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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

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

THE PHYSICIAN INVESTOR NEWSLETTER

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

My Outlook for 2017: The Market

Issue #448, December 12, 2016

    The market, led by financials, industrials and materials, has rallied hard since the election. Is the rally for real?
    Yes, I believe it is.
    Lowry’s notes that as a bull market matures, the major averages are led higher by fewer and fewer stocks. As the market top approaches, small caps lag first, then the mid-caps fall into their own bear market, with the final top in the major averages due to just a handful of the mega-cap stocks hitting new highs. Think of the “Nifty Fifty” in the early 70s. This was also the case in 2015-16, with the market lead by the FANG stocks (Facebook, Amazon, Netflix and Google). There has been a significant change since the election. The rally has broadened out, as exemplified by the out-performance of the Russell 2000, and hundreds of stocks are hitting new 52-week highs.
    It is significant when something breaks to a new high or new low. With the former, investors are willing to pay a higher price than ever before. With the latter, investors are willing to part with their positions for a lower price than ever before. So, the breakout of the major averages to new highs is significant. 
    Dow Theory looks at the Industrials, which manufactures the goods, and the Transports (formerly the Rails), which move the goods to market. Dow Theory says that a move in one average should be confirmed by a move in the other. On Wednesday, the Transports broke above the all-time high of late-2014, early-2015, confirming the breakout in the Industrials. I’ve never really been impressed with (or to be truthful, totally understood) Dow Theory, but some people put considerable value in it.
    RMD comment: I think just about everything suggests the rally is for real. Although this was an old bull market, it appears to be rejuvenated. There will, of course, be pauses, and even minor pullbacks, but I believe probabilities suggest the market will continue to rally for months.
    Also watch for individual issues that break to new highs: there is often a follow-through of at least 20% after the breakout. This is not momentum investing, which is buying something just because it is going up, hoping it will go higher. A breakout to new highs is usually because the market sees good things ahead. Examples include Deere (DE), Blackrock (BLK, see below), Paccar (PCAR), Cummins (CMI), and XLF (an ETF of the large financials, including Berkshire-Hathaway, JP Morgan, Bank of America, etc).
    Why has the market rallied?
    The market simply sees the incoming administration as more (a lot, lot more) business-friendly that the Obama Administration. There is talk of personal tax reform, and especially business tax reform. Our corporate taxes are the highest in the industrial world. Reasonable policies will also encourage US corporations to repatriate more than $2T sitting on their books overseas. That would be a tremendous boost to the economy.
    Bur even more important is that the market senses there will be an improvement in regulations. Note that many recent regulations came directly from the Executive branch, with an end run around Congress. I talk to small businessmen at Rotary: their hiring and the hours they gave the workers was dictated by the need to comply with, or avoid, ObamaCare, and other arbitrary rules. The Dodd-Frank law is so complicated that 6 years later the Fed still hasn’t issued the final regulations to implement the law. To quote one businessman: “some 25 year old well-meaning but naïve bureaucrat who’s never worked a day in their life is telling me how to run my business, and it’s killing me”. There is talk of streamlining regulations in almost every area of the economy.   
    The key, of course, is for Mr. Trump to behave himself (see below). To be truthful, I love him talking it up about the cost of the new Air Force One. Think about it: the richest guy ever to occupy the White House is actually concerned about saving some taxpayer’s money. To quote the late Senator Everett Dirksen (R-IL) “A billion here, a billion there, pretty soon you’re talking about some real money”.
    Bottom line: I believe the rally is for real. Hang on for the ride.
    Next week I’ll talk about the other areas that affect your pocket book, especially bonds. Note that if you have the traditional portfolio of 60% stocks and 40% bonds, the increase in interest rates has whacked your bonds so badly that it has almost negated the pop in your stock portfolio.     
     
                                                                  RMD
    A long-time subscriber noted that “sometimes your newsletters are really insightful, and sometimes not”. I quickly responded that “I agree. Half of the newsletters I write are in the top 50%, and half are in the bottom 50%”.
    RMD comment: I think one of my better newsletters is Issue #331 (9/15/14), where I discuss how to be a good decision maker. I noted what’s important is that whether my effort is in the upper or lower 50%, that it is good and worth your while to read. 
    The AC on one of my 3 units went out. Considering the furnace was 22 years old (average life about 15+ years), I decided to replace everything (to keep the entire unit under warranty). There was a $600 rebate. I received a Visa Debit Card which expires 5/17.
    RMD comment: There must be advantages for Lennox to sending the debit card vs sending me a check, or they would have sent a check. One is obviously that the credits might expire worthless, but unless the recipient expires, that shouldn’t happen. I presume there are also other discounts or advantages for the company.

 
   
    Let me make a point I always make around Christmas: avoid gift certificates and debit cards. Give money: as one old friend and subscriber says “The color is always right, and one size fits all”.
    Some people require an authority figure, a guiding hand, to round off their rough edges, to let their abilities shine through. Think of Hamilton under Washington, Patton under Marshall and Eisenhower, and Mike Tyson under Angelo Dundee. Louis Howe was a confidant and aide to FDR from the beginning of his political career until Howe’s death in 1936. He was the last person outside Roosevelt’s family who could say “Darn it, Frank, you just can’t do that”.
    Trump needs this kind of authority figure, someone who can say “Donnie, come here boy. You’ve got to stop those stupid Twits, or whatever they call them. I’m taking away your iPhone for a week. And what are you doing up at 3 AM? Didn’t I tell you that you could only stay up for the Tonight Show monologue and that was it”?
    RMD comment: Ivanka, Paul Ryan, one of the Generals he is appointing? We’ll see.
    John Glenn died at age 95.
    RMD comment: Glenn was a true American hero, worthy of our respect. I have an autographed, 1st edition, leather-bound copy of John Glenn: A Memoir. 
    I finished Worst. President. Ever. James Buchanan, the POTUS Rating Game, and the Legacy of the Least of the Lesser Presidents (Strauss, Rowman & Littlefield).
    RMD comment: I would call this reality history. The writing is so poor that it helps you appreciate how painful “the Buchanan experience” (my words) must have been.   

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