Newsletter Archive
Issues older than 90 days

Available Issues

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.

Outlook for 2018: Part III: Stocks and Bonds

Issue #502, December 25, 2017

    Lowry’s Research has been in business since the 1930s. By measuring the forces that drive all markets, namely, supply and demand, they have shown to my satisfaction that it is possible to determine the general direction of the market, to be mostly in stocks when the market is going up and out of stocks when the market is going down.
    They note that a stock market top is not usually a single event, but a process. The small caps weaken first, followed by the mid-caps, while the large and mega-cap stocks carry the major averages to their final highs. Think of the Nifty Fifty in 1972/3. This ‘divergence” in performance of the broad market from the largest stocks typically begins to appear about 4-6 months before the final top of the major averages. As of Lowry’s last monthly update of December 5, all segments of the market were healthy, suggesting we are at least 4-6 months from the final market top.
    Likewise, this bull market is quite old; there will be a bear market sometime. Start to cull weak positions from your portfolio, and either deploy the proceeds to stronger performing stocks, or if you are nearing retirement or already on a fixed income, build cash reserves. As discussed last week, I believe we are in the early stages of a bull market in commodities, so consider natural resource stocks (FCX, CVX, POT, XLE and VLO exploded to new highs last week). I also believe chances are good that Europe, Japan and Emerging Markets (especially India) could out-perform the US over the next few years.

    I have already made clear my dislike of long-dated bonds. The Federal Reserve has a stated goal of 2% inflation. With the 30-year bond at about 2.8% you are basically guaranteed 3 decades of dead money, and when the principal is returned, it will have only a fraction of the purchasing power of the money invested. You can see why Warren Buffett calls them “Certificates of Confiscation”.
    The yield curve refers to the shorter maturities as compared to the longer ones. It typically slopes upward: people need to receive more to tie up their money for a longer period of time. The yield curve has been flattening: shorter maturities are up in yield, while the longer maturities have remained about the same. An inverted yield curve, where the shorter maturities pay more than the longer ones, often anticipates an economic slowdown. We aren’t there yet. If it happens, we’ll talk about it then.
    An important point is that for the first time in almost a decade, the yield on the 2-year Treasury is higher than the dividend yield of the S&P 500. A little history. Until the Great Depression, bonds had a “gold clause”: they couldn’t be inflated away, you could demand payment in gold. They were considered risk-free. Stocks paid higher dividends than bonds because they were considered riskier. In 1958, the yield on bonds surpassed the yield from stocks: the bond market had sniffed out the coming inflation of the next 2 decades. Is the market saying Treasuries are now more risky than stocks? Also consider the inverse: higher yields make bonds more competitive with stocks.
    Central banks buying assets to artificially suppress interest rates is an experiment. This is the first time in 5,000 years we have had negative interest rates. That is of Adam eats the apple, antediluvian, Moses flees the pharaoh, Biblical proportions. I hope it ends in a controlled, peaceful manner.   
    Summary of my Outlooks:
    1) Commodities are at their lowest level compared to stocks since 1971. 
    2) A bull market started in the precious metals in December, 2015.
    3) The bull market in stocks probably has at least another 4-6 months to run.
    4) There will be a bear market sometime.
    5) Foreign markets may out-perform the US when this happens.
    6) I hope the Fed and other central banks can reduce their humongous balance sheets in an orderly fashion.
    I recently noted that the savings rate in the US had fallen to 3%. What was the savings rate in the US in the 1870s? Answer below.
    One of the allures of Bitcoin is that blockchain is supposed to be un-hackable.
    RMD comment: If a human being can create blockchain, a human can hack it.
    For centuries, museums have used accession books to keep track of their collection. They are bound ledgers with numbered pages. Entries are by hand in chronological order. Any alteration is obvious. Let’s see if blockchain lasts that long.
    With my offer to extend your subscription by giving a gift subscription, and the reminder of allowing family members to “piggyback” on your subscription, subscriptions are already up 20%. One loyal subscriber has given so many gift subscriptions that my goal is to live long enough to satisfy my obligation to him. See more below.
    The savings rate in the US in the 1870s was 24% (from A Republic for which it Stands). This included the immigrants, who were busting their chops for $1 per 14 hour day (the average workingman’s salary was $400 per year), and the recently freed blacks.
    RMD comment: Thrift creates wealth, debt destroys wealth. Work hard, save your money, and stay out of debt. Debt is the cause of every financial bust in history.
    From a sophisticated physician-investor on last week’s comments about farmland.
    “It’s too soon to buy unless you have an inside track, which means you can keep it private and be ready at a minute’s notice to write a **********big check. The last few years have been tough, and there will soon be a significant drop in prices. The average farmer is almost 60, and the young folks don’t have the money to buy. There are ways to leverage the situations, but this requires intimate knowledge of the farming community and the lenders with bad loans. Biggest issue is finding honest, up-to-date farmers”.
    RMD comment: Finding honest people to work with is one of the biggest issues of your life.
A Gift Subscription
    Many magazines, such as Forbes, provide the opportunity to give a gift subscription. From now through the end of the year, you can give a one-year subscription to this newsletter as a gift for $50, and I will extend your subscription for one year.
    I have always provided discounts to students and physicians-in-training. For $50, you can give 5 students or 2 physicians-in-training a one-year subscription, and I will extend your subscription one year. 
    This would be a perfect gift for your personal physician. If you are a physician, it would be a great gift for a new associate, or another physician. I’m sure all of you know at least one person who would appreciate this newsletter.
    Consider a gift subscription to your financial advisor. If you have a $1,000,000 net worth and this subscription can increase your return merely 0.1%, that’s $1,000, enough to pay for the newsletter as long as we are both around.
    Reality check: after writing this newsletter for 12 years, I can (unfortunately) assure you that the people who need this advice the most are the least likely to take it. Give the gift to someone who needs it, and will appreciate it, and read the newsletters.
    For many years I have allowed subscribers to let relatives “piggy-back” on their subscription for $25 per year, which many of you do. This is a reminder that is available.
    For new subscriptions, I need their mailing address and email. Please tell them I will be contacting them. Use my email and address listed above.
    Thank you, and have a Happy Holidays.


Site by Delta Systems powered by ExpressionEngine