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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.

Student Loans: But Wait, There’s More!

Issue #452, January 13, 2017

    I love the 30 second infomercials. You think the basic product seems reasonably priced at $29.95, but you actually receive 5 to 10 more things along with it. Now you’re really happy. You think the commercial is about to end when they say “But wait, there’s more! If you call within the next 10 minutes, you also receive these 3 dozen widgets which sell for $9.99 each. A $390 value, and all yours for the one low price of $29.95. This offer is not found in stores. Call now, operators are standing by”.
    I have probably written more on student loans than any other subject. I had a Commentary in the January, 2016 issue of The American Journal of Medicine on “Negative Secular Trends in Medicine: Student Debt”. (Your hospital or med school librarian should be able to retrieve the article for you. If not, I can send you a reprint).
    Now, just when you thought you’ve heard it all about student loans, I say “But wait. There’s more”.
    1) Student loans in the US now total about $1.3T, and are rising at about $100B per year. Student loans now total more than auto loans or credit card debt.
    2) As noted in a recent newsletter, the government has withheld more than $1B in Social Security payments from people behind on their student loans. These are mostly people on SS Disability.
    Americans age 50 and older owe about $205B in federal guaranteed student loans. Even more important and startling (scary, depressing, or whatever adjective you prefer) is that about 1 in 3 were in default (How about pathetic: 1/3 are dead beats).
    3) Student loans have traditionally had such a high default rate that many years ago Congress made it nearly impossible to discharge a student loan in bankruptcy. Within the last year, however, bankruptcy courts have accepted new, novel arguments that take advantage of the vague wording of the definition of a loan for “educational benefit”. Ex: a judge accepted the argument that a loan taken to study for the bar examination is a type of consumer debt, not a student loan. Note that this point so far applies only to private student loans, not to those insured by the federal government.
    4) Student loan forgiveness, also called income-driven repayment programs. Borrower’s monthly payments are capped at 10% of their discretionary income—defined as adjusted gross income minus 150% of the poverty level—and then forgive any balance after 10, 20 or 25 years, depending on several variables (just having a student loan for longer than 10 years makes no sense. The interest is crushing, and you have this gun to your head that you must send your master a check every month).
    RMD comment: this will be a disaster!
    A) Up to $150B could be forgiven over the next 10 years. So who does the forgiving? Because these are federally-insured loans, that’s you and me.
    B) Loans are forgiven based on private sector vs. public sector employment. Ex: a nurse working at a University, County or non-profit hospital can receive far more forgiveness than one working in a physician’s office or a for-profit hospital.
    C) Those with graduate degrees usually have the most debt. Ex: the average MD graduates with about $178K of debt. Those with graduate degrees, such as MD, DDS, JD and MBA are also the highest wage earners. The ones who make the most will realize the greatest amount of forgiveness. This is a spectacular example of the unintended consequences of government intervention. A program established to help the little guy ends up helping the big boys the most.
    D) Because these loans are guaranteed by the government, they have become politicized. I believe one of the biggest reasons the Socialist Bernie Sanders was so popular with the young crowd is that he wanted to make education free, an entitlement. A person will get a lot of votes if they push to forgive student loans.
    E) I believe the greatest problem is moral hazard. As signified by the astronomical default rate, people somehow have come to think that student loans are different than other loans. Well, in my opinion at least, they aren’t. You were lent money in good faith, it needs to be paid back. Everything the government is doing encourages this “don’t have to pay your bills” mindset, because it makes people dependent on the government. The people who paid off their debt have every right to be upset with the slouch next door who pays less, or not at all. The result is that many will say “why should I pay if they don’t pay”? 
    My advice if you have student loans: although it is clear I really dislike where this whole question is headed, and hope they do away with loan forgiveness and income-driven repayment, you must do what is best for you. As the old Hungarian saying goes “When somebody wants to give you something, take it”.   
    The rest of the saying is “When they want to hit you, run”. I know it in English, Hungarian, French, German and Swiss”.
    On Thursday, the NASDAQ broke to a new high. This is bullish.
    Netflix (NFLX) had a double top in July and December, 2015. It then backed off, touched the old high again 2 months ago, and this week broke to a new high. This is bullish: NFLX was in a base or consolidation period for a year and a half, and now goes to a new high. Now it needs to follow through on the breakout.

    My Uncle Dave Nagy passed away at age 90 on New Year’s Eve. My mother’s father John Kish (Kiss in Hungarian: “ss” is pronounced like “sh”) passed away in January, 1925, when mom was 5. Grandma Nagy was forced to put her into an orphanage for about 4 months while she got her life together. Gma Nagy remarried later that year, and Uncle Dave was born in 1926. He enlisted in the Navy at age 17 in 1943. He then spent 30+ years in the Reserves, where he made the rank of Full (Bird) Colonel. He told me that when he retired he was the highest ranking man in the Reserves with only a high school education.
    Our WW II vets are dying at the rate of 10,000 per day.
    Considering points and rebounds, who was the greatest NBA player? There are about 2 points for every 1 rebound, making rebounds more difficult to acquire. Thus I have provided a statistic where rebounds are multiplied by 1.5.
      Player           Year         Points   Rebounds   Rebounds x 1.5     Total (x1.5)
    Elgin Baylor   1960-61       34.8         19.8             29.7           54.6 (64.2)
                    1961-62       38.3         18.6             27.9           56.9 (66.2)
                    1962-63       34.0         14.3             21.4           48.3 (54.4)
    Bob Pettit       1960-61       27.9         20.3             31.4           48.2 (59.3)
                    1961-62       31.1         18.7             27.5           49.8 (58.6)
    Elvin Hayes     1968-69       28.4       17.1             25.6           45.5 (54.0)
                    1969-70       27.5         16.9             25.5           44.4 (53.0)
    Moses Malone 1989-90       31.0         11.1           11.1           41.1 (48.6)
    KA Jabbar       1970-71       31.7         16.0             24.0           48.7 (55.7)
                    1971-72       34.8         16.6             24.9           51.4 (59.7)
                    1972-73       30.2         16.1             24.2           48.3 (54.4)
    O. Robertson   1961-62       30.8         12.5             18.7           43.3 (49.5)
    Note that Robertson averaged a “Triple double: 10 points, 10 rebounds, and 10 assists,
    for his first 5 seasons in the NBA.
    Michael Jordan 1986-87       37.1         5.2             7.8           42.3 (44.9)
    Bob McAdoo   1974-75       34.5         14.5             21.8           49.0 (56.3)
    Kobe Bryant     2005-06       35.4         5.3             8.0           40.7 (43.4)
    Bill Russell     1959-60       18.2         24.0             36.0           42.2 (54.2)
    Julius Erving     1971-72       27.3       15.7             23.6           43.0 (50.9)
    Larry Bird       1984-85       28.7       10.5             15.8           39.2 (44.5)
    Now let’s look at Wilt Chamberlain
                      1959-60       37.6       27.0             40.5           64.6 (78.1)
                      1960-61       38.4       27.2             40.8           65.6 (79.2)
                      1961-62       50.4       25.7             38.5           76.1 (88.9)
                      1962-63       44.8       24.3             36.5           69.1 (81.3)
                      1963-64       36.9       22.3             33.5           59.2 (70.4)
                      1964-65       34.7       22.9             34.4           57.6 (69.1)
                      !965-66       33.5       24.6             36.8           58.1 (70.3)
    In 1960, many of the NFL running backs were under 200 lbs., and the lineman were 230-250 lbs. Say Wilt played tight end: 270 lbs., the strongest guy on the field. If you’re anywhere within the 10 yd. line, just run Wilt into the end zone and throw the ball 11 ft. in the air. Or blocking extra points. Or on long field goals, he could stand at the goal post and knock away anything up to 12 ft. in the air.
    I believe that if Wilt were white, he would be considered the greatest US professional athlete of the 20th century, right up there with Babe Ruth.                                       

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