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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

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

Embezzlement
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

The VIX
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

The War on Cash
Issue #408, March 07, 2016

Precious Metals: Don’t Jump in Yet
Issue #407, February 29, 2016

The Bear is Growling
Issue #406, February 22, 2016

The Importance of Showing Respect
Issue #405, February 15, 2016

The 80-20 Rule of Thumb Pareto Principle
Issue #404, February 08, 2016

Some Tips on Commercial Real Estate
Issue #403, February 01, 2016

Economic Outlook for 2016
Issue #402, January 25, 2016

Selling Short: Part II of II
Issue #401, January 18, 2016

Short-Selling. Part I. How it Works
Issue #400, January 11, 2016

Who Can You Trust, and How to Spot a Con Man
Issue #399, January 04, 2016

Outlook for 2016: Part II of II
Issue #398, December 28, 2015

My Outlook for 2016, Part I of II
Issue #397, December 21, 2015

Want to Live a Long Time?
Issue #396, December 14, 2015

Some Tips on Retirement
Issue #395, December 04, 2015

Negative Interest Rates
Issue #394, November 30, 2015

What if the US Dollar Breaks to New Highs
Issue #393, November 23, 2015

How to Decrease Student Debt by 25%
Issue #392, November 16, 2015

The Importance of Buying Life Insurance when you are Young
Issue #391, November 09, 2015

Barron’s Conference, Part II of II
Issue #390, November 02, 2015

THE PHYSICIAN INVESTOR NEWSLETTER

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

Economic Outlook for 2017: Part I of II

Issue #455, January 30, 2017

    Every year at this time Scott Colbert and Joe Williams of Commerce Trust of Kansas City (a division of Commerce Bank, CBSH) give a talk here in Columbia. It is always first-class. I was traveling and missed the talk, but Scott was kind enough to forward me the presentation.
    Where will the economic growth come from? Since 2012, the emerging market-developing economies have averaged 4-5% growth. The advanced economies have averaged 1.2-1.9% growth.
    RMD comment: Europe will not do well. If Le Pen wins in France, they will pull out of the Euro, which will cause real turmoil. Performance in the emerging markets, which rely heavily on exporting commodities, will depend on the US Dollar. If the dollar continues to weaken, they will do OK. If it strengthens, they won’t. I heard someone say that much of the growth in the Chinese economy has actually been negated by the health and environmental costs of their terrible pollution. That leaves Japan, which is improving, and the US, which will benefit from the GOP/Trump agenda and an influx of capital from Europe and China. They estimate US GDP growth for 2017 will be 2.3%
    Total debt in the US: financial, household, business, federal, and state and local, totals 335% of GDP. The peak was 370% in 2009. For comparison, this was basically flat at 125-150% from 1952-1978.
    RMD comment: Even with the drop since 2009, total debt is still more than twice as high as 40 years ago. Borrowing pulls growth from the future to the present. You can’t borrow your way to prosperity. Debt destroys wealth. We will never pay off the national debt, the only question is to service it.
    The drop in financial, household and business debt has been offset by an increase in the debt of the federal government.
    RMD comment: In the 2008-9 crash, profits were privatized, while the debt was transferred to the public. This was a basic reason why the regular guys had their Popeye moment, said “This is all we can stands, we can’t stands no more”, and voted for Trump.
    In 2007, debt to GDP in China was 158%. By 2014, it was 282%.
    RMD comment: China is running into a wall. They are a communist country: the #1 imperative is for those in power to remain in power by maintaining social order, and that means jobs. Because they do not have free markets, when their debt bubble starts to unwind, it won’t be pretty. What happens when a state-owned business goes bankrupt?
    Two factors drive GDP: 1) more output per worker and 2) more workers. From 2006-2015, there was 1.4% GDP growth: 0.5% from more workers, 0.9% from increased output per worker. In 2004, the median age of the workforce was 40.3, with a workforce participation rate of 65.9%. In 2014, these numbers were 41.9, and 62.7. In 2024, it is estimated they will be 42.4 and 60.9. It is estimated annual growth in real GDP from 2014-24 will be 2.2%, with an annual increase in 0.4% of the labor force.
    RMD comment: these are important numbers. 1) One reason the US grew so quickly in the 1700s and 1800s is because women often had 5-15 children, and there was basically free immigration. World-wide, as societies becomes wealthier, the birth rate drops. This is why the immigration of bright, hard-working people who want to come here to live the American Dream is so important. Some countries, such as Italy, Russia and Japan, have terrible demographic: they have less young people to support the old folks. 2) One reason the % of workforce participation dropped was because the Obama administration was much more lenient with disability. The socialist playbook is to make as many people as possible dependent upon the government. I hope the current administration will address this.
    An average 1.25M households are formed each year. Both car sales and home starts were crushed in the recession of 2008-9. They have now returned to baseline.
    RMD comment: There will be catch up. Homebuilding and autos now have tailwinds.
    Both the Consumer Price Index and the core CPI averaged +2.3% year over year from 1991-2016.
    RMD comment: Last week I noted that the latest CPI was +2.1% year-over-year, the highest since the 12-month period ending June, 2014. Since the financial crisis all of the central banks have been trying desperately to fight deflation and goose inflation. Now it looks like they are having some success, at least here in the US. Bullion houses are seeing the purchase of more gold and silver in anticipation of higher inflation. The question all along with low interest rates is if the Fed can control inflation once it starts. We’ll see.
    I still have a many points to make, so I’ll finish this discussion in an Interim Bulletin in mid-week.
                                                                      RMD
    In November I raised the cost of this newsletter for the first time in 9 years, and subscriptions are—up. Once someone subscribes, they are very loyal, with about 85% re-upping. I also picked up a lot of subscriptions recently by soliciting previous subscribers. “Bob, I really missed your advice. Thanks for re-contacting me.” Of the 30 original subscribers from the fall of 2006, 14 still subscribe, 2 have passed and 3 are quite elderly and no longer take emails.
    I don’t advertise, subscriptions are by word of mouth. I thus encourage you to share this newsletter with friends. They can send their email address to me, or can sign up for a free 3-month trial at   http://www.thephysicianinvestor.com 
    I recently saw a physician I’ve known for a long time. “Bob, how old were you when you retired?” RMD: “54”. “How did you do it? I have 4 kids in school. I can’t seem to save a penny (I know he makes at least $500K per year)”. RMD: “Here’s my card. Send me your email and I’ll sign you up for the newsletter”. Of course, he’s not responded.
    RMD comment: The first thing I figured out in my writing career is that the people who need my advice the most are the least likely to take it.

   
   
    I have recently highlighted stocks that are breaking out to new highs. Above is the graph of General Cable Corp., which pays a 3.4% dividend. 
   
    WSJ (1/26/17). Harvard will outsource the management of most of its endowment and lay off half the staff after the 5.7% return of the last 10 years was the second lowest among its Ivy competitors.
    RMD comment: 1) it’s hard to beat the competition. By definition, ½ are in the top 50%, ½ in the bottom 50%. 2) But the main point I want to make is that salaries of the top employees at the endowment were in the 7 and 8 figure range, which were competitive with what their talents would fetch in private industry. This didn’t sit well with many of the ultra-liberal faculty, so these people left. And guess what: performance at the endowment dropped. Another socialist victory.
    In capitalism, some people do amazingly well, the vast majority of people live comfortably, and a few are left behind. In socialism, everyone is equal: nobody has anything.   

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