Florida Keys Storm of 1935 (Scott, International Marine/McGraw-Hill, 2006). In that hurricane, the barometric pressure dropped to 26.35. In Patricia, the barometric pressure was recorded at 879 millibars = 25.95 inches, so Patricia really is the most powerful “ever” (so far).

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