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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.

Is the “Trump Bump” Running Out of Gas?

Issue #484, August 21, 2017

    At one point early Wednesday morning, the day after the election, when it looked like Mr. Trump would win, the Dow futures were down something like 800 points. Then the market began to realize that a Trump presidency, with a Republican majority in both Houses of Congress, might be the most pro-business administration since Calvin Coolidge. They saw the possibility of real, meaningful tax reform, health care reform, and a dismantling of the stifling regulatory burdens imposed by the leftist, anti-business Obama Administration. Animal spirits were unleashed: the market went up, and kept going up—and then went up even more. The last 6 months, though, it has barely budged. The S&P 500 is up only 1% since March.
    Mr. Trump, being the kind of person he is, has taken full credit.
    The initial moves included:
    1) The US Dollar strengthened, based on a presumption of infrastructure and military spending and a strong economy in general.
    2) Gold, which moves the inverse of the dollar, suffered a back-alley mugging.
    3) Interest rates shot up. In general, the market doesn’t like higher rates, because A) bonds become an attractive alternative to stocks, and B) it costs businesses more to borrow. But in this situation, higher rates were considered a positive sign because they meant stronger business activity, and more demand for credit.
    4) Companies that get a high percentage of their business overseas, the big multi-nationals, such as those in the DJIA and S&P 500, can be hurt by a strong dollar, whereas smaller companies that do the vast majority of their business here, and would profit from Mr. Trump’s “America first” agenda, would do better. The Russell 2000, composed of small and mid-cap companies, which do the vast majority of their business here, went bonkers, out-performing the large-cap stocks.
    Many businesses view deregulation as important, or even more important, than tax reform. Because much deregulation can be accomplished by executive order, with little or no Congressional input, the President has clearly been able to get the ball rolling.
    Unfortunately, Mr. Trump’s erratic behavior, inability to deal with just about everyone (although he does seem to be on good terms with Melania and Ivanka), even going after Republican lawmakers, has the market questioning how much of his agenda is going to get done.
    The moves in the market immediately after Trump’s election are close to reversing:
    1) as I have frequently noted, the big game in town is always currencies. The US Dollar is down 9% this year, and within 1% of the low of last year. If the Dollar Index breaks below 92.6, there is no support until the low 80s.
    2) The bond market is sensing the possibility of slower economic activity. Watch the 10-year Treasury: it closed the week at 2.19%. 2.15% is the very important support level. A further suggestion that interest rates will remain low, or even fall further, is that the interest-rate sensitive Utilities are at new highs.
    3) Rick Santelli is my favorite on CNBC. Last week he noted that the VIX (the Volatility Index, also called the “fear index” because it rises when the market drops) for some time has moved inversely to the yield on the 10-year Treasury: yields drop, the VIX pops. That is, at present, the market considers it bad when bond yields fall. 
    4) Gold again bumped up against $1,300, but pulled back, and is due for a rest.  If it breaks out, it will be just another confirmation of Dollar weakness.
    5) The S&P 500 is within about 2% of its all-time high, but the Russell 2000 is off 7% in just the last 3 weeks.
    I very much want the Republican agenda of tax, health care, and regulatory reform, and a strong national defense, to succeed. I believe 8 years of Mr. Obama’s socialist policies hurt the country. But the revolving door at the White House, Mr. Trump’s grade school behavior of instantly lashing out at anyone who disagrees with him on even the smallest of matters, his dissing of prominent Republicans, and his overall behavior this last week, are causing the market to question whether the Republican agenda can be passed. If the market starts to tank, it won’t be because Looney Tunes in North Korea is threatening something (see below), but because the market senses that the Republican agenda, esp. tax reform, won’t get implemented. Politics always has at least some influence on the market and business’ financial decision, but this is approaching all or none.
    Really makes you appreciate Truman and Eisenhower, doesn’t it?
    Wall Street Journal (8/16/17). “Consumers ramp up spending: Debt rises”. The article describes how consumers feel flush because of low unemployment, rising confidence and rising wages. The catch: they are saving less and borrowing more.
    RMD comment: This allows me to make a very important point that I hope you will put into your permanent brain file. In Scarcity: Why Having Too Little Means so Much (Mullainathan, Shafir, Times Books). I thought the most insightful discussion was that of abundance: people invariably spend too much when they are flush, money that they will need when the tough times return, as they always do.
    The newsletter 2 weeks ago was about the importance of being a good estimator. If you can put a % on something, it forces you to ask questions and appreciates facts you might have otherwise overlooked. I put the chance that Mr. Trump will not finish his term as high as 30%.
    Kim Jong Un in N. Korea is an evil, terrible man, but his family has stayed in power for 70 years. They know how to play international politics. The chance of him picking a shooting conflict with the US is zero. I’m more concerned about the White House picking a fight. 
    I held my nose and voted for Mr. Trump for 2 reasons:
    1) the Supreme Court nominee to replace Scalia. Gorsuch is first-rate.
    2) I thought Hillary Clinton was the most venal politician since Aaron Burr.
    The best thing that can happen for the Democrats is for Mr. Trump to continue to flounder. If he were forced out or resigned, Mr. Pence would become President. Pence is more conservative than I prefer on social issues (I have always been pro-choice), but he is honest and capable, with significant legislative and executive experience. He would get a lot done with a Republican Congress.   
    On August 12, we presented the 6th annual Doroghazi Eagle Scout Awards, 3 awards of $10,000 each given to young men who received their Eagle Scout in the Great Rivers Council. This year’s recipients were:
    Jordan Occena: attended the University of Tulsa on a Presidential Scholarship and graduated Phi Beta Kappa. He is pursuing a PhD at the U. of Michigan in Material Science and Engineering.
    Andrew Turner: graduated valedictorian from Harvey Mudd College, with several publications. He is pursuing a PhD in Theoretical Physics at MIT.
    James Weagley: graduated summa cum laude with Distinction from the U. of Minnesota and is pursuing a PhD in Molecular Genetics and Genomics from Washington U. in St. Louis.
    Past recipients include a Rhodes Scholar, Fulbright Scholar, Army Captain Special Forces with a Bronze Star, and an entrepreneur who owned 10 rental properties at age 24. Eagle Scout is one of the few things you can earn before HS graduation that carries weight as an adult.
    Columbia is in the path of the total eclipse this afternoon. More in the next newsletter.

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