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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.

Leveraged ETFs

Issue #472, May 29, 2017

    ETFs are an important investment vehicle: think of them as mutual funds that allow you to trade during the day. But as so often happens, good things can sometimes get carried a little (or a lot) too far.
    There are now leveraged ETFs. To save us both our valuable time, let me make my point before providing a brief explanation.
Avoid Leveraged ETFs
    The basic goal of a double-leveraged ETF is to move twice that index for the day. SSO: the S&P 500 is up 1%, SSO is (hopefully) up 2%. SDS (a double-negative ETF): the S&P 500 is down 1%, SDS is up 2%. The price of leveraged ETFs is then reset at the end of the day. There are now even triple-leveraged ETFs, such as NUGT (3x positive) and DUST (3x negative) a basket of gold stocks.
    The problems with leveraged ETFs include:
    1) the results can “decay” after one day, they are not exactly double or triple, an effect that is multiplied every day.
    2) Leverage is terribly seductive. Something is up 5%—you are up 10%. Excellent! Something is down 5%, you are down 10%. Bogus!
    3) If you want leverage, which I hope you don’t, futures are far more efficient. Another advantage of futures is that they trade from Sunday PM to Friday afternoon, whereas leveraged ETFs trade only while the stock market is open, and in the brief pre and post-market sessions.
    Remember, thrift creates wealth, debt destroys wealth. The average investor has no business buying an investment on margin (leverage). Warren Buffett doesn’t buy on margin, and he’s worth $xxxxxxxxxxxx. Take his advice.

    Several weeks ago I mentioned Blackstone Group (BX). The technicals looked good, they pay a 5.5% dividend, and Barron’s had just written a positive review of the fundamentals of the company. During Trump’s trip last weekend to Saudi Arabia, it was announced the Saudi government would invest $40B in US infra-structure with Blackstone. On Monday, BX was +6.73% on 5x normal volume, with nice follow through on Tuesday.
    RMD comment: I do get things right sometimes.
    How much does a blackjack dealer at a high-end place in Vegas, like the Bellagio or the Wynn, make per year? Answer at end of newsletter
    I spoke at Northside Medical Center in Youngstown, OH on May 18.
    1) After the talk, a young man in his residency came up to ask my advice on his very significant student debt. As we were talking, I came to the realization that I had very little to offer: the damage was already done. Medical student debt, and its causes, will be the subject of next week’s letter.
    2) When I made my plane reservation, I was told to be sure to fly coach. When I presented my receipts to one of the physicians, he apologized about that, but said it was a standard part of their procedure.
    RMD comment: I immediately told him not to apologize. About 25 years ago, I invited a man I trained with at the Mass General to speak at one of our conferences. His honorarium was $1,000. When we received his travel expenses, he had flown first class = $1,800. I was appalled, very (very) upset, and felt taken advantage of.
    I have found the best way to handle these situations is to have the institution make the hotel and plane reservations for you, with flights that you suggest. This way there are no receipts and no delays in compensation. It also avoids the possibility that the institution will make plane reservations that wastes hours of your time for them to save ten bucks.
    3) I buy my suits at the Dillard’s at a shopping mall on the east side of Cleveland. I stopped there on this trip. The man who waited on me clearly knew how to deal with high-end clientele: quiet, dignified, yes Sir, no Sir, is there anything else, Sir”.
    RMD comment: You will never go wrong showing people respect. (Issue #405, 2/15/16, “The Importance of Showing Respect”. One of my better newsletters).     
    On Monday, Mark Fields was dismissed as the CEO of Ford (F), mostly because of pressure from the Ford family, who own less than 2% of the common stock, but control 40% of the super-voting shares.
    RMD comment: There is nothing wrong with one acting in their own best interests, in fact, it is expected and desirable, but this example allows me to make 2 related points. 1) I am hesitant to invest in companies with super-voting shares. The problem is that it often takes some research to learn this. It is more common in companies that recently went public, so it surprised me it’s still the case at Ford. 2) Whenever you are in a business or investment, you want an alignment of interests. The other person makes money when you make money. The best situation is where those who run the company have a significant amount of their wealth in it. They are incentivized. You can sleep well at night because you know they are staying up at night watching the shop. Beware if someone can make money while you lose money. 
    If you want an idea of how oppressive, repressive, depressive, totalitarian, and mind-blowingly crappy it must be to live in the Communist paradises of Cube or North Korea, they are the only countries in the world where you can’t buy a Coca Cola. 
    Subscriber feedback from last week’s letter.
    1) “A relative leased a loaded Chrysler Pacifica self-parking van. If the electronics hold together for the 3 year lease, he will buy it. He’s a retired Navistar engineer. Money less important than reliability. Already the cruise control has a glitch”.
    RMD comment: I’m sure there are a few situations such as this that leasing a vehicle is a viable option. Otherwise: Don’t!
    2) This is from a subscriber whose relative teaches at a Jr. College in NC.
    “The campus is nervous. We had a bumper enrollment starting with the 2008 recession.  Obama gave basically free money to anyone with a pulse who was bored and wanted to be a “student”. After 2 years, the money runs out unless you re-enroll at a different institution, which restarts the 2 years of free money. Now 6 years later we have turned out 3 “generations” of hapless, aimless, GPA-wrecked students who, due to sheer geography, no longer have a Jr. College near enough to attend. Last year our enrollment crashed…and the suits noted it”.
    His opinion:
    A) our once good tax money has been made bad by placing it in unworthy causes, applying educational steroids to already atrophied minds.
    B) Loose money creates bubbles, like campus overbuilding. Health care is the same kind of bubble, but will be harder to burst.
    C) “Well-intentioned” government enables weakness by removing the invisible hand.
    D) I cannot help notice the irony that every quality craftsmen I know, such as a plumber, are older than 50. The 30 years or younger all show up late, red-eyed and smoked on grass, unlike many of the immigrants, these coddled Americans have no career motivation because they have never felt fear, hunger, or desperation.
    3) Another subscriber says “My parents were from the Ukraine and lived a while in a DP camp. Stalin did send a lot of people back to Siberia…he thought they should have never left Mother Russia. People today are soft, not like the “greatest generation” because of what they endured. They respected and treasured education.
    I love to talk to taxi drivers in Vegas. One was a fellow who also sells cars, so he knows what people put on their credit applications. Black jack dealers at the high-end joints in Vegas can make $125-135K per year. Think about that if you are a Pediatrician or Primary Care physician, who graduated with the average med student debt of $175K, and are pulling down $175K per year while you take call on Memorial Day.   

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