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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.

The Saudi Arrests and the Perils of Foreign Investing

Issue #496, November 13, 2017

    Last weekend there were the arrests of almost 50 Saudi princes (they have a lot of princes over there), military officers, government officials and other influential Saudi businessmen on the orders of crown Prince Mohammed bin Salman. Included among those rounded up was multi-billionaire Al-Waleed bin Talal, 95% owner of Kingdom Holding Company, worth $20B+, which makes him the largest individual shareholder in Citigroup (C), and second largest voting shareholder in 21st Century Fox (FOXA). As the week wore on, there were not only more arrests, but assets totaling as much as $800B have been frozen. (Apparently the arrests are now in the hundreds and are still rising). 
    This, of course, has nothing to do with the official allegations of corruption and money laundering (Putin would have come up with better excuses). At first this was described as a move by bin Salman to consolidate his power. But it appears that the motives are also more banal. The low oil prices of the last 6 or 7 years have hurt the Saudi government’s finances. This roundup appears to be nothing more than a good, old-fashioned shakedown. 
    Forget the geo-political, social and religious implication. How does this effect your pocket book?
    Energy has been strong. The price of oil is close to a 2-year high, and XLE (an ETF of the largest oil stocks, such as Exxon-Mobil (XOM) and Chevron (CVX), and OIH (an ETF of the oil service stocks, such as Schlumberger (SLB) and National Oilwell Varco (NOV) have been strong. Is this because of a strong world-wide demand for energy, a harbinger of a weakening of the US Dollar (oil and most commodities are priced in dollars), or political instability in the Middle East? Considering there is currently little surplus in the oil market, a conflict that causes any production to go off line could cause prices to shoot up.
    My most important point is the message this sends about your investments and the rule of law. The cornerstones of our democracy, and the reason we have the strongest economy in the world, is because of the sanctity of private property and the enforcement of contracts. People invest in the US because they know their money is safe. Is there anywhere else in the world where many countries would let another country’s central bank hold their gold, as the Federal Reserve does in New York?
    The Saudis have been considering an offering of stock in their state-owned Saudi Aramco Oil, the largest company in the world, valued at $2T. With this banana-republic style shakedown and roundup of political (?) opponents, the chance of the IPO of Aramco being floated on a major exchange in New York or London is zero. It will probably be sold by private placement, with the Chinese government the most likely buyer.
    This applies to countries in general, such as Venezuela and Russia, and also individual companies in various countries. About 10 years ago, the Brazilian state-owned oil company Petrobras (PBR) announced the discovery of the Lula oil field, the largest oil discovery in the Western Hemisphere in the last 30 years. PBR has been looted by the politicians, and the stock was trashed. Indonesia has been haggling with Freeport McMoran (FCX) over the Grasberg mine, one of the largest copper and gold mines in the world, and now by “agreement” Indonesia has taken a 51% stake in the mine.
    Last week I noted China’s imperial ambitions. They want to have the world’s most powerful military by 2050, and they want the renminbi to be the world’s reserve currency. This won’t happen unless China proves they respect private property, and they appear to be headed in the right direction.
    The point of this discourse: only invest in jurisdictions that respect private property and the rule of law. I would be hesitant to buy stocks directly outside of North America, Western Europe, Japan, Australia or Singapore. If you want exposure to emerging markets, do it through a fund offered by one of the big companies, such as Vanguard or Blackrock (BLK). Let them pick the stocks.
    I would be very hesitant to have a direct investment, such as in a company or piece of real estate, outside the US or the English-speaking democracies. What if something goes wrong? Do you speak the language? Just traveling there could be hazardous to your health. An exception would be if you are an immigrant to this country or still have relatives there, such as many of those of Indian heritage who take this newsletter.     
    In French, the crown prince was le Dauphin.
    Two-time Cy Young Award winner Roy Halladay died in a plane crash on Tuesday.
    1) Non-commercial flights, mile per mile, are many times more dangerous than commercial flights. When a commercial plane goes down and 150 die, you hear about it on the news. Unless someone of note, such as Halladay, golfer Payne Stewart, or Buddy Holly, Richie Valens or The Big Bopper (Jiles Perry J. P. Richardson, Chantilly Lace) dies, the crash goes un-noticed by the national media.
    2) When I was in practice, our group had term life insurance policies, payable to the group, on each member to fund their buyout in case of premature death. Two of the questions asked by the insurance company were A) do you scuba dive? B) In the last year, have you taken a non-commercial flight more than once?
    RMD comment: Avoid non-commercial flights.
    SCUBA: self-contained underwater breathing apparatus.
    LASER: light amplification by stimulated emission of radiation.
    RADAR: radio detection and ranging.
    Three weeks ago I noted that General Electric (GE) was already down almost 25% for the year. But I cautioned “Don’t buy just because something is lower. It is usually weak for a reason, and could go much lower before it turns around”. GE continued to get trashed, and as of Friday morning, 11/3, was down 9 days in a row. I bought a small position, thinking “It’s got to turn around sometime”, with a plan to take a 10% profit and get out.
    RMD comment:
    1) To repeat: don’t buy because something is low, because it can go lower.
    2) I admit: this is not investing, but there are a lot of ways to make money, sometimes on a trade. This will become more important as the bull market matures. When your intention is a trade, put in the order to close the position as soon as you open it.
    3) Lowry’s notes that the more obvious a bargain, the more quickly the buyers step in. GE went nowhere last week, so I took my small profit and got out.   
    Last month Robert Edward Auctions sold a 1916 Sporting News Babe Ruth, and all 4 Ruth cards from the 1933 Goudey set, at prices that were very strong, at least twice as high as just 4 or 5 years ago. I asked younger son Michael about the comic book market, and he noted the more premium the material, the stronger the prices.
    RMD comment: For the first time in many years, there is a synchronized upturn in almost all economies and stock markets around the world. Everyone is flush.

    This is from a Canadian subscriber on last week’s letter about Las Vegas.
    “In ’74 we went on a junket promoted by a friend. It was thrilling. We put up $2,500 and stayed at the Sahara, a class joint at the time. We had a 2-lobster cocktail and filet mignon for breakfast, and it was free. The “wise guys” (mobsters) were hard to miss. The town had energy.
    We played craps. A LOT of black chips ($100) were flying. Within ½ hr. we were up $3,500 (RMD comment: That would be about $25K now). My wife said “let’s quite”. I said “Are you nuts? We’re just getting started”. But we did leave shortly thereafter, and ended up way ahead.
    I asked my friend Harvey how many people on the flight ended up “in the box”. He said all of them. It seemed strange to me that people would put up so much, take a long flight, and come home empty. I never replicated that big win and incredible feeling and finally stopped. We saw LV change from a fast and loose Wild West atmosphere, to structured, corporate and constrained”.
    RMD comment: I encourage feedback, suggestions and questions. And don’t gamble. 
    Remember the commercial “How do you spell relief? R O L A I D S”.
    How do you spell confidence? When an 88 year old takes a 2-year subscription to this newsletter. 
    We have had some problems with the emails sent that a newsletter has been posted. They may be ending up in your SPAM folder. Be assured we are working on the problem. As you now, when I’m not traveling I usually post on Sunday morning. If you have not received a notice by Monday afternoon, sign into the website for the latest post.   
    The interest rate curve is starting to flatten, so I’ll talk about that in the near future.

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