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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

Student Loans: But Wait, There’s More!
Issue #452, January 13, 2017

A Second Home
Issue #Interim Bulletin #451A, January 04, 2017

The Consumer Confidence Index
Issue #451, January 02, 2017

Social Security
Issue #450, December 26, 2016

My Outlook for 2017: Part II of II
Issue #449, December 19, 2016

My Outlook for 2017: The Market
Issue #448, December 12, 2016

Medicine in 20 Years
Issue #447, December 05, 2016

Higher Interest Rates
Issue #446, November 28, 2016

Trump and the Markets: The Bad and Ugly
Issue #445A, November 23, 2016

Trump and the Markets: The Good
Issue #445, November 21, 2016

Negative Trends: The Suits aren’t Makin’ Steel
Issue #444, November 16, 2016

The New DOJ Fiduciary Rule
Issue #443, November 07, 2016

Barron’s Conference, Part IV of IV
Issue #442, October 31, 2016

Barron’s Conference, Part III of IV
Issue #Interim Bulletin #441A, October 26, 2016

Barron’s Conference, Part II of IV
Issue #441, October 24, 2016

Barron’s Conference, Part I of IV
Issue #440, October 20, 2016

This Newsletter
Issue #439A, October 12, 2016

Memoirs of US Grant: Vol II
Issue #439, October 10, 2016

More Points on Collecting, Investing and the Economy
Issue #Interim Bulletin #438A, October 05, 2016

Personal Memoirs of US Grant
Issue #438, October 03, 2016

Ideas for a High School Part-Time Job
Issue #Interim Bulletin #437A, September 29, 2016

Collecting, Investing, and the Economy
Issue #437, September 26, 2016

Free College
Issue #436A, September 22, 2016

A Military Commitment to Pay for Med School
Issue #436, September 19, 2016

When a CD isn’t a CD
Issue #435, September 12, 2016

I Made a Mistake
Issue #Interim Bulletin #434A, September 07, 2016

What is Your Spare Time Worth?
Issue #434, September 05, 2016

Credit Cards and Bonus/Loyalty Points
Issue #433, August 29, 2016

The Write-off of Student Loans
Issue #Interim Bulletin #432A, August 25, 2016

412 Retirement Plans
Issue #432, August 22, 2016

Join the Club
Issue #Interim Bulletin #431A, August 18, 2016

The Case for Precious Metals and Hard Assets
Issue #431, August 15, 2016

When the US went off the Silver Standard
Issue #430, August 08, 2016

Why NOT to Open a Restaurant
Issue #429, August 01, 2016

Some Tips on Life Insurance
Issue #428, July 25, 2016

More Observations on Negative Interest Rates
Issue #427, July 18, 2016

Issue #426, July 11, 2016

Is a PhD Worth It? Part II of II
Issue #425, July 04, 2016

Is a PhD Worth It? Part I of II
Issue #424, June 27, 2016

Avoid Part-time real Estate Agents
Issue #423, June 20, 2016

Issue #422, June 13, 2016

The Problem with Auction Reserves
Issue #421, June 06, 2016

Make Full Use of Your Capital Investments
Issue #420, May 30, 2016

The Fed’s Announcement
Issue #419, May 23, 2016

Quit While You’re Ahead: A True Story
Issue #418, May 16, 2016

The Precious Metals
Issue #417, May 09, 2016

Negative Secular Trends: Part Ii of II
Issue #416, May 02, 2016

Negative Secular Trends: Part I of II
Issue #415, April 25, 2016

Not Winning is not the same as not Losing
Issue #414, April 19, 2016

Behavioral Economics: Part II: Weaknesses
Issue #413, April 11, 2016

Behavioral Economics: Part I: Valid Points
Issue #412, April 04, 2016

The Most Important Books I’ve Read
Issue #411, March 28, 2016

Secret to Success: Take Risks and do Things Differently
Issue #410, March 21, 2016

The Over-Priced Food Presentation Hustle
Issue #409, March 14, 2016

The War on Cash
Issue #408, March 07, 2016

Precious Metals: Don’t Jump in Yet
Issue #407, February 29, 2016

The Bear is Growling
Issue #406, February 22, 2016

The Importance of Showing Respect
Issue #405, February 15, 2016

The 80-20 Rule of Thumb Pareto Principle
Issue #404, February 08, 2016

Some Tips on Commercial Real Estate
Issue #403, February 01, 2016

Economic Outlook for 2016
Issue #402, January 25, 2016

Selling Short: Part II of II
Issue #401, January 18, 2016

Short-Selling. Part I. How it Works
Issue #400, January 11, 2016

Who Can You Trust, and How to Spot a Con Man
Issue #399, January 04, 2016


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

Is the “Trump Bump” Running Out of Gas?

Issue #484, August 21, 2017

    At one point early Wednesday morning, the day after the election, when it looked like Mr. Trump would win, the Dow futures were down something like 800 points. Then the market began to realize that a Trump presidency, with a Republican majority in both Houses of Congress, might be the most pro-business administration since Calvin Coolidge. They saw the possibility of real, meaningful tax reform, health care reform, and a dismantling of the stifling regulatory burdens imposed by the leftist, anti-business Obama Administration. Animal spirits were unleashed: the market went up, and kept going up—and then went up even more. The last 6 months, though, it has barely budged. The S&P 500 is up only 1% since March.
    Mr. Trump, being the kind of person he is, has taken full credit.
    The initial moves included:
    1) The US Dollar strengthened, based on a presumption of infrastructure and military spending and a strong economy in general.
    2) Gold, which moves the inverse of the dollar, suffered a back-alley mugging.
    3) Interest rates shot up. In general, the market doesn’t like higher rates, because A) bonds become an attractive alternative to stocks, and B) it costs businesses more to borrow. But in this situation, higher rates were considered a positive sign because they meant stronger business activity, and more demand for credit.
    4) Companies that get a high percentage of their business overseas, the big multi-nationals, such as those in the DJIA and S&P 500, can be hurt by a strong dollar, whereas smaller companies that do the vast majority of their business here, and would profit from Mr. Trump’s “America first” agenda, would do better. The Russell 2000, composed of small and mid-cap companies, which do the vast majority of their business here, went bonkers, out-performing the large-cap stocks.
    Many businesses view deregulation as important, or even more important, than tax reform. Because much deregulation can be accomplished by executive order, with little or no Congressional input, the President has clearly been able to get the ball rolling.
    Unfortunately, Mr. Trump’s erratic behavior, inability to deal with just about everyone (although he does seem to be on good terms with Melania and Ivanka), even going after Republican lawmakers, has the market questioning how much of his agenda is going to get done.
    The moves in the market immediately after Trump’s election are close to reversing:
    1) as I have frequently noted, the big game in town is always currencies. The US Dollar is down 9% this year, and within 1% of the low of last year. If the Dollar Index breaks below 92.6, there is no support until the low 80s.
    2) The bond market is sensing the possibility of slower economic activity. Watch the 10-year Treasury: it closed the week at 2.19%. 2.15% is the very important support level. A further suggestion that interest rates will remain low, or even fall further, is that the interest-rate sensitive Utilities are at new highs.
    3) Rick Santelli is my favorite on CNBC. Last week he noted that the VIX (the Volatility Index, also called the “fear index” because it rises when the market drops) for some time has moved inversely to the yield on the 10-year Treasury: yields drop, the VIX pops. That is, at present, the market considers it bad when bond yields fall. 
    4) Gold again bumped up against $1,300, but pulled back, and is due for a rest.  If it breaks out, it will be just another confirmation of Dollar weakness.
    5) The S&P 500 is within about 2% of its all-time high, but the Russell 2000 is off 7% in just the last 3 weeks.
    I very much want the Republican agenda of tax, health care, and regulatory reform, and a strong national defense, to succeed. I believe 8 years of Mr. Obama’s socialist policies hurt the country. But the revolving door at the White House, Mr. Trump’s grade school behavior of instantly lashing out at anyone who disagrees with him on even the smallest of matters, his dissing of prominent Republicans, and his overall behavior this last week, are causing the market to question whether the Republican agenda can be passed. If the market starts to tank, it won’t be because Looney Tunes in North Korea is threatening something (see below), but because the market senses that the Republican agenda, esp. tax reform, won’t get implemented. Politics always has at least some influence on the market and business’ financial decision, but this is approaching all or none.
    Really makes you appreciate Truman and Eisenhower, doesn’t it?
    Wall Street Journal (8/16/17). “Consumers ramp up spending: Debt rises”. The article describes how consumers feel flush because of low unemployment, rising confidence and rising wages. The catch: they are saving less and borrowing more.
    RMD comment: This allows me to make a very important point that I hope you will put into your permanent brain file. In Scarcity: Why Having Too Little Means so Much (Mullainathan, Shafir, Times Books). I thought the most insightful discussion was that of abundance: people invariably spend too much when they are flush, money that they will need when the tough times return, as they always do.
    The newsletter 2 weeks ago was about the importance of being a good estimator. If you can put a % on something, it forces you to ask questions and appreciates facts you might have otherwise overlooked. I put the chance that Mr. Trump will not finish his term as high as 30%.
    Kim Jong Un in N. Korea is an evil, terrible man, but his family has stayed in power for 70 years. They know how to play international politics. The chance of him picking a shooting conflict with the US is zero. I’m more concerned about the White House picking a fight. 
    I held my nose and voted for Mr. Trump for 2 reasons:
    1) the Supreme Court nominee to replace Scalia. Gorsuch is first-rate.
    2) I thought Hillary Clinton was the most venal politician since Aaron Burr.
    The best thing that can happen for the Democrats is for Mr. Trump to continue to flounder. If he were forced out or resigned, Mr. Pence would become President. Pence is more conservative than I prefer on social issues (I have always been pro-choice), but he is honest and capable, with significant legislative and executive experience. He would get a lot done with a Republican Congress.   
    On August 12, we presented the 6th annual Doroghazi Eagle Scout Awards, 3 awards of $10,000 each given to young men who received their Eagle Scout in the Great Rivers Council. This year’s recipients were:
    Jordan Occena: attended the University of Tulsa on a Presidential Scholarship and graduated Phi Beta Kappa. He is pursuing a PhD at the U. of Michigan in Material Science and Engineering.
    Andrew Turner: graduated valedictorian from Harvey Mudd College, with several publications. He is pursuing a PhD in Theoretical Physics at MIT.
    James Weagley: graduated summa cum laude with Distinction from the U. of Minnesota and is pursuing a PhD in Molecular Genetics and Genomics from Washington U. in St. Louis.
    Past recipients include a Rhodes Scholar, Fulbright Scholar, Army Captain Special Forces with a Bronze Star, and an entrepreneur who owned 10 rental properties at age 24. Eagle Scout is one of the few things you can earn before HS graduation that carries weight as an adult.
    Columbia is in the path of the total eclipse this afternoon. More in the next newsletter.

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