Newsletter Archive
Issues older than 90 days

Available Issues

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.

Why NOT to Open a Restaurant

Issue #429, August 01, 2016

        This question will come up at least once (and hopefully only once) in your life. This advice could save you a quarter-million dollars or more and a lot of headaches. I have yet to meet a restaurateur who thinks they can do brain surgery or an aortic valve replacement, yet for reasons that escape me some doctors think they can open a restaurant and make money.
    I have a friend who is a smart guy, excellent physician and successful investor. He and two friends opened a restaurant. His partners were a successful developer and a very savvy businessman.
    Right off the bat things went great. They had an excellent location on a rise overlooking a busy intersection on an interstate. The place was packed, with long waits, the food was very good and the customers happy. Yet each month when they met to review the financials it was painfully obvious they were losing money. In one of the best quotes ever, my friend said “It’s like we were paying people to eat at our restaurant”.
    The first problem was the manager. They came highly recommended, and their spouse was a local businessperson. In the end, they just weren’t up to the job.
    Their specialty was steaks. The beef was so good the employees stole the meat.
    There was a gift shop. The shoplifting losses were enormous.
    In spite of locks, dead bolts and chains, there was a break-in with big losses.
    Getting and keeping employees was difficult. On the urine screen, so many employees tested positive for drugs that the owners finally agreed that being positive for “just” marijuana was not a reason for dismissal. Welcome to the real world.
    After less than a year, they were forced to close. The owners had to service a multi-million dollar mortgage, costing them each $6,000 per month. Think of that: how long could you pay out that kind of money in addition to your mortgage, the kids’ college tuition, and your personal expenses?
    They hired a real estate agent. The agent found a renter, who signed a multi-year lease, with rental payments that almost covered the note. The commission was paid to the agent up-front, as a percentage of the total rent that would be generated over the length of the lease. Unfortunately, the renter was gone after 6 months, and had paid only the first 2 months of rent. Let’s just say the owners and the real estate agent had a disagreement over the commission (see more below).
    The owners tried to renegotiate the note with the bank. The same bank that was so delighted to make the loan now wasn’t quite so cooperative. (RMD comment: This is not a negative comment on the bank. If I loan someone money, I expect to be repaid in full and on time. It is essential to maintain a good relationship with bankers. Just as once or twice in everyone’s life they need a physician, once or twice in your life you’ll be in a pickle and need the help of a banker).
    The only reason a physician gets into the restaurant business (or any similar non-medical (ad)venture) is for the glamour, so they can brag in the Doctor’s Lounge or at the Country Club. “Hey, I’m really cool. Dude, get with it, and have a little fun in life” Don’t be seduced. The glamour of investing is to make money. Give me a “boring” S&P 500 Index Fund anytime compared to a “glamourous” investment where you lose your butt.
    In my experience, these kind of investments are a male androgen ego thing. Female physicians tend to be more (appropriately) risk averse. I’ve yet to meet or even hear of a female physician that has done this sort of thing.
    Please don’t open a restaurant.
    This is a review of Issue #61, April 6, 2009.   
    Interest rates in many countries dropped to new all-time lows. And they are going to stay low—for a long time. If/when the Fed, or any other central bank, even hints they will raise rates, the stock market—all assets, will tank. The central banks are in experimental territory and don’t know how to get out.
    Next week I’m going to talk about when the US repudiated the silver standard and stopped issuing silver dimes, quarters and half dollars in 1964, and how the Treasury sold billions of Silver Dollars into the market—at face value. I’m also going to discuss that we are again in a bull market in the precious metals.   
    In the example above, although negotiable, the real estate agent usually receives their commission up front. For small clients, a local agent will take annual payments to help level the cash flow.
    He notes the owner is responsible to do the due diligence on the tenant. Think of it as a sale with owner financing. If the buyer (in this case, tenant) defaults, it was the lender (seller or owner) that lent the money (rented the building) who is at risk. The landlord-seller must do the due diligence. 
    A management company that is paid for monthly management and works the rental is a different story. In that case there is usually a small upfront fee and monthly fees for management, based on the rent and cost of labor and expenses.
    RMD comment: a very big advantage of living in one place for a long time is that you develop relationships with reputable people in just about every profession.
    Last week I mentioned that USAA offers a wide range of financial services, but specializes in life insurance for current and past US Military. A local subscriber said:
    “Nice to see you plug a good company. All extended family (of servicemen) can use them. They were very helpful when our reserve unit mobilized for Iraq. I still use them”.   
        CNBC does a yearly survey of the top states for business. States are rated 1-50 in 10 categories. Overall, Utah was #1, Texas #2, Hawaii #49, Rhode Island #50.

    Missouri         Workforce                   49
                      Cost of doing business     14
                      Infrastructure                 9
                      Economy                   34
                      Quality of Life             49
                      Tech and Innovation       25
                      Education                   14
                      Business Friendliness       15
                      Cost of Living               11
                      Access to Capital           20
                    Overall rating                   31
    RMD comment: I found this interesting and suggest you look up where your state scores. Some points about Missouri:
    1) it is one of just a handful of states to retain a AAA bond rating.
    2) Workforce of 49th. Outside of St. L, KC, and Columbia, Missouri is rural. Consider: if you are the smartest kid in a town of 5,000, there’s nothing to keep you there. These areas suffer a constant brain drain, accompanied by a chronic drop in population. I make this point to show the importance of the immigration of smart, hard-working people to the US. The only 2 ways to increase GDP are improved productivity and more people.
    3) Cost of living #11. In Columbia, the cost of living is 97cents on the US dollar. Sixty cents in the parking meter gets you one hour. You can buy a nice 8 room, 2,000 sq ft home with a basement and 2-car garage for $200K.
    4) Education #14. St. L. U. is a good school. The U. of Missouri, Columbia is a member of the exclusive AAU. Washington U. in St. L. is a world-class institution.
    5) Infra-structure #9. Lambert St. Louis and KC International are first-class airports, Springfield has an airport with a nice selection of flights, and the roads, especially the Interstates, are good.
    6) Quality of Life #49. I have to admit, this burns me a lot. I haven’t traveled much to the West Coast, but I have a lot to the NY/NJ area, and I lived in Boston for 3 years. To be truthful, a lot of the folks in the Northeast are snooty to mid-Westerners, they think we’re a bunch of hillbillies and hicks (I’m not sure of the difference, as I know no hillbillies or hicks). Have you ever seen a Bostonian’s map of the US? Boston takes up about 3/4 of the area, then the rest of Massachusetts, and a smidgeon for the remainder of the US. In Columbia, you don’t have to pay for water at a restaurant (one of the biggest hustles on earth), and when you go into a store, the clerks actually treats you nice. The Lake of the Ozarks puts areas like the Poconos to shame. We have the Internet, indoor toilets, air conditioning, none of my neighbors chew tobacco, everyone wears shoes outside, no one I know eats possum or raccoon, and we don’t marry our cousins (That’s Arkansas, not Missouri).
    People in NYC say they have Carnegie Hall, Lincoln Center, and Broadway. I’m not impressed! How often does the average New Yorker go? A friend in Columbia goes to NYC 3 times a year and sees more live performances than 99.9% of the hoi polloi crowd.

Site by Delta Systems powered by ExpressionEngine