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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

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


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

Leasing a Watch: Don’t

Issue #476, June 26, 2017

    One way I judge my newsletters is the feedback. It seems the less likely you are to find the topic discussed elsewhere, such as “A Wedding as an Investment”, (Issue #241, 12/24/12), and “Buying Jewelry: Gold, Diamonds and Pearls” (Issue #468, 5/1/17), or the more off-beat, “Critters and Varmints in your Home and Yard” (Interim Bulletin #473A, 6/7/17), the more they catch your eye. It is clear that the recent newsletter on “Leasing a Car: Don’t”, generated a lot of interest.
    In the June 19 Penta issue of Barron’s, there is an article “Just-in-Time Watch Rentals”. Eleven James, in NYC, rents watches. Here’s how it works. There are four levels of monthly “membership”, starting at $149 per month for watches worth $3,000 to $7,000, to $999 for watches worth $30,000 or more.
    (RMD comment: this man is clearly a sharp merchandiser. $999 rather than $1,000, which sounds so expensive. His products aren’t leased or rented, rather, you must be a “member”, implying exclusiveness. 
    Let’s run the numbers. For the $3K-7K group, the average is $5K. Round $149 to $150. $150 x 12 = $1,800 per year. At that price, you could buy the watch outright in less than 3 years. For the most expensive group, say the average watch is $50K, and round $999 to $1K. $1K x 12 = $12K per year. In a little more than 4 years, you could buy the watch. The vehicle you drive to work every day will eventually be worth zero, whereas quality watches are made to last a long time, basically your lifetime (I don’t say “forever”, because that is a very long time). My Bulova Accutron lasted 36 years. At the end of 3-4 years, the “members” have paid for this man’s watch collection.
    When leasing a car, you are terribly over-paying, but it is something you need: you have to get around. But leasing a watch? Not only do you have nothing financially—zero—to show for it, but you really don’t need it. Although I and many of my generation still wear watches, many younger people don’t. They just turn on their computer or cellphone and know the exact time.
    It is clear, at least to me, that this is just plain ego. Think about it: you are renting, sorry, leasing, bling! My “Dad, Grandpa Nagy Rule” applies here; would they be impressed? No. The man (almost) admits as much in the article. He says this new approach represents a “generational difference in lifestyle priorities and interests. The millennial generation has an aversion to long-term commitments”.
    RMD comment: We’re not talking about getting married, or moving from Columbia, Missouri, to Whiz-bang, Texas, or giving up a lifetime appointment to the Supreme Court. It’s a watch, man. A watch.
    ‘The sharing-economy model allows them to access experiences and embark on journeys otherwise unattainable” (see 2nd paragraph below for the rest of this quote).
    RMD comment: Uber is a good example of the power of the sharing economy. Rather than your automobile, your second largest capital asset after your home, just sit there for 23 hours a day, it is put to good use. This fellow is a savvy promoter who has noticed (created) a niche, and exploited it. Good for him. He’s just trying to make an honest buck.
    To finish the above quote: “without having to spend a major chunk of their savings”.
    This discussion allows me to make several points.
    1) It’s doubtful that people with this mindset are going to have a lot of savings. I don’t quote Ann Landers often, but someone asked her about the old saying “a fool and their money are soon parted”. She said (this is from 40 years ago, I am paraphrasing), “I didn’t know a fool ever had any money”.
    2) Such things can be enticing. It’s up to you to show discipline and not be seduced.
    3) Besides your home, if you can’t pay cash for something, you can’t afford it.
    4) Aside from the occasional situation where you need an expensive piece of equipment only once for a specific job, like renting a U-Haul or a pump, don’t lease. Remember: you don’t accumulate wealth buying, or leasing, depreciating assets.
    5) Presuming you can afford it, I encourage you to buy a quality gold watch. They last a long time, they look nice, and they are portable wealth.
    6) People who are careful with their money go through this kind of mental exercise all the time. Round numbers off or estimate, do the quick math, and you can easily determine if it’s worth it or not.
    7) Sometimes when I hear what people do for a living, I say “why couldn’t I get some of that action”. I once read someone got $1,500 for doing Jennifer Lopez eye brows. Think about this fellow renting watches to a bunch of millennial wanna-bees when you’re busting your chops on call over the July 4th weekend.
    You go to college for 4 years, med school for 4 years, and train for another 3-7 years. Don’t waste your money on foolishness like this. 
    Pharma has been doing well. Merck (MRK) is on the verge of breaking to a new recent high. Pfizer (PFE) has been strong. The biotechs (see the ETF IBB) are ripping, breaking out strongly to a 1 ½ year high, so I asked the opinion of an original subscriber with 30 years’ experience in the pharmaceutical industry.
    “Biotechs have been doing well since Trump’s election because the feeling is that the high prices will stick, but I don’t think investing now will bring a windfall. The reason for the recent bump is because the details of Trump’s health plan have emerged”.
    RMD comment: It appears to depend on whether the Republicans can pass their health care bill. I believe Trump is the most pro-business President since Coolidge, even more so than Reagan or Eisenhower. If many of the things he wants get passed, the market will do well.

    From Yahoo:  Derek Jeter is still in the bidding to buy the Miami Marlins, but his group needs more time to raise the $1.3B to complete the deal.
    RMD comment: I use this to illustrate the importance of credit, being able to borrow. It’s just as importance in your personal life as in your business.
    When I spoke in Youngstown, OH, in June, a House Officer (a semi-archaic term referring to people doing their Internship and Residency. In bygone times, Interns and Residents lived “in-house”. When I was an Intern at the Mass General, we all had rooms assigned at the Walcott, which no one used. It was torn down before I left), asked me about the first investments he should make when he had the basics covered.
    RMD comment: I’m surprised I haven’t written about this before. It will be the subject of next week’s newsletter. 
    Last weekend I played in the World Series of Poker Super Seniors event in Las Vegas, for those 65 and older (I’m 66).
    RMD comment: I’ve given up playing in the open events, available to all those 21 and older. I realized some time ago I’m no longer competitive against the kids. Look at athletic and intellectual performance. The body peaks at about age 26-27 (depressing isn’t it). There aren’t any 65 year olds in the NBA or NFL.
    I had been thinking about my play and realized I must be more aggressive, which I clearly was in this event. Three related quotes. 1) “You don’t win playing scared poker”, 2) “If you’re not caught bluffing at least once, you’re not bluffing enough” (I made one stone-cold bluff, got re-raised, and promptly folded), and 3) “Fortune favors the bold” (I believe Caesar said that).
    !720 people bought in. They paid the top 15% = about 257. Although I admit I had good cards, I also played very well. With about 500 people left, I had about 34,000 chips. Average stack about 15,000, so I was in great shape. Just staying even, I would easily finish in the money.
    First hand after moving to a new table. Lady raises and I call with a pair of 6s. Flop: 3-6-J. I flop a set (3 sixes). Pot about 4,000. I bet 1,500. I don’t want to let her in for free, but don’t want to chase her away. She raises me all-in for another 20,000 chips. I snap call, and turn over my set of 6s. She winces and turns over a pair of Queens.
    RMD comment: 1) She way over-bet the pot. A call would have been weak, a re-raise of 5-6K would have been about right. 2) Don’t make a bet that only a better hand will call, such as another over-pair, (AA or KK), or, like me, trips. The hands that she wants to call, like A-J, are going to fold to that kind of bet.
    After the flop, there are 45 cards left in the deck. Chance of a Queen on the turn = 2/45. It was a 7. The river: chance of a Queen = 2/44 = 4.5%. Of course it’s a Queen, or I wouldn’t be telling this story. I was crushed emotionally, short-stacked, and busted out shortly thereafter. If I had won that hand, I would have had a monster stack, near 4x the average. I would have easily gotten into the money, and maybe even contend for a big prize. First place was about $270K.
    1) This is why they call it gambling.
    2) I’ll take those kind of odds any time.
    3) Even with the odds tremendously in your favor, nothing is guaranteed.
    4) I admit, I’m very competitive. This still burns me.
    I highly recommend Killers of the Flower Moon: The Osage Indians and the Birth of the FBI (Grann, Doubleday). Between about 1915 and 1926, hundreds of Osage Indians in Oklahoma died under suspicious circumstances to gain their headrights (royalties from oil on their reservation). This is better than any detective-spy novel because it was true.
    I try to read one or two of the classics every year. From Mark Twain’s Life on the Mississippi. “When I was a little boy, Lem Hackett was drowned—on a Sunday. He fell out of an empty flatboat, where he was playing. Being loaded with sin, he went to the bottom like an anvil. He was the only boy in the village who slept that night. We others all lay awake, repenting”.   

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