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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.

Used Car Dealers, Student Loans, the Chinese, and Uncle George’s Rule

Issue #516, April 02, 2018

    I want to write about interest rates, the dollar, and gold, but the US Dollar Index is stuck in a range between 88 and 90. When it breaks out either way, things should get interesting. We’ll talk more then.
    You won’t see this in print anywhere else.
    A man in his early 70s, a car enthusiast, winters in Texas from January through April. His daughter goes down to visit. To pass the time, they go to a car lot to look around. Man “This looks pretty cheap”. Salesman “That’s just the down payment”. Man: “I might be interested”. Salesman: “Are you a snowbird”? Man: “Yes”. Salesman: “We don’t like to sell to snowbirds”. Man:”???” Salesman: “Snowbirds usually pay cash, so we can only sell the car once. We prefer to sell to locals. We just post the down payment so they buy a car we know they can’t afford. When they can’t make the payments, we repo the car. We keep the down payment, which is all profit for us, then resell the car. We ‘sell’ some cars 5 or 6 times”.
    RMD comment: The vast majority of car dealers are honorable businessmen and woman you can trust. For those that sell new cars, about 50% of their profits come from service. They want to keep customers happy so they will bring their car back for service, and 5 years down the line, buy another new car. Some Chevy and Ford dealerships have been in the same family for 3 or 4 generations. But just as in every profession, there are a few bad apples that operate at the margins, so be careful.
    If you take my advice and only pay cash for the car you can afford, this isn’t an issue. 
    In 2003, student loans represented 3.3% of total household debt (mortgages, credit cards, auto loans, everything). In 2017, student loans had skyrocketed to 10.5% of household debt. The new Fed Chmn. Powell said that student debt had reached the point that it “could hold back growth”.
    RMD comment: student debt is out of control.
    About 11% of all student loans are in serious delinquency, defined as at least 90 days in default. Considering that the denominator includes students still pursuing studies, with no responsibility to currently pay on their note, the true delinquency rate is much higher.
    RMD comment: Student debt is out of control. The enabler is the federal government, which now insures more than 95% of student loans, and the “perps” are the “University-Industrial Complex” (a term coined by me), who capture the subsidy by raising tuition, which the students fund by borrowing more: a positive feedback loop. The Universities grow just to become more powerful, regardless of the needs of society.
    I believe student loans will play out by becoming politicized. They will be considered an entitlement, just like Social Security and Medicare. Any attempt to have an intelligent discussion will be met with “he wants to take away your student loans”. The deadbeats will act as a special interest group, and outvote the good boys and girls who did the honorable thing in paying off their loans. See The Federalist Papers #9 “Union as a Safeguard Against Domestic Factions and Insurrection” by Alexander Hamilton and The Federalist Papers #10 “Factions: Their Cause and Control” by James Madison for insight into special interest groups.   
    Oil futures are now traded in yuan on the Shanghai exchange, with the option to convert the yuan to gold.
    RMD comment: The US Dollar is the world’s reserve currency. This gives the US great power and flexibility. Oil is currently traded world-wide in dollars. China wants to become the #1 super power, and to do this they must be able to challenge the US militarily and economically. To challenge us economically the yuan must be as strong and universally accepted as the dollar. Oil tradable in yuan is an important step.
    China’s official gold holdings are 1,842 tonnes. I think they have a lot—a lot—more than that, and have been accumulating gold for exactly this reason: so the yuan can challenge the dollar.
    There is a man with the sobriquet “Marlins Man”, a loyal, intense fan with 4 season tickets directly behind home plate. The Marlins lost much of their talent over the off season, yet raised ticket prices on Marlins Man’s seats from $250 to $260 per game. He sent them a check for $200,000 to re-up for his 4 seats for 2018, 2019 and 2020. After some negotiation, the Marlins declined his offer and returned the check.
    RMD comment: Let’s look at the numbers. 81 home games x 4 seats = 324 tickets per year. For 3 seasons that’s 972 tickets. He is offering $206.75 per ticket in cash up front for tickets that lists for $260. 1) The guy is a loyal fan, cut him some slack. Good customers negotiate discounts all the time. 2) In Interim Bulletin #486A (9/7/17), I recounted what Mr. Graham told me in the first week of my high school job in June, 1967, “Bob, never let anybody leave the store when we have what they want”. The Marlins let this guy leave the store when they had what he wanted. 3) The Marlins would have the use of the $200K for almost 3 years. 4) Newsletter #5 (12/4/06) was “Uncle George’s Rule: Why Cash is King”. After General Steel closed in 1973, and my dad lost his job of 37 years and Uncle George lost his job of 30 years, Uncle George would frequent the area pawn shops to make a few extra bucks. When he was having trouble closing a deal, he would put the merchandise he wanted in one pile, and the cash he was willing to pay in another pile and say “which pile do you want”? The pawn shop owners always took the cash. The Marlins turned down the cash.
    WalMart (WMT) is in talks to buy health insurer Humana (HUM). Amazon (AMZN), Berkshire Hathaway (BRK.A) and JP Morgan (JPM) recently announced plans to create an alliance to deliver health care to their employees.
    RMD comment: I had a series of 6 Commentaries in The American Journal of Medicine in 2016 under the general heading “Negative Secular Trends in Medicine”, things like Prolonged Training Periods, High CEO Salaries, Student Debt, Increasing Bureaucracy and High Hospital Profits, that I thought made it less likely the smartest kids in the class would pursue a career in Medicine. Add to that list “The Corporatization of Medicine”. Physicians are at an ever-worsening disadvantage against these multi-billion dollar corporate behemoths.
    Next week’s Newsletter will be a good one: What to do with $1.35M in a retirement account when it’s time to draw it out, and you don’t need the income at that time.     



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