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Strange Things in the Precious Metals
Issue #531, July 17, 2018

Buying Years of Retirement
Issue #530, July 09, 2018

Rent-A-Kid for Retirement
Issue #529, July 02, 2018

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


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

A Pension Question: Part II of II

Issue #518, April 16, 2018

    To remind you: a 69 year old subscriber recently retired and has a pension totaling $1.35M. They currently don’t need the income from this, but she must decide next year how to take the money. In last week’s Newsletter, I discussed the option of taking the whole amount as a taxable lump sum, which I strongly discouraged, or annuitizing the money, and receive $10,500 per month of taxable income for her life.
    The other options are:
    3) I believe by far the best option for her is just to roll the money over, tax-free, into an IRA, let it continue to grow, and take the required mandatory distributions at the appropriate time. She says she will almost certainly take this option, but is a little daunted by the prospect of producing a reasonable long-term return, like 5%+, on such an amount, esp. since the rate on CDs is so low.
    RMD comment: This is a perfect situation for a wealth advisor or bank trust dept. to manage the money. With an account of more than $1M, she should have no problem finding a reputable, established company that would gladly take her business. Fees are a flat % of the amount under management, in this case, should be about 0.8-1.0%. The returns will be “boring”, probably around 5-7%, but that’s exactly what she wants.
    4) Some combination of all of the above. I will not discuss this further.
    Their eventual plan for this money is to help with the educational expenses and enrichment activities for the grandchildren, inheritance for their heirs, and travel and other activities for them. If it ends up they never have to touch the money, they might consider a charitable donation. $1.35M (or a significant fraction thereof) is a lot of money, enough to leave a real legacy.
    Aside from discouraging taking the entire amount as a taxable lump sum, I’m not sure there is a “right” answer, but I do believe there is a “best” answer, which will be different for different people.
    I encourage feedback and questions (The Interim Bulletin coming out mid-week is from a subscriber). I’m glad to provide advice, and in trying to answer questions, I often learn new things, and in this case, the topic was important enough to for 2 Newsletters.   

    Last summer refiner Valero (VLO) broke out to a new multi-year high. It backed off with the market, but last week again broke to a new high.
    RMD comment: That’s pretty strong action. Several weeks ago Barron’s noted that a variety of factors have come together to provide a strong tailwind for the refiners, and mentioned VLO specifically. Dividend about 3.4%.
    Lowry’s continues to feel that probabilities suggest the current market weakness is a correction, which will eventually resolve with a breakout to the upside. 
    There was a cartoon on Facebook of a very old man in a nursing home with a cake in front of him. One nurse says to the other “His 100th birthday was 3 months ago. This is for paying off his student loans”
    RMD comment: Your first impulse is to laugh, but it should be to cry. As of 2017, there were 2,800,000 people age 60 and older with student loans. In 2015, money was garnished from the Social Security checks of 173,000 people who owed on student loans. 40% of federal student loan borrowers 65 and older are in default.
    Student loans are one of the most important secular issues of this generation. The government must get out of the student loan business.
    Note also that many of those in this age group have student loan debt because they co-signed notes for children or grandchildren. Let me remind you of the 2 main points from my discussion of co-signing a note in Issue #156 (5/9/11).
You co-sign a note you are liable: Period
There is never a reason to co-sign a note.
    Also on Facebook I saw a posting for “Student Loan Borrowers of America: Help us elect pro-reform candidates to Congress”. They are a PAC, and ask for donations.
    RMD comment: I followed their link and was unable to determine their position on the isues. I also was unable to find out anything about them on Google. They may be legit, but 1) what does “pro-reform” mean? and 2) they may not be legit. Be careful.
      In the futures market, the number of short and long positions are equal. For commodities such as oil, corn or gold, the longs are usually the speculators, and the shorts are usually the producers: it’s how they sell their product into the marketplace. The speculators are considered the “dumb” money and the commercials the “smart” money, because at major turning points, the spec are invariably wrong and the commercials invariably right.
    For the first time in at least 15 years, the speculators have thrown in the towel and are actually short silver. If this is the contrary indicator it usually is, it means the next move in the silver market will be a big rally, forcing the speculators (again) to cover their short positions at a loss. More if/when this occurs. 
    Two weeks ago I thought that the Marlins baseball team made a mistake returning a $200,000 check from a loyal fan who wanted to re-up his 4 season tickets for 3 years at a discount of about 20%.
    This is from a long-time subscriber: “I attended a Marlins game vs. the Cubs thanks to a friend who rented a luxury suite. Despite the fact this was the opening series of the season against a popular team on a beautiful Saturday night, I would estimate the stadium was no more than 20% full, and half of those were visiting Cub fans. Enough to say that if there is a more incompetently run and tone-deaf organization out there than the Florida Marlins, I would be hard pressed to name it”.
    I try to review books at regular intervals. Knowledge just doesn’t appear in your head, it has to be put there, and the only way to do this is to read. Warren Buffett reads 6-7 hours per day.
    1) Iran: A Modern History, Amanat, Yale U Press. Fifty pages in and we’re still at 1600. Save your money.
    2) Culture of Growth: The Origins of the Modern Economy. Mokyr, Princeton U Press. Read 10 pages. Seemed more like a Jr High text book. Save your money.
    3) The Story of the Jews: Vol 2, Belonging: 1492-1900. Schama, CCCO. You have to read a lot for a few useful facts. Let it go.
    4) Grant, Chernow, Penguin. I believe Chernow is the greatest biographer of this generation. If I were worthy of a biography, my first choice would be Carl Sandburg. I believe his 2 volume Lincoln: The Prairie Years, and 4 volume Lincoln: The War Years, are the best biography ever written (I have Sandburg’s autograph). My second choice would be a tie between Chernow and Esther Forbes. (See Paul Revere and the World He Lived In, winner of the 1943 Pulitzer Prize for History).
    Future Newsletters include:
    1) An Interim Bulletin in mid-week on “The Kids Birthday Party Hustle”. It could easily save you $1,000 per year.
    2) Next weekend’s Newsletter is “Degree Inflation and Prolonged Training Periods”. It will be one of the most important Newsletters of the year.
    3) Other future topics include the Knight-Frank Wealth Index and, if you are a public employee, the possibility to “buy” years of service to supplement your pension.


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