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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

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

Embezzlement
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

The VIX
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

THE PHYSICIAN INVESTOR NEWSLETTER

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

Buying Art and Collecting in General, Part I of II

Issue #480, July 24, 2017

    This is based on Art Collecting Today: Market Insights for Everyone Passionate About Art by Doug Woodham (Allworth Press). I believe this book makes so many points about buying and selling art, and collecting in general, that it should be a core book in your financial library. I also like the author’s style: simple, direct, and interesting.
    I found the discussion about buying art by living artists to be the strongest part of the book, but it is far too detailed and nuanced to review here: you must read this for yourself. Is the current hot young artist the next Picasso or Van Gogh, and you can buy their works on the cheap, or are they just a hot young artist who appears to have talent, and may, but goes nowhere? How good is your eye for art and your judgement?
    RMD comment: like everything, some people have a better eye than others. But: also like everything, the more you practice and work at it, the better you get. You’ll be surprised how much you can improve your ability to appreciate the better works.
    Before being president of the Americas section at Christies, Woodham was a partner at McKinsey in wealth management. “Whenever I started working with new clients, I asked around to find out…who…were the collectors. (They) were inevitably (those) most open to new growth and overcoming obstacles”.
    RMD comment: That is an insightful comment. I’ve observed that the really smart people invariably have so much excess brain power that they have other interests besides their primary profession. I encourage you to collect, and for you to encourage your children to collect. It is a great introduction to capitalism. Along with playing a musical instrument, collecting is one of only a handful of pursuits that you can do your whole life. If I were interviewing people for school or a job, one question I would always ask is if they collect anything. It will quickly help separate the stars from the guys.
    Bob’s Rule #1 of Buying Art (Actually, this applies to ALL major decisions you make in life): Never talk yourself into anything. In art, they call this the “Wow” factor. You look at something and say “Wow”, or my personal favorite “this is the greatest thing since sliced bread”, this is what you should buy. You may not always be right (although you usually will be), and even if it doesn’t work out as a good investment, you still like it. Now say you buy a work you didn’t like but you thought it would be a good investment: a women (the gallery director said it’s a woman, but you’re not that sure) with 3 heads and 17 eyes. Five years later it’s worth one quarter of what you paid for it. Now whenever you walk in the living room, you know that all 17 of those gooney eyes are laughing at you. Art is a discretionary purchase: only buy what you really, really like (see below).
    Most of the discussion involves 6, 7 and 8 figures or higher art.
    RMD comment: The general points about buying, selling and collecting at that level are the same as buying less expensive material. The average physician makes $250K per year. Obviously, many make more. Over a 30 year career, this is $7.5M. If a physician saves 20% of what they make = $50K per year, they should have a net worth of $3-5M by age 65. If they are not divorced, which cuts your net worth by more than half, you could easily have more. Considering that art is one of the finer things in life, it is portable wealth, and it is a nice legacy for your children, you could easily afford a 5 or even low 6-figure work.
    Woodham emphasizes: All prices are negotiable. He notes that the people who get the best deals at the auction houses are not necessarily the ones with the best items to sell, but the ones who are the best negotiators. He also encourages you to negotiate when buying at galleries, even if you are a first-time buyer. You could get at least 10% off.
    RMD comment: At most galleries, the split with the artist is 50/50, that is, the gallery mark-up is 100%. At glitzy, high-end vacation destinations, say Maui or Las Vegas, the gallery mark-up can be 200%, so there is room to haggle (The mark-up on rare books at such glitzy destinations can easily be 5x or 10x).
    I’ll finish this discussion in next week’s newsletter.

                                                                        RMD
    The US Dollar was down again last week, and is now off 7% for the year. That is a huge move in any currency, esp. for the most-owned in the world. This is not lost on gold, which was up again last week. Watch $1,290, the double high earlier this year. If (when) gold breaks $1,300, I’ll have a lot more to say.
    I live on Bingham Road. George Caleb Bingham’s genre paintings, such as “The Jolly Flatboatmen” (National Gallery of Art), “Fur Traders Descending the Missouri” (Metropolitan Museum of Art), or “Lighters Relieving a Steamboat Aground” (in the White House) come to market rarely, if at all, and fetch far into 7-figures. His portraits are far less expensive: the most famous is of John Quincy Adams in the National Portrait Gallery. In 2010, I was in the financial position to buy a Bingham portrait. That fall, “Mrs. George Caleb Bingham (Sarah Elizabeth Hutchinson) and son Newton” came up for auction at Sotheby’s. In 10 seconds I decided to buy it and have never looked back. It was one of the best purchases of my life. Go to George Caleb Bingham on Wikipedia. The first painting is a self-portrait at age 24. The second is the one I purchased.
    RMD comment: trust your own judgement. If you are wrong, so be it: learn from your mistake and move on. I promised myself a long time ago I would never fail taking someone else’s advice over my own better judgment.
    Quote of the week. From the narration of the World Series of Poker 2017 Main Event; “Horses are smarter than us: they don’t bet on people”.
    RMD comment: I’ve read a lot of Mark Twain. His humor often involves 1) the absurd; the Siamese twins, Chang and Eng, fight for the North and the South in the Civil War. They are captured and exchanged for each other. 2) Taking the unexpected opposite: the coldest winter I ever spent was a summer in San Francisco.
    I recommend The Last Days of Stalin (Rubenstein, Yale U. Press). 1) Ever heard of the “Doctor’s Plot”? 2) It’s hard for us in the US to imagine what it was like to live in Stalinist Russia, although the people in North Korea have a pretty good idea. 3) What’s really scary is that the rhetoric of demonization, name-calling and intimidation is heard on today’s college campuses.   
 

 

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