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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

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


By Robert M. Doroghazi, M.D., F.A.C.C.

The Market makes New Highs

Issue #490, October 02, 2017

    Before getting to the main topic: If you wish to communicate with me directly, do not do it by responding to the notices that a newsletter has been posted or through the website. Please use my personal email listed above.
    Last week I talked about the significance of an individual stock making a new high: people are willing to pay more than they paid before. This week all of the major averages, the S&P 500, the NASDAQ and the DJIA closed at or made new highs. There were several other averages that made new highs that are worthy of note.
    1) I’ve mentioned Lowry’s many times before. I feel they are the best technical forecasting service in the business. They note that the final top of the bull market is a process: the leadership gets narrower and narrower. First the small cap stocks fade, then the mid-caps. The strength of the big and mega cap stocks disguises the weakness in the broad market, and carries the major averages to the final high.
    That’s why I believe it is important that the Russell 2000 (chart below) blasted to a new high this week. This suggests that the broad market is participating in the advance.
    2) The Financials, as represented by XLF (see chart, p3), an ETF of the largest financials, such as Berkshire Hathaway (BRKB), JP Morgan (JPM), Bank of America (BAC), Wells Fargo (WFC), Citigroup (C), etc.) made a new high. It’s difficult for the broad market to be strong without the participation of the Financials.
    3) The Dow Transports made a new high. There are 6 components to formal Dow Theory. One says that a high in the DJIA should be confirmed by a high in the Transports. The reasoning is that the factories make the goods, but they must be carried to market by the Transports (in original Dow Theory, this was the Rails), so both should move in tandem. If they don’t, if one makes a new high and the other doesn’t, this “non-confirmation” of one average by the other should be a warning signal.
    The more I read about Dow Theory, the less impressed I am that it predicts the direction of the market. Think of it kind of like a horoscope. If you believe in it, and it says you’re going to have a good day, then you’ll have a good day (and you’ll credit the horoscope for it, and remain a believer). If you don’t believe in it, and you have a good day, you still probably won’t believe, but you might read it a little more often.

    This is the 2nd longest bull market ever. It will, of course, end sometime. But last week’s action was quite bullish. To me, probabilities suggest we’re probably OK through the end of the year.
    Since the DJIA bottomed on March 6, 2009 at 6443, it has returned 16%—plus dividends—per year. Unfortunately, periods of over-performance, like 1982-2000, are followed by periods of under-performance, like 2000-2009. Returns are minimal. Next week’s newsletter will discuss how you should prepare for this coming period of low returns, especially if you are on a fixed income.

    The latest issue of Forbes is their 100th anniversary. There is a list of the largest companies in Forbes first year, 50 years later, and now.
      1917                         1967                         2017
    1) US Steel                 1) IBM                       1) Apple
    2) AT&T                   2) AT&T                     2) Google
    3) Standard Oil NJ         3) Eastman Kodak           3) Microsoft
    4) Bethlehem Steel         4) Gen Motors               4) Amazon
    5) Armour                 5) Standard Oil NJ           5) Berkshire Hathaway
    6) Swift                     6) Texaco                     6) Facebook                
    7) Intern. Harvester         7) Sears                       7) J&J
    8) DuPont                   8) GE                         8) Exxon Mobil
    9) Midvale Steel           9) Polaroid                   9) JP Morgan
    10) GE                     10) Gulf Oil                 10) Wells Fargo
    RMD comment: 1) The US has moved away from an industrial-based economy to one dominated by tech, finances and services. 2) There were no medical/pharma companies in the top 50 in 1917 (but there were 2 tobacco companies). There were a handful in 1967, and more in 2017, with J&J breaking into the top ten. I believe this shows the innovation of US pharma, aided by the basic research funded by the National Institutes of Health. 3) In 2017, 5 of the 6 largest companies are tech. This is because, at least for now, tech is lightly regulated in the US. Note though, that the EU is already going after US Big Tech. 4) Berkshire Hathaway is really just the stocks collected by Warren Buffett over the last 50 years. The fact that it is larger than all companies except the mega-techs is a testament to his genius. 
    Brother Paul, a retired surgeon, told me that in the early 80s he met a man who was a prominent chest surgeon in China in the 50s and 60s. Along came Mao’s Cultural Revolution, and he was banished to the hospital kitchen. Medical students would bring in X-rays and hold them up to the light for his opinion—while he was washing the dishes.     
  This is from a sharp young man who has taken this newsletter since he was a med student. He has trained at first-class institutions and is now finishing his Radiology Residency in a field in high demand, so he is in a strong position. “Main thing is to avoid groups/institutions that have tried to commoditize radiologists. There is one group I know of that has stop lights in the reading rooms tracking productivity and you are not to leave until it turns green at the end of the day”.
    RMD comment: This is what happens when the “suits” run Medicine. One of the allures of being a doc is being your own boss. Anybody who would put up with this foolishness deserves what they get. Unfortunately, “lifestyle” (defined however you want to define it) is now at the top of many physician’s priorities, so they will grin and bear it. I think it’s terrible. 
    I saw this on Facebook:
This year thousands of men
will die of stubbornness.


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