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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

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


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

Your First “Real” Investment

Issue #477, July 03, 2017

    When I spoke in Youngstown, OH in May, a young man asked what should be his first investment after covering the basics, such as adequate cash reserves and the down payment for a home. I’ll discuss this from the point of view as a physician goes through training. The general points, of course, also apply to non-physicians.
    The average med school grad has about $190K in student loans. By definition, they will have minimal savings, say $5K in their check/money market account, and no other real investments, such as stocks. Say they make $50-60K per year during their 5 years of training.
    During this period, the first goal is to discharge any debt besides student loans, and not take on any more debt. I pray you don’t have credit card debt (these folks are not the kind who read this newsletter anyway), but if you do, that needs to be paid off first. You may or may not have a car note. If you don’t, you must resist buying a new vehicle. Drive what you have until it dies. 
    Your next goal is to accumulate cash reserves. After you get a sufficient amount in the check account, open a money market, or buy short-term CDs. Continue to accumulate cash so that you have a 20% down payment for a home when you enter practice.
    Here’s what’s critical. You are used to living on a med student’s budget. Continue that mindset. I married after my Intern year. My wife taught at the Peter Bent Brigham School of Nursing. We lived off her salary of $21K, and saved my entire salary of $16K. When we moved to St. Louis in 1980 for my Cardiology Fellowship, we had saved enough for the down payment on a home.
    All of the above should be obvious. This is my insight: during this period, you want to get some money into the stock market, so you can take advantage of compound interest, your greatest investment friend. $1,000 invested in the stock market at age 30, compounded at 7% per year, is about $11,000 at age 65. At this time in your life, the best place to make this investment is in a retirement account. For those in training, see if you can open a Roth IRA or participate in a retirement plan. Same thing for your spouse.
    Don’t try to be a stock-picker. At this time of your life, you are investing for the very long term. Income average, say $250 per month, into and S&P 500 Index fund.
    Do not put the funds intended for the down payment on a home into the stock market, because, over the short term of several years, you need to avoid volatility. You could get lucky and the market goes up. You can just as easily be unlucky. The market could drop, maybe even enough that you don’t have enough for the down payment. When you are investing for a goal, like a down payment on a home, stop, and put that money in 100% safe cash investments, like CDs or money market.
    The key to everything is being thrifty. The best investors are the best savers. 
    Gold is +7% for the year, but has twice been stopped at the $1,290 level.
    RMD comment: Gold is priced in US Dollars, and the dollar has been noticeably weak, falling to its lowest level since last October. The two big resistance levels for gold are $1,290, and $1,390, the high of last summer. If (when) gold breaks $1,400, things will get very interesting. More later if this comes about.

    The state of Illinois’ bonds are on the verge of being downgraded to junk status.
    RMD comment: What if Illinois is forced into bankruptcy?
    1) It will be the best possible way to show that politicians can’t be Santa Claus. Buying people’s votes with entitlements and giving the public employee unions everything they want works only so long.
    2) Illinois isn’t paying their bills now. Physicians, hospitals, and many other vendors are getting stiffed. Lottery winners aren’t getting paid, yet the state continues to sell tickets, and people continue to buy them, a sorry comment on the state and those who continue to buy tickets.
    3) 6 or 7 years ago a close friend retired from a county job in Illinois. They could take some of their retirement in a lump sum up front, or payments over many years. I saw this coming, and strongly recommended the up-front payment. They took my advice, and are quite happy. Their co-workers run the very real chance of getting stiffed. To quote that sage J. Wellington Wimpy from Popeye “I’ll gladly pay you Tuesday for a hamburger today”. In Illinois, take the hamburger.
    4) It will teach creditors a lesson: that they have to be careful when loaning their money to a government entity (or anyone). It will help restore a little discipline.

    I was chosen Rotarian of the Year for Columbia Northwest Rotary. Along with Dr. James Ritter, retired Supt. of the Columbia Public Schools, we have done the programs for the last 3 years.
    RMD comment: I say this not to brag, but because it allows me to make some points.
    1) When you want something from people, all you have to do is ask. You’ll be surprised how often you get what you want.
    2) Like everything in life, you get out of it what you put in. A personal benefit of doing the programs is that I get to meet a lot of people, and I arrange programs that interest me. Fortunately, they seem to interest the other members too.
    3) I have a rule: the more someone wants to speak to our group, the less I want them to speak, because they invariably have an axe to grind. Think of it as a cold call: Have you ever profited from a cold call? Of course not.

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