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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

Escheat
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

Contracts
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

THE PHYSICIAN INVESTOR NEWSLETTER

HELPING PHYSICIANS ATTAIN FINANCIAL SECURITY
By Robert M. Doroghazi, M.D., F.A.C.C.

Economic Outlook for 2017: Part I of II

Issue #455, January 30, 2017

    Every year at this time Scott Colbert and Joe Williams of Commerce Trust of Kansas City (a division of Commerce Bank, CBSH) give a talk here in Columbia. It is always first-class. I was traveling and missed the talk, but Scott was kind enough to forward me the presentation.
    Where will the economic growth come from? Since 2012, the emerging market-developing economies have averaged 4-5% growth. The advanced economies have averaged 1.2-1.9% growth.
    RMD comment: Europe will not do well. If Le Pen wins in France, they will pull out of the Euro, which will cause real turmoil. Performance in the emerging markets, which rely heavily on exporting commodities, will depend on the US Dollar. If the dollar continues to weaken, they will do OK. If it strengthens, they won’t. I heard someone say that much of the growth in the Chinese economy has actually been negated by the health and environmental costs of their terrible pollution. That leaves Japan, which is improving, and the US, which will benefit from the GOP/Trump agenda and an influx of capital from Europe and China. They estimate US GDP growth for 2017 will be 2.3%
    Total debt in the US: financial, household, business, federal, and state and local, totals 335% of GDP. The peak was 370% in 2009. For comparison, this was basically flat at 125-150% from 1952-1978.
    RMD comment: Even with the drop since 2009, total debt is still more than twice as high as 40 years ago. Borrowing pulls growth from the future to the present. You can’t borrow your way to prosperity. Debt destroys wealth. We will never pay off the national debt, the only question is to service it.
    The drop in financial, household and business debt has been offset by an increase in the debt of the federal government.
    RMD comment: In the 2008-9 crash, profits were privatized, while the debt was transferred to the public. This was a basic reason why the regular guys had their Popeye moment, said “This is all we can stands, we can’t stands no more”, and voted for Trump.
    In 2007, debt to GDP in China was 158%. By 2014, it was 282%.
    RMD comment: China is running into a wall. They are a communist country: the #1 imperative is for those in power to remain in power by maintaining social order, and that means jobs. Because they do not have free markets, when their debt bubble starts to unwind, it won’t be pretty. What happens when a state-owned business goes bankrupt?
    Two factors drive GDP: 1) more output per worker and 2) more workers. From 2006-2015, there was 1.4% GDP growth: 0.5% from more workers, 0.9% from increased output per worker. In 2004, the median age of the workforce was 40.3, with a workforce participation rate of 65.9%. In 2014, these numbers were 41.9, and 62.7. In 2024, it is estimated they will be 42.4 and 60.9. It is estimated annual growth in real GDP from 2014-24 will be 2.2%, with an annual increase in 0.4% of the labor force.
    RMD comment: these are important numbers. 1) One reason the US grew so quickly in the 1700s and 1800s is because women often had 5-15 children, and there was basically free immigration. World-wide, as societies becomes wealthier, the birth rate drops. This is why the immigration of bright, hard-working people who want to come here to live the American Dream is so important. Some countries, such as Italy, Russia and Japan, have terrible demographic: they have less young people to support the old folks. 2) One reason the % of workforce participation dropped was because the Obama administration was much more lenient with disability. The socialist playbook is to make as many people as possible dependent upon the government. I hope the current administration will address this.
    An average 1.25M households are formed each year. Both car sales and home starts were crushed in the recession of 2008-9. They have now returned to baseline.
    RMD comment: There will be catch up. Homebuilding and autos now have tailwinds.
    Both the Consumer Price Index and the core CPI averaged +2.3% year over year from 1991-2016.
    RMD comment: Last week I noted that the latest CPI was +2.1% year-over-year, the highest since the 12-month period ending June, 2014. Since the financial crisis all of the central banks have been trying desperately to fight deflation and goose inflation. Now it looks like they are having some success, at least here in the US. Bullion houses are seeing the purchase of more gold and silver in anticipation of higher inflation. The question all along with low interest rates is if the Fed can control inflation once it starts. We’ll see.
    I still have a many points to make, so I’ll finish this discussion in an Interim Bulletin in mid-week.
                                                                      RMD
    In November I raised the cost of this newsletter for the first time in 9 years, and subscriptions are—up. Once someone subscribes, they are very loyal, with about 85% re-upping. I also picked up a lot of subscriptions recently by soliciting previous subscribers. “Bob, I really missed your advice. Thanks for re-contacting me.” Of the 30 original subscribers from the fall of 2006, 14 still subscribe, 2 have passed and 3 are quite elderly and no longer take emails.
    I don’t advertise, subscriptions are by word of mouth. I thus encourage you to share this newsletter with friends. They can send their email address to me, or can sign up for a free 3-month trial at   http://www.thephysicianinvestor.com 
    I recently saw a physician I’ve known for a long time. “Bob, how old were you when you retired?” RMD: “54”. “How did you do it? I have 4 kids in school. I can’t seem to save a penny (I know he makes at least $500K per year)”. RMD: “Here’s my card. Send me your email and I’ll sign you up for the newsletter”. Of course, he’s not responded.
    RMD comment: The first thing I figured out in my writing career is that the people who need my advice the most are the least likely to take it.

   
   
    I have recently highlighted stocks that are breaking out to new highs. Above is the graph of General Cable Corp., which pays a 3.4% dividend. 
   
    WSJ (1/26/17). Harvard will outsource the management of most of its endowment and lay off half the staff after the 5.7% return of the last 10 years was the second lowest among its Ivy competitors.
    RMD comment: 1) it’s hard to beat the competition. By definition, ½ are in the top 50%, ½ in the bottom 50%. 2) But the main point I want to make is that salaries of the top employees at the endowment were in the 7 and 8 figure range, which were competitive with what their talents would fetch in private industry. This didn’t sit well with many of the ultra-liberal faculty, so these people left. And guess what: performance at the endowment dropped. Another socialist victory.
    In capitalism, some people do amazingly well, the vast majority of people live comfortably, and a few are left behind. In socialism, everyone is equal: nobody has anything.   

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