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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

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


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

Secret to Success: Take Risks and do Things Differently

Issue #410, March 21, 2016

    From Left Brain Right Stuff: How Leaders Make Winning Decisions (Rosenzweig, Public Affairs). How do you determine when to take risks, and when to avoid them?
    The main point is if you are seeking absolute or relative results. With absolute results, there are no competitors, all that counts is how well you do. Ex: saving for your retirement. You’re not in a competition, you just want to save money, so there’s no reason to take risks: tracking the S&P 500 with an index fund is quite sufficient.
    Relative results: say there are 50 competitors, and its winner take all. It makes no difference if you finish 2nd or 33rd or 49th. You get nothing, so you will take any risk you must to win. “When performance is relative and payoffs are highly skewed, one thing is assured: playing it safe will almost guarantee failure”.
    RMD comment: read that last sentence until you understand and appreciate it, because the message is really profound. It is the strategy for corporate success, and for personal success.
    It is also the strategy for tournament poker. As a general rule, only the top 10% of entrants get paid. You finish 12th = nothing, you essentially wasted your time—and your entrance fee. You finish 10th, you’ll get your money back plus a few bucks for dinner. You finish 1st, you receive about 20-25% of the entire prize pool. The classical coin flip in Texas Hold’em is a pair vs. 2 higher cards. Ex: 8-8 is a 55-45% favorite vs A-K. If you want to finish in one of the top spots—and the big money—you’re going to have to win a few of those coin flips. If you read books on poker, everyone says they had to get lucky somewhere along the way to make it to the final table.
    There was a Star Trek: Next Generation where the semi-omnipotent “Q” allows Picard to go back in time. During his cadet days, Picard was a brash young man. He jumped into a bar fight and was stabbed in the heart (and ended up with a 25th century mechanical heart). Picard wanted to know what his life would have been like had he not done such a stupid thing. Q snaps his fingers and they’re in the alternate present. Picard is in a dead-end, low-level science officer position with no chance for advancement. Q’s point: it was the risk-taking Picard that became Captain of the Enterprise, the flagship of Star Fleet.
    I’m not recommending you walk in the baddest part of town at 2 AM on Sunday morning to prove your machismo. But you need to take (calculated) risks sometimes to really get ahead. “Playing it safe (all the time) will almost guarantee failure.”
    Looked at another way: to win, you must do something different than everyone else. In college, I could recite the Nat. and Amer. League Batting, Home Run, and RBI Champs from 1920-1970. In 1931, Chick Hafey (of my St. L Cardinals) hit .3489. Bill Terry of the NY Giants hit .3486. Hafey’s teammate “Sunny” Jim Bottomley hit .3482. I came to the realization that Hafey won the batting crown because in one time at bat out of 500, he beat out an infield hit when Terry and Bottomley popped up or struck out.
    When I was a House Officer at the MGH, I organized a pool for the holiday college football bowl games. The “donation” to enter was $5 (being good, clean-cut Harvard doctors, we didn’t gamble). I quickly appreciated that to win, I had to make several choices that were different than everyone else: you had to pick the upsets. I didn’t care about the tossups or the prohibitive favorites, I looked at the 60-70%, 7-10-14 point favorites, and chose what I hoped were a few upsets. I came close the first year and won the second.
    You want to win a contest? Say most people are looking for about 200. If you choose 190 or 200 or 210, unless you hit the number on the nose, your chances of winning are zero. Choose 125 or 245: you might get lucky.
    Bottom line: to win in life, you must 1) take calculated risks, 2) know when to be different, and 3) know when not to be different.
    This time last year Bill Ackman and his Pershing Square hedge fund were the darlings of Wall Street, on the back of investments such Valeant Pharmaceuticals (VRX). Valeant has since fallen from 260 to about 30. Pershing lost more than $1B in one day alone last week, and has been put on credit watch by S&P. As of Thursday morning, Pershing Square was down 26% YTD and 47% since last summer.
    RMD comment: No matter what you think a stock “should” be worth, the market tells you what it “is” worth. Ackman let his ego get in the way of reality. To quote Baron Mayer Rothschild “Take a profit at once, take a loss at once”. Another maxim that applies “Your first loss should be your biggest (i.e., don’t stick with losers).
    On Wednesday, the Fed announced they would not raise interest rates, and were less likely to in the near future. The US Dollar tanked. The stock market took off, and gold popped $40 (see below).
    RMD comment: The central banks keep doubling down on low interest rates. The market has rallied 2,000 Dow points in 26 days, the strongest rally ever. I just don’t know where this will end. 
    Jack Chan posts every Monday morning on 321gold. In May, 2012, he turned bearish, and was right on the nose: in fact, he was “early”. Gold suffered a Hiroshima-like smackdown in April, 2013. He has remained bearish—until last week. He has again turned bullish, although notes near-term gold may back off, because the Commercials, the “smart money”, had their largest short position in years.
    RMD comment: Negative real interest rates are bullish for gold. When gold finally breaks above the recent high of $1,280, it will be the time to buy. I’ll talk much more about the precious metals at that time.
    In 1952, Senator Estes Kefauver (Tenn.) came to the Democratic Convention having won the vast majority of the primaries. However, because of his sensational Senate hearings where he exposed the Mafia on live TV broadcasts, he was disliked by many of the big city bosses in the Midwest and Northeast. Although Truman was unpopular at the time (history has shown almost all of his major decisions were correct), he was still President. He carried a lot of weight, and he disliked Kefauver big-time. Gov. Adlai Stevenson of IL won the nomination on the 3rd ballot. Sen. John Sparkman of Alabama was the VP nominee. In the end, it made no difference, as no one would have defeated Eisenhower.
    RMD comment: There is still hope for the Republicans. Unless Trump comes with enough committed delegates to guarantee the nomination on the first ballot, he won’t get it. The basic goal of a political party is to get behind a candidate that can win, to gain power. Trump won’t win, and he would drag down all the races for the House, Senate Governor, etc.
    Should Mr. Trump receive the nomination, I can only hope that Dr. Pangloss’ (naïve) comment in Voltaire’s Candide actually comes to pass. “Tout va pour le mieux dans le meilleur des mondes”. “All goes for the better in the best of worlds”.
    In 1935, Sinclair Lewis wrote It Can’t Happen Here, published during the rise of Fascism in Europe, patterned loosely after Louisiana Sen. Huey Long. According to Wikipedia, the novel describes the rise of Berzelius “Buzz” Windrip, a populist US Senator elected to the Presidency after promising drastic economic and social reforms while promoting a return to patriotism and traditional values.
    RMD comment: Unless we are very careful, it could happen here.   

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