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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

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

THE PHYSICIAN INVESTOR NEWSLETTER

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

Practice Real Estate and Free Agency

Issue #503, January 01, 2018

    I recently spoke with a man who is as well-connected with the business of Medicine, both private practice and Academia, as anyone I know. He has an impressive appreciation of the intricacies, nuances and vagaries, literally of what makes things tick. This newsletter could be included under the general heading of “What They Don’t Teach You in Medical School”. 
    For some time now I have been discussing the increasing “Corporatization” of Medicine. The hospitals are run by the “suits” for the benefit of the “suits” and the multi-billion dollar companies, both profit and not-for-profit, that own them. Physicians are steadily losing ground. Here’s at least one thing that gives docs a little more leverage.
    “I have some thoughts on your recent comments about real estate as it relates to your practice. I started and built a practice from scratch, adding partners, ancillary services, imaging, and a surgery center. I never owned the real estate, and the longest lease was 2 years. I believe the #1 key (emphasis in the original) for physician happiness is free agency. Hospitals love when you own real estate, because you are no longer a free agent: it ties you to them. The small amount of financial advantage (depreciation, paying yourself rent and potential appreciation), does not outweigh the loss of flexibility. Even highly specialized offices can move efficiently, and landlords love docs because they pay the rent and rarely move.
    An exit strategy is always critical, but if you own your exit strategy, it’s a turtle’s pace. If a potential buyer knows you or your group are leaving the immediate area, they will take advantage. If you are leaving town, look out, because the price you receive will be under real pressure. You may have an agreement with your group to buy back your interest when you retire, but how about if you leave town in the middle of your career, and you want the “fair market value” for your ownership? No matter what the language of the contract, your value in the real estate has gone down dramatically. Litigating a contract is always a losing proposition, esp. if you are leaving the area”.
    RMD comment: that is one of the most important points you will ever hear, so I will repeat it: litigation is always a losing proposition. Ask any banker about foreclosing on a piece of property: they hate to do it, because they are guaranteed a loss.
    It shows the importance of dealing with people of character. If a person cannot or will not honor an agreement, even a foot high, million word contract means nothing. Ex: you do a $1M business deal with a guy who squanders all of the money and only has a nickel left. He defaults. You take him to court with the best lawyers, and win. You will receive exactly 5 cents (minus attorney’s fees and other expenses). 
    “In the last few years free agency has played out in spades. There is a great demand for docs, but you have to pick and choose. How many docs do you know, who for whatever reason, are trapped in a geographic location, and have seen their practice decline for reasons beyond their control? This is occurring in my area. We hear so much about burnout and suicide. I believe many of these pressures are from not having the freedom to pursue different opportunities. Look at major league athletes if you want to see the tremendous advantages of free agency. Thank you Curt Flood (see below).
    Eighty percent of docs going into practice today want employment, but don’t realize what they are asking for. At least they have free agency—often sooner than they like”.
    RMD comment: I had a series of 6 Commentaries in The American Journal of Medicine in 2016 on “Negative Secular Trends in Medicine”, things such as long training periods and student debt, which make it less likely that the smartest kids in the class will choose Medicine as a career. Becoming a hospital employee is near the top of that list: you may have an MD behind your name, but you are just a cost center to be controlled, no different than an X-ray tech, or how much it costs to pave the parking lot.
    Before finishing, let me remind you there are two related negatives to moving a lot. 1) The moving expenses themselves, although these may be covered by the hospital. 2) In a flat market, it takes at least 5 years to recoup the “round trip” fees to buy and sell a home, making it hard to accumulate equity. Potentially, these can be negated by the improved income (and happiness) from your practice.
     
                                                                  RMD

    Someone asked what is the intrinsic value of Bitcoin? One could easily say zero, but the best answer I’ve heard is $1,250, the cost of the power to run a computer to solve the complex algorithms required to “mine” a Bitcoin. An analogy is the input cost to mine an ounce of gold or a pound of iron.
    RMD comment: put that in perspective. $1,250 is 3-4 months of utility and heating bills for your home. This can’t last—or will it? 
    This is from a subscriber in the food processing industry who lives in a rural area.
    “Regardless of land values (unless they tank), it’s not practical for a young person to start a farm. Especially in productive areas, it costs too much because faming is so capital intensive. I compare this to someone who wants to start a car company. It’s not practical. The industry is too mature. No amount of farm welfare from DC will overcome this”.
    RMD comment: The average farmer in the US is almost 60. We feed the world. Something will happen shortly. Maybe the people who graduate college with $50K of student debt and a worthless degree in “general studies” (whatever that is) will figure out they would be far better off, make some real money, and contribution more to society, by going into agriculture: get your hands dirty, drive a $300,000 tractor, slop the hogs (as they did in the 50s, don’t know if they do that anymore), collect eggs, and weld the 24-row, computerized $250,000 planter when it breaks down. You heard it here: the 20-year old who is smart, but doesn’t like the classroom, who is good with their hands, willing to work hard and wants to be their own boss, should be a farmer.
    From The Republic for Which it Stands:
    1) In the US, adult height (a general indicator of childhood nutrition) and life expectancy (a general measure of living conditions) peaked about 1830, coincident with the rise in industrialization and urbanization. By 1880, average adult height had fallen 5 inches, and life expectancy was down from 56 to 47. It took 100 years, 1930, to return to 1830 levels. In the Revolutionary War, the average Minuteman was 3 inches taller and 20 lbs. heavier than the average Red Coat.
    2) From 1865-1897, prices fell about 1% per year. The Consumer Price Index fell from 196 to 100 (1860 = base 100. There was significant inflation during the Civil War).
    RMD comment: Creditors, in this instance, the hard-money, gold standard Northeast and near-Midwest bankers and industrialists, did well. Ex: a bond not only paid 4-5% interest per year, but each year the return and principal were worth more. The indebted farmers of the Midwest, far West, and the entire South, were crushed.
    Debtors, the US being the largest, must have inflation to service their debt. 
    I saw my first baseball game at old, old Busch Stadium (nee Sportmans Park) on North Grand in 1958, the year the Cardinals traded for Curt Flood from Cincinnati. After the 1969 season, the Cards traded Flood, Tim McCarver and Joe Hoerner to the Phillies for Richie Allen and Cookie Rojas. Flood declined to report, and challenged the reserve clause. His letter to baseball Commissioner Bowie Kuhn is considered one of the most important letters of the 20th century (see Letters of the Century: America 1900-1999, Grunwald, 2008). It ruined his career, but opened the door for the later successful challenges, creating free agency. Had Flood foregone this and continued to play, he would be in the Hall of Fame. See A Well-Paid Slave: Curt Flood’s Fight for Free Agency in Professional Sports (Snyder, 2007).
    The dollar is weakening, the precious metals are strong, and the commodity, natural resource stocks, have exploded upwards. This will be the subject of next week’s letter.     
     

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