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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.

The New DOJ Fiduciary Rule

Issue #443, November 07, 2016

    A subscriber asked me to write on this subject. I had this article mostly written but was fortunate enough for there to be a nice Op/Ed piece in Wednesday’s (11/2/16) Wall Street Journal on the subject, so I will also borrow from that.
    In April the Dept. of Labor issued a fiduciary rule requiring those handling retirement accounts to move to a fee-based compensation model, or sign a “Best Interest Contract Exemption (BICE)” if they wish to continue receiving variable compensation. The advisors can receive only “reasonable compensation”. If a client feels their advisor has not acted in their “best interests”, they can file a class action law suit.
    Let’s start with the basics. Webster’s defines fiduciary as “of, relating to, or involving a confidence or trust”. Fiduciary sounds apple-pie American, touchy-feely good, but I believe these new regulations will not work out well.
    What will be the results? The WSJ article lists:
    1) it will push investors into passive index funds.
    RMD comment: Studies show that index funds outperform actively managed funds over time, so, in part, this is fine. Likewise, there are times that sector funds or individual stock positions are indicated. Ex: if you believe we are in a bull market in the precious metals, you would buy GDX (an ETF of mining stocks). Or 10 years ago the only store in the local mall with customers was Apple, so you bought AAPL (as cousin Tony did). The new rules discourage the use of judgment. As we know from being physicians, there are times to follow the rules, and times to use judgment.
    2) It will cost investors money. Morningstar notes that fee-based account can cost up to 60% more than commission-based accounts. Ex: say you have $1M. 1% = $10,000 per year. But in a commission-based account, say there is a minimum fee of $100 to have the account, and you make only 10 trades per year at $20 per trade = $200. $300 total.
    3) Hurt smaller investment advisors. Like all regulations, the large companies can more easily absorb the cost of compliance. The rule is 1,023 pages long.
    4) Hurt small savers. The increased threat of litigation on commission-based accounts will cause advisors to switch to fee-based accounts, which can be un-economical for small accounts. Ex: say that the fee is 1% of assets, but with a minimum fee of $100. An individual just starting out may have an account of $1,000. $100 is a 10% fee. 
    So here’s what I see as the 2 main issues:
    What should you do?
    RMD comment: from my reading, nothing. Your investment advisor will contact you if any changes are required in your account. If you are happy with your investment advisor (if you’re not, why haven’t you already changed?), just stick with them.
    What was the reason(s) for the new regulations? Were investors in trouble?
    RMD comment: Now we are talking. One would think that new regulations regarding investing in stocks should come from the Securities and Exchange Commission. Nope. Or maybe, even better, Congress? Nope. The Federal Reserve? Nope. The Treasury Dept.? Nope. An independent policy board such as the one that recommends GAAP (Generally Accepted Accounting Principles)? Nope.
    It was the Department of Labor. I would make a direct analogy to the Affordable Care Act. These new rules sound like they are set up to help the little guy, but the results will be the same as ObamaCare: more unnecessary government interference and regulation, more expense, and in this case, a lot more lawsuits. The trial lawyers could hardly ask for more. In short order, any loss will be blamed on the advisor because they were not in the client’s “best interests”.
    This is from a new subscriber. “Your newsletter allows me to focus on topics that are not part of my daily responsibilities. Your insight is admirable.”
    RMD comment: I have noted from the beginning of my writing that I cannot evaluate an individual stock as well as Barron’s, or that I have the resources of the Wall Street Journal. Rather, I give my opinion on topics of importance, such a today’s newsletter, or discuss issues you won’t see elsewhere, like “A Wedding as an Investment” or “What is Your Spare Time Worth”. I also continually remind you of the basics: work hard, save your money, and stay out of debt.
    It’s important to hear different opinions. As (I believe) Mark Twain said “You never learned anything from listening to yourself talk”. 
    The Deeds of Trust (mortgages on real estate) are published in the Saturday Business Supplement in the Columbia Daily Tribune. It breaks my heart to see physicians in their 50s and 60s (and even 70s) with mortgages of $300-500K (the average home in Columbia sells for $210K), or docs in their 30s and 40s with mortgages of $600-800K. 
    RMD comment: there is never a better investment than the early repayment of debt.    Your goal should be to have your mortgage paid off and be debt free by age 45. My dad, a foreman at General Steel, paid an extra $50 per month and had the mortgage paid off at age 42 in 1959. I remember shaking his hand.
  I have yet to see a physician that subscribes to this newsletter with an out-sized mortgage. Work hard, save your money, and stay out of debt.
    In 2012, I paid cash for a 750 BMW with the goal that I will never have to buy another sedan. The maintenance plan just expired, so the routine oil change and lube and air filter was $225 (RMD comment: ouch!).
    The man also said I need new tires = about $1,800. I have only 26,700 miles on the car, and the tires don’t look that worn to me, so I asked a Rotary buddy and long-time subscriber who owned a tire store for many years his opinion. He said new tires have10-11/32s inches of tread (If you knew that, I’m really impressed), and tires are considered worn out at 2/32s on the tread gage. He’s going to do a “house call” when he gets back into town to check things out.
    RMD comment: 1) successful people know as much about their profession as you know about Medicine. 2) If something doesn’t seem right, question it. 3) Don’t be afraid to ask other’s opinions, it’s not a sign of weakness. 4) one of the really great things about living in one place for a long time is that when I have a question about almost anything: plumbing, insurance, real estate, electrical work, tires, getting a suit tailored: I know someone I trust who I can give a call.
    I played in the Heartland Poker Tour Senior’s (50 and older) Tournament at the Ameristar Casino in St. Louis on Tuesday. 320 entrants: they paid 36 places: I finished 31st.I had pocket Aces twice: tripled up once, doubled up the other time.
    Possibly the most important hand is one I read wrong! I thought I had nothing so didn’t bet. Actually I had a King-high flush. The other guy had a full house: Kings full of Queens. I would have lost a lot of chips. A negative times a negative is a positive.
    RMD comment: People say “Isn’t it fun to play”? I say “the fun is winning”.
    It’s important to admit things to yourself. I realize that I’m no longer competitive in the general poker tournaments, but I am very competitive in the Senior’s events. The brutal truth is that the mind and body peak at age 25-27. How many 65 year olds do you see in the NBA or NFL?
    You have to take chances to win in poker. There are several times I had to tell myself “You don’t win playing scared poker”.     
    It’s not often I come across a word I’ve never seen before:
    Vernissage: (it’s not even in my 7th Ed. Webster’s Collegiate Dictionary. I had to look it up on-line): (Webster’s) a private showing or preview of an art exhibition.
    Two quotes:
    1) a Russian proverb.
    Go to war—pray once.
    Go to sea—pray twice.
    Get married—pray 3 times.
    2) “I do what the voices in my wife’s head tell me to do”.
    Diane and I are traveling so next week’s newsletter won’t come out until Monday, or more likely Tuesday. The topic will be “Negative Secular Trends in Medicine: The Suits aren’t Makin’ Steel”. You will love it.   

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