Newsletter Archive
Issues older than 90 days

Available Issues

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.


Issue #422, June 13, 2016

    This is one of those newsletters that are meant to instruct you on a basic topic.
    Definition: “The VIX is the ticker symbol for the Chicago Board Options Exchange (CBOE) Volatility Index, which shows the market’s expectation of 30-day volatility. It is constructed using the implied volatilities in a wide range of S&P 500 index options”.
    The VIX is quoted in percentage points and represents the expected range of movement in the S&P 500 index over the next year, at a 68% confidence level (one standard deviation). Ex: if the VIX is 15, this represents an expected annualized range (with a 68% probability) of less than 15% up or down. To calculate the expected volatility range for a single month, divide not by 12, but by the square root of 12 (approx. 3.46). A VIX of 15 would infer a range of +/- 4.33% over the next 30-day period. 
    There are futures and options traded on the VIX (As I always note: futures and options are leveraged instruments, to be used only by sophisticated investors who understand them completely and follow the market daily. i.e., they aren’t for the average physician, or for the average investor). VIXY is an ETF based on VIX short-term futures and VIXM on VIX Mid-term futures.
    A boring market is almost always headed higher, thus the phrase “never short a dull market.” Market turning points are characterized by high volatility: the market doesn’t know what to do. Is it going up, or is it going down? A high VIX doesn’t necessarily indicate direction, it just says the market might move so much in either direction. But in practice, the VIX is called the “fear index”, because markets fall 5 times faster than they go up. Note that the VIX will still be high (but should be falling quickly) at the turning point from bear to bull market.
    The average VIX from 1990 to October, 2008 was 19.04. The all-time intra-day high was 89.53 on October 24, 2008.
    I’ve been watching the VIX more recently, and I’m impressed how it seems to anticipate the direction of the market. There have been days when the DJIA was down 100 points, and instead of also being down, the VIX barely budged. By the end of the day, the market had rallied. Likewise, there have been days where the market was up by 100 points, and rather than falling as one would expect, the VIX barely budged. By the end of the days, those gains had evaporated.
    For the last 3 months, the VIX has touched 17, and then backed off. It was +2.39 (16.33%) on Friday, to close at 17.03. If it keeps headed higher, the market will almost certainly turn lower. Keep your eye on DJIA 17,400.
    Bill Gross, currently at Janus, previously at PIMCO, posted a marvelous piece on June 3 entitled “Bon Appetit!” I suggest you read it for yourself.
    His basic thesis is that the returns of the last 40 years will not be repeated. Interest rates fell for 30 years, resulting in a 7%+ return on bonds. With the 10-year US Treasury at 1.65%, and the yield on many bonds in the Euro-zone and Japan negative, considering that interest rates will rise sometime, an investor will receive, by definition, 1.65% return if the bond is held to maturity.
    RMD comment: 1) if you have to sell before the bond matures and interest rates rise, you will be forced to take a discounted price. 2) Considering the Fed’s stated goal is 2% per year inflation, your real return (purchasing power) is zero.
    Considering that stocks traditionally command an “equity premium” over bonds, add 3% to 1.65% = an anticipated return of about 4.65% on stocks for the next 10 years.
    To quote Gross, “Returns (on any asset, stocks, bonds, real estate) will be low, risk will be high, and at some point “intelligent investors” must decide that we are in a new era…that demands a different approach”.
    RMD comment: Maybe gold? This week the German 10-year bond closed at 0.02%. Think about that. You work hard, save your money, and on $10,000 of hard-earned capital you will receive exactly $2 a year for 10 years, barely enough for a plain cup of coffee at Starbuck’s. If you wanted a hazelnut mocha latte, you would have to save up for 2 years. This will not end well. In fact, that is the question: how will this end? How will the Fed normalize interest rates? Gross later said it will end like a ‘super-nova”, either an explosion or a collapse. 
    In Newsletter #12 (3/19/07) I said I was neutral to negative on Long-term Care Insurance. The more I think about it, the more negative I have become.
    1) The benefits are not open-ended. You receive a set amount, say 3-5 years in the nursing home, and then benefits stop.
    2) If you never need the benefits, you have nothing for your years of premiums.
    3) $2M in liquid assets generates enough return to cover the cost of a NH: you are “self-funded”, and the $2M is still in your estate.
    4) The people who run out of money and go on Medicaid stay in the same NH at the same level of service as those who are self-pay.
    5) If you must buy LTCI, it is mandatory to make sure the premiums are fixed. I recently spoke to someone in their late 70s who is getting killed by the escalating premiums. When the time is approaching that they might need the benefits, they are almost to the point they can’t afford it. If they are forced to drop the policy, they receive nothing.
    This is from an original subscriber regarding last week’s letter about auction reserves.
    “Reserves are a symptom of seller arrogance. The big auction houses give estimates that are accurate: these are smart people who do this for a living. The reserve means you don’t like their estimate and think you know better. I never bid on items with a reserve and find that they rarely sell”.
    Older brother John was an MP (Military Police) in the Air Force from 1958-63. He pulled his weapon twice, and fortunately, never had to fire it. They carried a .45 semi-automatic. He said while in the US, they did not keep a bullet in the chamber: when on foreign soil, there was always a bullet in the chamber.
    1) On Guam, a drunken Marine tried to enter a restricted area, and knocked John down. When John hit the ground he pulled his weapon.
    2) At Sawyer Air Force Base on the Upper Peninsula of Michigan, there were 2 “Christmas Tree” areas. Jet fighters and B 52 bombers sat on the runway, ready to take off at any time. It was Sat. night, an airman was walking toward the B 52. John instructed him to stop. He kept walking toward the bomber. When the man, who was quite drunk, heard the “click-click” of John chambering a round, he looked around, appreciated for the first time where he was, and promptly passed out.
    I will play in the Senior’s event (50 years and older) at the World Series of Poker in Las Vegas next weekend. The next newsletter may not be posted until Tuesday.         

Site by Delta Systems powered by ExpressionEngine