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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

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

Outlook for 2016: Part II of II
Issue #398, December 28, 2015

THE PHYSICIAN INVESTOR NEWSLETTER

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

Negative Trends: The Suits aren’t Makin’ Steel

Issue #444, November 16, 2016

    My first year at Granite City Steel was 1970. The base wage was $2.68 per hour. All jobs had points, worth 7 cents per hour. Laborer was a 2 point job. The rollers at the Blooming Mill and Hot Strip were 28 point jobs, the highest at “The Mill”.  Then there was bonus, calculated as a percentage of $1.90, the base wage in 1959 (see below). A laborer made about $2.68 + 2x7 + 10% bonus = about $3.00 per hour. The rollers made $2.68 + 28x7 + 50% bonus = about $5.59 per hour.
    I always worked as hard as I could, because I badly needed the job, and because I might increase my bonus. I never turned down a second of overtime, and I bid on all higher paying jobs. The first year I worked in Yard Maintenance. We were removing slag from the bowels of the soaking pits in the blooming mill with an air hammer, crow bar, and shovel. The foreman comes by, takes out his tape, measures the pile of debris, and does some calculations. “Doc, you just made 6% bonus”. RMD: “I really worked hard. The roller (literally right above us) makes 50-60% bonus, and all I get is 6%?”  Foreman: “Doc, he’s makin’ steel, you’re not makin’ anything”.
    The point: you must reward the people putting money on the bottom line.
    Medicine in 2016.  Who should make the most money? Easy: Who’s makin’ steel? Doctors and nurses make steel. Nurse’s aides, X-Ray techs, blood drawers, transporters, lab personnel, and floor secretaries help.
    Who’s not makin’ steel? The suits that run the joint.
    Yet who makes the most money and gets the biggest raises? The suits!! There’s clearly something wrong with this picture.
    A long-time subscriber sent me an article by Max Borders entitled “The Chart that Could Undo the US Healthcare System”. Here is the link.
https://fee.org/articles/the-chart-that-could-undo-the-us-healthcare-system/
    The chart graphs the number of physicians in the US, the number of healthcare administrators, and the % increase in US healthcare spending per capita from 1970 through 2009. Over this period, the number of physicians has more than doubled. Healthcare spending has increased 2,300%, and the number of administrators is up about 3,100%.There is an almost straight-line correlation between the rise in healthcare costs and the number of administrators.
    The 2nd of my series of 6 articles in The American Journal of Medicine on “Negative Secular Trends in Medicine” was “High CEO Salaries”. Many administrators at “non-profit” health care organizations make 7-figure salaries. Some even pull down more than 8-figures. The average CEO at a “non-profit” hospital makes more than 2.5X times the average physician.
    1) I do not believe it is a coincidence that there is an almost direct correlation between the increase in healthcare costs and the increase in the number of administrators.
    2) I believe this trend will worsen. The suits have every intention of keeping their sometimes obscene salaries, and will do it by continuing to squeeze the help. This will fall especially hard on the physicians who sign on as hospital employees.
    3) The physicians who will do the best in the future are those that rely the least on the hospital, such as dermatologists and the surgical subspecialists. I will discuss this in more detail in a newsletter in the near future. 
                                                                  RMD
    The multi-decade fall in interest rates appears to be over. I’ll discuss this, and some of the other things that might happen with Drumpf and the Republican sweep in next week’s letter.
    There was a bitter 6-month strike in the steel industry in 1959. In retrospect, it represented the top in the industry. The stock of US Steel never returned to its 1959 high.
    I received a detailed, well thought out note from a subscriber who disagrees with my negative opinion on the new DOL fiduciary rules discussed in last week’s newsletter.
    “For a literate investor, these rules may be unnecessary and raise costs. But the general populous doesn’t understand the advantages or disadvantages of a load vs. no-load or closed-end fund. Employers are shifting the burdens of funding retirement onto workers, and most are woefully unprepared. A good chunk of investors already believe their advisor are acting in their “fiduciary” interests.
    I realize you don’t like government interference, and prefer the market sort this out. However, with the increasing gaps in the elderly safety net, such as the underfunding of Social Security and many pension plans, there will be great human costs in the next bear market. Free markets only work when people are knowledgeable. It’s tough to meet these conditions when people can’t meet the financial basics.
    RMD comment: all good points. We’ll just have to see how things work out.
    Prior to Social Security and Medicare, old age could be rough. Many people were forced to work literally until they died. Now many have become too reliant on the government safety net, saving little or nothing for retirement. In China, where there is no safety net, people make a fraction of what we make, but save 40% of it because they know they must pay their own bills.
    As a society based on the Judeo-Christian Ethic, we feel an obligation to help the less fortunate. Unfortunately, the current system destroys self-reliance. The best course is clearly somewhere in between.       
    I talked to a man in a single accountant practice in a New England community, and asked what he did between April 15 and the end of the year. He said many people ask for extensions on their personal taxes, pushing their filing deadline back to October 15.
    1) You can ask for an extension on filing, but you must pay the taxes due by April 15.
    2) He noted this is usually just a lack of personal discipline. If the hard and fast deadline were April 15, they would file by April 15. Because the absolute deadline is really October 15, they routinely ask for an extension and file by October 15.
    3) He noted ¾ of these people end up getting a refund!
    RMD comment: by sheer laziness and lack of discipline, people let the government hold their money—interest free—for up to 6 months. This is the exact sort of thing that separates those who can accumulate wealth from those who just limp along.
    I had lunch with a professional man. As soon as my salmon came, I put pepper on it. He noted that I didn’t even taste it yet added more pepper. I said I like pepper, tasted it, and put on even more pepper (I admit, somewhat out of pique).  He thought it important, a sign of someone who does things out of habit without thinking.
    RMD comment: This reminds me of my discussion earlier this year of behavioral economics (see Issues #412, 4/4/16, and 413, 4/11/16): you try to do things because it makes sense, but sometimes there’s nothing wrong with doing something the way you do it because that’s how you like to do it.
    I recommend The Fall of the Ottomans: The Great War in the Middle East (Rogan, Basic Books). I have read a lot about WW I, and some about the battle of Gallipoli, but nothing about the war in the Middle East. It is also the first I read about the fate of the Armenians, the first genocide of the 20th century. There are a lot of Armenians in Granite City; the vast majority have a name that ends in “ian”. The rest end in “an”.
    Sorry this letter was late. I was traveling, then had IT problems.     

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