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The Dark Side of Student Loans
Issue #528, June 25, 2018

The Cost of Out-sourcing Convenience
Issue #527, June 18, 2018

Social Security: 66 or 70?
Issue #526, June 11, 2018

Student Loans: There’s (Unfortunately) a Lot More!
Issue #525, June 04, 2018

Co-signing a Note
Issue #524A, May 31, 2018

The Knight Frank Luxury Index and Collectables
Issue #524, May 28, 2018

The Importance of Diversification: The Myth of Diversification
Issue #523, May 21, 2018

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

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


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

Commodities and Buying the Breakout

Issue #504, January 08, 2018

    In Part I of my Outlook for 2018 (Issue #501, 12/18/17), I noted that commodities were at their lowest in comparison to stocks since 1971.
    My timing couldn’t have been better (even a blind squirrel can find an acorn sometimes). Copper has broken to a multi-year high, and copper miner Freeport-McMoran (FCX, see chart below) is up 40% since the first week of December. XLE, an ETF of the largest energy companies, such as Exxon Mobil (XOM) and Chevron (CVX) has been strong.
    As a general rule, the producers are leveraged to the price of the commodity.  Ex: say it costs $1 to mine a pound of copper, and the price of copper goes from $1.50 to $1.75. The price has increased by 16.7%, but, other things being equal, the producer’s profit is up 50%. The producer’s stock price can also lead the commodity, as shown by FCX.
    I use fundamental analysis to determine what to buy or sell. Fundamental analysis says commodities are cheap. 1) Timing. Stock and commodity bull and bear markets tend to alternate. We are approaching the end of a bull market in stocks and the beginning of a bull market in commodities, similar to the early 70s and late 90s. 2) There is synchronized world growth, so demand is strong. 3) Commodities are priced in dollars, and the dollar has been weakening, down almost 10% last year (a large move for a currency). 
    I use technical analysis to determine when to buy or sell, when to pull the trigger. I like to buy on strength, on a breakout (or sell if a stock breaks down below previous support). People are willing to pay a higher price than they were willing to pay before. The longer the preceding base or consolidation period, the more important the breakout.

    Think of water building up behind a dam: the more pressure, the greater the force. John Deere (DE, see chart, p 3)) is a perfect example. It broke out to a new 9-year high on Trump’s election in November, 2016, and is up 75% since then. 
    A bull market started in the precious metals with gold at $1,050 in December, 2015. I believe the correction that began in the summer of 2016 is now ending. Watch the US Dollar: if it breaks decisively lower, gold will be on a rocket.
    Re: the general stock market: In Lowry’s Research latest monthly update, their proprietary indicators strengthened even more in December, suggesting the final top in the major averages of this aging bull is at least 4-6 months away.
    In summary:
    1) it appears we are in the early stages of a bull market in commodities that will probably last years.
    2) I will discuss the precious metals when gold, now about $1,315, breaks above $1,370, the high of the summer of 2016.
    3) The internals of the stock market remain healthy, so hang on.
    From The Republic for Which it Stands (White, Oxford). The book is really long, but I highly recommend it.
    In 1870, the average person spent $3.80 per week, or $197 per year. This would be $54 per week in 2010 dollars. More than 50% was perishable goods, mostly food, and 25% was rent.
    RMD comment: The average American today spends 7-8% of their income on food.

Some Thoughts on Charity
    I recently talked to an investment banker of about 40 years of age who has made well into 7-figures for some time (he is very smart and works very hard). He recently married and has no children (they probably won’t have any). He is drawing up a new will, and wanted my thoughts on charity. He gives away about 5% of his yearly income.
    RMD comment: I suggested Andrew Carnegie’s The Gospel of Wealth, published in the North American Review in June, 1889. I believe Carnegie, and Rockefeller, defined philanthropy in the US. See Carnegie (Krass, Wiley and Sons, 2002), and Titan (Chernow, Random House, 1998). Read also about Carnegie’s “Hero Awards”.
    I am a firm believer in “Noblesse Oblige”, “nobility obligates, the obligation of honorable, generous, responsible behavior, associated with high rank or birth” (Webster’s Seventh New Collegiate Dictionary, given to me by my high school employer Mr. Graham on graduation). Physicians are certainly privileged members of society, held in (well-deserved) high esteem. We make 5 times the average worker in the US. You can’t expect a taxi driver, school teacher, steelworker or blood-drawing tech to support charities if you’re not willing to be generous. Try to give at least 5% of your salary to charity. You’ll be doing good things, it will make you feel good inside, and I will be proud of you.
    Bottom line: 1) all you need is enough to spend in one lifetime. 2) You can’t take it with you. 3) As Carnegie notes, anyone can give it away after they die. The mark of real charity is to give it away while you are alive.     

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