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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

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


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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