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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

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


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

The Problem with Auction Reserves

Issue #421, June 06, 2016

    Two weeks ago, Stacks-Bowers auctioned part IV of the Pogue Collection. The world record sum of $10,575,000 was bid for the finest known 1804 Silver Dollar, but it didn’t meet the reserve, so didn’t sell. There are only 3 known 1822 Half Eagles ($5 gold piece). Two are in the Smithsonian, so this is the only one available to private collectors. It received a bid of $7,285,000, but didn’t sell because it didn’t meet the reserve.
    This not a comment on Stack-Bowers, they are an absolutely first-class outfit, arguably the premier auction house for US coins, nor on any other major auction houses, since most if not all do this. Rather, it about having a reserve price on an item at auction.
    1) You don’t know what the reserve is. It’s a mind game, like “what am I thinking?”
    2) The opening bid is invariably lower than the reserve, so that doesn’t give any help.
    3) You can’t just register on-line and bid on items like this. What if somebody was the high bidder at $41M on a desirable Picasso Cubist painting, and were just some Joe who did it for a lark, maybe some wacko in a high-security prison? The auction house would take a terrible hit to their reputation. When I bought “Mrs. George Caleb Bingham (Sarah Elizabeth Hutchinson), 1819-1848, and son Newton, 1837-1841”, (#121, E. Maurice Bloch, The Paintings of George Caleb Bingham, U. of Mo. Press, 1986) at a Sotheby’s auction, I had to provide multiple bank references before I was allowed to bid.
    4) Say you are a 70-year old retired physician, who worked hard and was careful with their money, with an investable net worth (not counting your home and vacation home) of $10M. You have a coin collection worth $1M. You are willing to pay $500K for the coin you have been waiting 20 years to complete your collection. You are ecstatic, and pay $10K to bring all of your family to NYC to attend the auction. The bidding is intense: you are the high bidder at $575K (15% more than you planned). Sorry Sir, you don’t meet the reserve.
    5) Say you want item 49, expected to bring $400K, but you like item 50, expected to bring $600K, even more. You can’t afford both. #49 goes for $375K, a little less than you thought, but you pass, saving your money for #50. You bid $600K for #50, but don’t meet the reserve: sorry Sir, you’re shut out, nothing to show for the auction.
    6) Payment is due on receipt of the invoice, which they get out quickly. Thus unless you have made a previous arrangement with the auction house, you have 10 days to 2 weeks to come up with the money. What if you have already liquidated investments in preparation, but your bid doesn’t meet the reserve? Big waste of time, and maybe an unnecessary tax bill. Or you have arranged a line of credit with your local bank, to be paid off as CDs roll over. Another waste of time.
    7) I’m sure auction houses have data on items with a reserve that don’t sell. It would be interesting to know whether in the end, considering the time cost of money and the expenses, the seller realized the price they really wanted. 
    I recommend you avoid bidding on an auction item with a reserve. I think it’s just a hustle. Also if you put something up for auction, don’t put a reserve, just sell it.
    The May Job Report released on Friday can only be described as punk. It was expected to show about 170K new jobs: alas, it was 132K short at +38K. Moreover, the total of the prior 2 months was revised downward by 59K. I think the most startling number was that 664K people (that is exactly 2/3 of a million) became so depressed they stopped looking for a job.
    RMD comment: is a recession coming? I can’t see the Fed raising interest rates. 
    There is a great article in last week’s Barron’s (5/30/16, p 33) “Free Tuition is not the Solution”. “The more the government lures unqualified students into the groves of academe, the more students will be falling out of the trees.”
    RMD comment: this sums up beautifully what I have been saying for years. 1) Too many students go to college. There are only so many jobs that require a college education. More than 1/3 of college grads have jobs that don’t require a college education. It is far better to be the smartest carpenter or auto mechanic than to be the dumbest (and indebted) General Studies major. 2) The government needs to get out of the student loan business.
    Next week I’m going to talk about the VIX, the Volatility Index. In the interim, watch the VIX: if it stays below 17, the market will stay calm. The week after I’ll talk about why you should not engage a part-time real estate agent.
    From The Rise and Fall of American Growth (Gordon, Princeton U. Press).
    The greatest medical advances since 1870 were the sterile surgical technique pioneered by Lister, vaccines, and penicillin. But most important was the germ theory of Pasteur, which led to clean food, milk, and especially clean running water and improved sanitation. Infant mortality dropped from 25% to less than 1%. Considering the value of a year of life, nothing has contributed more to human productivity than the increase in the life span from 45 to 70 years.
    There have been some advances since 1970, but not on the scale from around the turn of the last century. Gordon rightly notes that modern hospitals, with their spacious rooms, advertising, and all kinds of expensive equipment such as helicopters and CT scans, have added little aside from driving up costs.
    I highly recommend The Bad-Ass Librarians of Timbuktu and Their Race to Save the World’s Most Precious Manuscripts (Hammer, Simon & Schuster).
    1) I knew nothing about the rich cultural heritage of Timbuktu, and that area of Africa.
    2) It is an on-the-ground, first-hand account of what happens when ISIS comes to town. Very scary. It was only strong action by the French that restored order to the area in 2012.
    On June 2, 1967, I started my high school job at Graham’s Book Store at $1.59 ½ per hour. Looking back, Mr. Graham was the hardest working person I ever met. I learned a lot, and will make this the subject of a newsletter in the near future.   
    Last weekend one of Diane’s grandson’s was baptized. The church service was way too long (at least for me). About half way through I said to myself “this is killing me”.
    That instant my hearing aid battery went out.
    I looked straight up and said “Thank You”.
    It was a good week for the family. Claire Emily Doroghazi, daughter of younger son Michael and wife Beth, was baptized in Cleveland.
    Older son John is a partner at law firm Wiggan and Dana in New Haven, CT. They were named one of the top 5 “Franchising” firms in the nation by Chambers ranking service, and John was listed as an “Up and Coming” attorney.       


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