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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

This Newsletter
Issue #439A, October 12, 2016

Memoirs of US Grant: Vol II
Issue #439, October 10, 2016

More Points on Collecting, Investing and the Economy
Issue #Interim Bulletin #438A, October 05, 2016

Personal Memoirs of US Grant
Issue #438, October 03, 2016

Ideas for a High School Part-Time Job
Issue #Interim Bulletin #437A, September 29, 2016

Collecting, Investing, and the Economy
Issue #437, September 26, 2016

Free College
Issue #436A, September 22, 2016

A Military Commitment to Pay for Med School
Issue #436, September 19, 2016

When a CD isn’t a CD
Issue #435, September 12, 2016

I Made a Mistake
Issue #Interim Bulletin #434A, September 07, 2016

What is Your Spare Time Worth?
Issue #434, September 05, 2016

Credit Cards and Bonus/Loyalty Points
Issue #433, August 29, 2016

The Write-off of Student Loans
Issue #Interim Bulletin #432A, August 25, 2016

412 Retirement Plans
Issue #432, August 22, 2016

Join the Club
Issue #Interim Bulletin #431A, August 18, 2016

The Case for Precious Metals and Hard Assets
Issue #431, August 15, 2016

When the US went off the Silver Standard
Issue #430, August 08, 2016

Why NOT to Open a Restaurant
Issue #429, August 01, 2016

Some Tips on Life Insurance
Issue #428, July 25, 2016

More Observations on Negative Interest Rates
Issue #427, July 18, 2016

Issue #426, July 11, 2016

Is a PhD Worth It? Part II of II
Issue #425, July 04, 2016

Is a PhD Worth It? Part I of II
Issue #424, June 27, 2016

Avoid Part-time real Estate Agents
Issue #423, June 20, 2016

Issue #422, June 13, 2016

The Problem with Auction Reserves
Issue #421, June 06, 2016

Make Full Use of Your Capital Investments
Issue #420, May 30, 2016

The Fed’s Announcement
Issue #419, May 23, 2016

Quit While You’re Ahead: A True Story
Issue #418, May 16, 2016

The Precious Metals
Issue #417, May 09, 2016

Negative Secular Trends: Part Ii of II
Issue #416, May 02, 2016

Negative Secular Trends: Part I of II
Issue #415, April 25, 2016

Not Winning is not the same as not Losing
Issue #414, April 19, 2016

Behavioral Economics: Part II: Weaknesses
Issue #413, April 11, 2016

Behavioral Economics: Part I: Valid Points
Issue #412, April 04, 2016

The Most Important Books I’ve Read
Issue #411, March 28, 2016

Secret to Success: Take Risks and do Things Differently
Issue #410, March 21, 2016

The Over-Priced Food Presentation Hustle
Issue #409, March 14, 2016


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

Barron’s Conference, Part IV of IV

Issue #442, October 31, 2016

Jerome Dodson
    Dodson is the founder and President of Parnassus Investments. This was his first year at the Conference, and I thought he did fairly well.
    ESG: Environment, Social and Governance. He is one of the pioneers of looking at environmental and social issues and corporate governance to determine investments. Contrary to popular belief (in his opinion), environment-friendly investment can control costs. Ex: recycling and lower energy bills. They prefer companies that undertake environmental-friendly changes on their own, rather than forced by regulation. 
    Social screens are important to determine working conditions: If you treat employees well, they give better performance. How do you rate employee happiness? 1) How do they treat working mothers? 2) Look at the local media (TV, radio, newspapers) for favorable or unfavorable stories.
    Governance: the Chairman of the Board and the CEO should be different people: it provides better checks and balances (RMD comment: agree). 
    Of course, fundamental analysis is important. They look for improvements in earnings and debt reduction over a period of 3-5 years, and like a ROI of at least 16%. He also notes that many companies that talk ESG don’t practice what they preach.
    Wells Fargo (WFC): Customers weren’t hurt that badly, and those that were received compensation. The rest of the business is good. They are the 3rd largest corporate contributor to charity in the US. They have good diversity, many managers are female.
    RMD comment: I’m not as forgiving. I think a lot more heads need to roll at WFC. Think about this: some poor black guy sticks up a liquor store and gets 10 years in the slammer (he should for such a violent crime), while these folks opened millions of fraudulent accounts, made multi-millions of profits and salaries and bonuses, and the company paid the fines. The best way to stop white collar crime is for people to know that if they are caught, they’re going to jail—and they’ll be in the same cell with the guy who stuck up the liquor store!!
    Gilead (GILD). Currently 70, he believes it will go to 110. Although their treatment for Hepatitis C is expensive, it cures the disease. But as a result, there is no need for chronic treatment, so no recurring revenues. Competitors have entered the field. There is little downside risk, P/E = 7, and they have a lot of cash.
    Whole Foods (WFM). Has been knocked down because of competition, but they will come back by lowering prices. Not much downside (RMD comment: I believe the gluten-free, non-genetically modified, no pesticides, free-range stuff is a hustle, an excuse to charge more. I think genetically modified crops and animals are one of the greatest things to happen to humanity). 
    IBM: likes it less all the time.
    Qualcomm (QCOM). Has great intellectual property. The last few years have been a speedbump because of competitors and browbeating from China. The % of chips in AAPL iPhones is increasing, se he’s optimistic. 
Helima Craft
    Craft is a Managing Director and Global Head of Strategy at RBC Capital Markets. This was her first year, and I sometimes had trouble following her.
    OPEC is back. In 2015, the Saudi’s miscalculated. They thought price didn’t matter, but it does. They were forced to implement austerity measures: making people pay more for services lead them to want a greater say in government, which threatened the power structure. The Arab Spring also scared the Saudis. 70% of the population is 30 or younger, with very high unemployment. They were forced to increase social spending.
    The Saudis are concerned about their borrowing and credit rating. They are happy with oil at $50-60. At $70-80, the US shale complex becomes competitive. It is important that Putin and Russia support the current price level.
    Venezuela is a disaster. They barely got by with oil at $100 per barrel. At $50, people are running out of the basics such as food and medicine. Venezuela is close to a humanitarian crisis and political implosion (RMD comment: Castro-style Socialism-Communism doesn’t work). If Venezuela goes off line, oil could shoot up to $70.
    The only bright spot for coal is India: they need cheap, reliable energy.
Greg Valliere
    Valliere is Chief Political Strategist at Horizon Investments. He tries to be apolitical, reporting on things as objectively as he can. He is also entertaining.
    Clinton will win. The recent accusations of Trump touching women overshadowed the Wikileaks damning Clinton. 
    Things that might give Trump a chance to win include:
    1) a terrorist attack.
    2) Are the polls accurate? Since Trump is controversial, people who might support him are hesitant to give their true opinion to a stranger over the phone.
    3) Trump’s supporters are loyal and will turn out. A 22 year old Bernie Sanders supporter (who would probably vote for Clinton) might stay home.
    4) ObamaCare is in trouble in many states.
    Presuming Clinton wins, what counts is who controls Congress. The market likes gridlock. They want Republicans to retain control of at least the House (and hopefully the Senate), because a radical agenda would never get through.
    What if Clinton wins?
    1) There will be a continuation of the extraordinary use of Executive Orders.
    2) More regulation, in spite of business being over-regulated and demoralized.
    3) There would be price curbs on drugs (RMD: on Friday, the drug distributors such as McKesson (MCK) and Cardinal Health (CAH) were annihilated).
    4) She is a strong supporter of Israel.
    5) She has more testosterone than Obama (his words, but I agree), and is more hawkish. If threatened, she will have to show she is tough, and more likely to commit troops.
    6) Supreme Court nomination(s).
    What if Trump wins?
    1) Markets hate uncertainty, and he is a huge uncertainty.
    2) Because it doesn’t require legislative action, he could start a trade war with China on his first day in office.
    3) He would continue his personal and strident attacks on Yellen, and would ally with those in Congress who want to curb the Fed.
    4) He has never detailed how he would finance what he wants. Spending would increase.
    5) He would back up his rhetoric toward the markets. Ex: bring back Glass-Steagall.
    6) Harry Reid was the most obstructionist Senator ever. Chuck Schumer is more liberal, but more willing to deal. There is little chance of personal income tax reform.
    Where Trump could have a positive effect? There could be corporate and especially international tax reform, encouraging companies to repatriate trillions of dollars currently held abroad.
    One or both parties could split after the election. Republicans: Ryan and the traditional pro-business wing vs. the Tea Party. Democrats: the far left Warren and Sanders vs. Clinton.
    “People are talking about body parts. No one is talking about the real issues”.
    I hope you learned a lot, but by far the #1 takeaway point is—for the next 3-5 years, you can anticipate—at most—a 5% return. Obviously, it could be lower. A) Just about all presenters considered the market over-valued. B) Earnings are flat. C) The vast majority of the increase in stock prices has been due to expansion of the P/E ratio stimulated by QE, which will end. D) If the 30-year US Treasury Bond pays 2.5%, for the next 30 years, you are going to receive exactly 2.5% per year—and that’s it.
    The implications include:
    1) People were seduced by the 10-15% returns of the 80s and 90s. You must adjust your expectations to reality.
    2) If you have a nice gain, take it.
    3) If you are retired, you will need to tighten your belt.
    4) If you are nearing retirement, you may need to work longer (This happened to many people in the run-up to the 2000 Internet bust).
    5) Societal. A) Some private and many public pension funds are under-funded. This will only worsen. Either benefits will be reduced (very tough to pull off politically), money will be diverted from other public services, and/or (most likely), the government will be stuck with the bill = your taxes will increase. B) Insurance companies will raise rates, or worse, could go broke, a disaster for those relying on an annuity, life insurance, or Long-term Care Insurance (look at Genworth Financial, GNW). C) Foundations, a backbone of charity in the US, will cut back. D) Older son John, partner at law firm Wiggan and Dana in New Haven, CT, is on the local legal aid board. By state law, the interest on lawyer’s trust accounts, client’s money held in escrow for settlements, real estate deposits, retainers, etc. goes to organizations such as the legal aid board to help the poor. Typical case: the landlord won’t refund the security deposit. Pre-recession, this was $20M state-wide. With the decline in interest rates, this has dropped 75-90%. The poor—as always—suffer the most.   

    On Tuesday there will be a press release on my Commentary “Negative Secular Trends in Medicine: High Hospital Profits” that will appear in the November issue of The American Journal of Medicine. More on this in the near future.
    Also on Tuesday I’ll be playing in a Senior’s Poker tournament in St. Louis. I’m realistic: I am no longer competitive in the all-comers tournaments. You don’t see any 65 year olds in the NBA or NFL. Wish me luck. 
    I am traveling next weekend to CT for the baptism of granddaughter Angelina in CT. The Newsletter may not come out until Monday or more likely Tuesday.   


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