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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

My Outlook for 2016, Part I of II
Issue #397, December 21, 2015

Want to Live a Long Time?
Issue #396, December 14, 2015

Some Tips on Retirement
Issue #395, December 04, 2015

Negative Interest Rates
Issue #394, November 30, 2015

What if the US Dollar Breaks to New Highs
Issue #393, November 23, 2015

How to Decrease Student Debt by 25%
Issue #392, November 16, 2015

The Importance of Buying Life Insurance when you are Young
Issue #391, November 09, 2015

Barron’s Conference, Part II of II
Issue #390, November 02, 2015

THE PHYSICIAN INVESTOR NEWSLETTER

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

Who Can You Trust, and How to Spot a Con Man

Issue #399, January 04, 2016

    In Chapter 20 of The Physician’s Guide to Investing, 2nd Edition, I provide insights on “Who can you Trust?”, and in Issue #10 (2/20/07) of this newsletter I discuss “How to Spot a Con Man”.
    Who can you trust?
    One of my main goals is to instill a sense of healthy skepticism. There are some times when you ae better served being skeptical and even cynical.
    Make people earn your trust.
    The people to be most trusted are your blood relatives.
    During the Great Depression, some Hungarian friends of my grandparents were in a legal tussle and signed their home over to them until it blew over. This is how I would define complete trust: someone you trust enough to sign your home over and expect to get it back. Someone you can trust with anything is worth more than gold.
    Want to hear a provocative but realistic comment? Can you trust your spouse? Fifty percent of marriages end in divorce (see Chapter 23, Divorce: Beware of Gold-diggers).
    If there are 10 people, inside and outside of your family, you can trust with anything, you are either 1) a saint, 2) terribly naïve, or 3) come from a big and good family.
    As physicians, we are taught to trust our patients. In the real, legal, financial world, blind trust is a formula for disaster. Physicians must learn to turn off, to segregate, this blind trust outside medicine. I make an analogy to a prize fighter. Inside the ring, he tries to beat his opponent senseless. Outside the ring, such behavior is not socially acceptable.
    Be hesitant to invest with someone who has previously lost you money, not that they may be dishonest, but rather because they just may not be a good investor.
    How to spot a con man:
    Greed. To quote George C. Scott in “The Flim-Flam Man: “Greed’s my line. Greed and 14-karat Ignorance. They never let you down…you can’t jip an honest man”. The higher the promised return—“double your money in 3 months”—the more likely they are bogus. Any return above 20% should immediately make you suspicious. 
    Charming and slick. You are a 57-year old man who looks, acts and talks like Archie Bunker. A drop-dead gorgeous 25-year old lady starts to hit on you. There are only 3 possibilities. 1) You drop to your knees and say “Hallelujah, there is a God”. 2) She is stoned, or 3) she just wants your money.
    Checkered past: entrepreneur (can mean anything), then salesman, then preacher (watch out here), then water ski instructor, then real estate developer. 
    Flash, Glitz and throws money around. See more below.
    Religion, race, color and creed: referred to as “affinity” scams. “You’re a Christian, I’m a Christian. You can trust me”, or “us African-Americans need to stick together”.
    Secrecy. The “investors” are told to keep things a secret, mostly so the pigeons don’t out the perps.
    If you don’t understand an investment, your concerns are well founded.
    Inconsistencies should immediately raise a red flag. You were told this, and it’s not right. You were supposed to get a check, and you didn’t. In the 1980s, a check-kiting scheme by EF Hutton was only brought down after a clerk at a tiny bank did their job and wouldn’t clear a check because the funds weren’t in the account.
    I write on this now for 2 reasons. First, it never hurts to review basic topics. Second, flamboyant, glitzy, outrageous behavior should always raise your suspicions. 
    Albanian-born ex-CEO of Turing Pharmaceuticals Martin Shkreli first gained fame (infamy) earlier this year when Turing purchased the rights to decades-old generic drug Daraprim and (rapaciously but legally) raised the price from $13.50 to $750 a pill. However, 2 weeks ago, Shkreli was arrested and charged with multiple counts of securities fraud unrelated to the purchase and repricing of the drug.
    Shkreli previously tweeted that he was “the world’s most eligible bachelor, but “sorry, you have to be a shareholder to meet me”. He also would stream live on the Internet hours of himself playing chess, strumming a guitar, answering questions from strangers, or mocking Democratic presidential candidate Bernie Sanders. He recently purchased the rights to a Wu-Tang Clan album for $2M. 
    I guarantee that at least once in your life a con man will try to work his evil ways on you. Flamboyant glitz should always cause your antenna to shoot up. I know of a con man who rented a jet just to impress the stooges (unfortunately, it worked). Consider this: you want the person who manages your investments to have respect for money, to be concerned about every basis point (1/100th of a percent) of return, not to be like Ex-Tyco CEO Dennis Kozlowski, who spent $6,000 on shower curtains, $15,000 on “Dog umbrella stands”, and $2M on a birthday party. I prefer people who are straight arrows, maybe even a little dull, if for no other reason they are more like me, and I find them more believable.
    One more point. Shkreli was named to the Forbes’ 30-under-30 list. Watch out when someone starts to name drop. It makes no difference to you if Johnny Carson or Walter Cronkite have chosen to invest. You must make up your mind for yourself.
                                                                  RMD
    Below is a weekly chart of the DJIA, with the top in May, followed by a plunge in late August. The market rallied into year-end, but was not able to make a new high, and looks like it might be rolling over. Lowry’s numbers continue to deteriorate.
    RMD comment: watch 17,000 on the DJIA. If it breaks through this, it will probably re-test the lows of August/September. I forgot to add in last week’s note that 2016 will probably be more volatile. Watch the VIX (the Volatility Index).


 
   
    There have recently been a lot of ads on TV to donate to this charity or that.
    RMD comment: As a general rule, avoid any charity that advertises on TV, because too much of your donation goes to pay for the ads, and little, or very little, goes to programs. You are far better off giving to your church, or local Salvation Army or Boy Scouts. There are websites such as CharityWatch.org that provide a basic evaluation of a charity, and provide numbers on how much goes to programs vs. ads and salaries.
    I also wonder about stores that will take the change on your bill and give it to a charity. Sounds like a lot of work to raise a little money, a long run for a short slide. Just drop the change in the Salvation Army kettle on the way out.     
   
         
     

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