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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.

This Week in the Market

Issue #485, August 28, 2017

    I’ve talked a lot lately about currencies, and rightfully so, because they’re the big game in town. Immediately after Trump’s election, the dollar soared, breaking to a new high. But that was a false breakout. The dollar has since weakened, and this week the US Dollar Index broke below the support level of 92.6, closing at 92.52, down a full percent for the week.
    What are the implications of a weaker dollar?
    1) Commodities are priced in dollars. Commodity prices go up when the dollar weakens. Copper has been very strong, and is right at a multi-year high. Copper miner Freeport-McMoran (FCX) has shown strength. . Natural resource stocks, such as miner Rio Tinto (RIO, see chart below) should do well. RIO pays a 5.5% dividend.
    With dollar weakness, you would expect the biggest and most important commodity of all, oil, to be strong, but it hasn’t been. I believe this is a supply issue. Hydraulic fracturing (fracking) has revolutionized the North American oil industry, and all of the other oil producing countries around the world, like Russia, Saudi Arabia, and Venezuela, just can’t stop pumping because they really need the dough.
    Gold is in a bull market. It is at significant resistance right now at $1,300, and is due for a rest or even a pullback. We’ll talk more about this when the precious metals and the precious metal miners break out.
    2) One of the reasons the dollar is weak is because interest rates are soft. The 10-year Treasury closed at 2.169%, at the very bottom of its recent range. The interest-sensitive Utilities are strong and at a new high.


    There was an excellent interview in this week’s Barron’s with Doug Ramsey of the Leuthold Group. He feels the most likely scenario for the market is that we have started a pullback which will probably amount to the S&P 500 falling 6-8% from the recent peak. He then sees the market going to its final bull market high later this year into sometime next year.
    I think his most important point, though, is what he sees after this market peak. He notes that both stocks and bonds have never been this over-valued at the same time. They feel a standard portfolio of 60% stocks and 40% bonds will have difficulty generating a 3-4% return over the following 8-10 years. That sounds far-fetched to people accustomed to higher returns, but it happened in the 30s, the 70s, and the 2000s.
    If this comes to pass A) Insurance companies, endowments, and pension funds, especially the already under-funded public pension funds, are going to be “in for a world of hurt”. B) If you are nearing retirement, you may need to make an adjustment. In 1999, a lot of the folks who planned retiring in 2000 were still working in 2005. C) It will show the fallacy of buy and hold forever. D) Traders will do better, and actively managed funds will almost certainly out-perform index funds. 
    The average price of a new home sold last month in the US was $313,700, +6.3% over the same time last year.
    RMD comment: Let’s put that in context. The average salary in the US is in the upper 50s, so say $60K. I think a good metric is not to buy a home that is more than 2 ½ times your yearly income. Some people stretch that to 3x, or at the height of the housing bubble, it was even higher. A similar metric is for student loans not to be more than 1x expected income. The reason for these metrics is simple: you just don’t have enough money to service the debt. 
    Anyway, $313K is more than 5x the average salary in the US. It means that 1) the average family in the US can’t afford the average new home, 2) more and more new homes are built by the big, publically-traded builders, who like to build high-end homes simply because they are more profitable, 3) it explains the continued strong demand for starter homes. Ex: in Columbia, homes less than $200K often have multiple bidders, while the market is slow for those above $400K. 4) The average family is being priced out of many markets. 5) It also means the price of the average new home is rising much faster than inflation.
    An interview in this week’s Barron’s mentions “smart beta strategies”.
    RMD comment: this is quite interesting. I need to do more research, and will make it the topic of a newsletter in the near future.
    Many of you may have already noticed this, at least subconsciously: whenever the “presentation” of merchandise is changed: new wrapper, different, often more glitzy, advertising, displayed differently or more prominently, the first thing you must say to yourself is “Vigyaz”, Hungarian “look out for danger” (Uncle George’s favorite warning when he had a big hand in Hungarian poker). You can be sure that the price has been raised, or you are getting less for the same price. Check it out, and you’ll see what I mean.
    One great thing for me personally about writing this newsletter is the expertise of the subscribers. When I have a question about almost anything, there is someone I can ask for their opinion. Earlier this year I need new tires for my BMW: a subscriber told me exactly the factors to consider. I was approached last week by a private equity firm about buying this newsletter. An attorney told me he had a client that did business with them, and they are a first-class outfit. Another subscriber checked with his contacts in the area, and noted my operation was really far too small to interest them. Both were correct.
    RMD comment: it is a sign of strength, not weakness, to ask for help when you need it. The worst physicians are those who think they know it all and treat patients out of their area of expertise.
    Or think they know as much about finance as they do about Medicine and get hosed.
    I’m reading The Other One Percent: Indians in America (Chakravorty, Kapur, Singh, Oxford U. Press). “India-born lived overwhelmingly in married-couple family arrangements, as a result of which they were able to diminish the well-recognized economic difficulties of single-parent, esp. female headed, households”.
    RMD comment: Those making immigration policy heed to read this book. Send us your best, brightest hard-working people who want to live the American Dream.     



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