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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.

Economic Outlook for 2017: Part II of II

Issue #455A, February 02, 2017

    This is from a presentation made recently in Columbia by Scott Colbert and Joe Williams of Commerce Trust in Kansas City (a division of Commerce Bank (CBSH).
    The US 10-year Treasury is currently at about 2.5%. The average in Japan and the large Euro-zone countries is 0.9%.
    RMD comment: Interest rates will eventually rise, and may start to hurt our market later in the year. European rates are so low because Europe is a mess. If Marine Le Pen is elected President of France, they will leave the Euro, which will cause real turmoil.
    From 12/31/12 to 12/31/16, the total return of the S&P 500 was 70.7%. The EAFE (Europe, Australasia and Far East, basically the developed economies besides the US and Canada) returned 16.97%, and Emerging Markets (-) 5%.
    RMD comment: A regression to the mean would suggest it is time to give serious consideration to emerging markets. BUT: the big dog here is the US Dollar. Emerging markets are typically based on exporting commodities and their debt is not priced in local currency, but in US Dollars. They will be crushed by a strong dollar. I believe Trump wants a weaker dollar. A basic problem with investing in foreign markets are currency translations. If their market is up 10% in local terms, but their currency weakens, you are flat or down. Another way to play this game is to invest in natural resource companies based in North America.
    In his note, Scott thought the big themes were:
    1) look somewhere besides the S&P 500 for returns. International looks cheap. Floating rate securities look safe. Preferred stocks have sold off with bonds.
    2) This is the 4th longest economic expansion since 1949. It could conceivably become the longest. However, starting next year, there is a 1/3 chance of a recession starting in any year. They are cautiously optimistic.
    3) The Fed must stay accommodative. Any significant increase in interest rates has not been priced into the market.
    RMD final comment:
    1) as I have repeatedly emphasized, currencies are the big theme. Watch the US Dollar. If it breaks out to the upside A) commodities, including gold, will be hurt. B) Emerging markets will not do well. C) I’m not sure how that would affect our market. D) In the near-term it looks as if the Dollar may be breaking down rather than up. This will be discussed in more detail in the weekend newsletter.
    2) Avoid Europe. Avoid Mexico: they are in Trump’s sights (see below).
    3) Interest rates will eventually break to the upside, and this will hurt the market.
    4) Watch the VIX (Volatility Index). Last week it touched a multi-year low under 11. The long-term average is 19. If it stays below 15, we should be OK. 
    5) This will be the most business-friendly administration since Calvin Coolidge (that is a long time). Consider how well US business can do if 75% of regulations are wiped away (see below). One business owner noted he had more employees making sure he complied with regulations than producing his product. Even if taxes are not lowered, simplification will pay similar dividends.
    The deciding factor in my voting for Trump was the Supreme Court nominee(s). I like a lot of what he is doing, but going out of his way to bash Mexico makes no sense. Parts of central Mexico are almost lawless, with thousands of murders every year. My greatest fear is this lawlessness could spill over the border. Many of the Mexican drug lords have a home just inside the US where they park their wife and children for safe-keeping. There is already much more drug-related violence in these border areas of the US than gets into the national media.
    I asked someone who has a national presence in the banking industry what they thought of the new administration. 1) He received a questionnaire from the Trump people and agreed or strongly agreed with 95% of their proposals. 2) His organization wrote a multi-page report on how regulations can be streamlined. The administration and Congress are taking this seriously.
    I was recently in Las Vegas.
    RMD: “Where are you from originally?
    Taxi driver: “Afghanistan”.
    RMD: What are the predominant languages spoken there”?
    TD: Pashto and Dari.
    RMD: Is Dari similar to Farsi (modern Persian, spoken in Iran)?
    TD: Yes, they are dialects. People can understand each other.
    RMD: Kind of like someone from Brooklyn and Alabama.
    TD: (laughing): I never thought of it like that, but yes.

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