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Strange Things in the Precious Metals
Issue #531, July 17, 2018

Buying Years of Retirement
Issue #530, July 09, 2018

Rent-A-Kid for Retirement
Issue #529, July 02, 2018

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


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

Bitcoin and the Digital (Crypto) Currencies

Issue #493, October 23, 2017

    I discuss this now for three reasons, with the 3rd being most important.
    First, it is important you understand the concept of blockchain, on which Bitcoin and the other digital currencies are built. To quote from Blockchain Revolution: How the Technology Behind Bitcoin is Changing Money, Business and the World (Tapscott and Tapscott, Portfolio/Penguin): “Blockchain is a revolutionary protocol that allows transactions to be simultaneously anonymous and secure by maintaining a tamper-proof public ledger of value…The underlying framework has the potential to go far beyond these and record virtually everything of value to humankind from birth to death certificates to insurance claims and even votes”.
    RMD comment: That does not appear to be an exaggeration. Blockchain will probably be the basis of how all banks store information in the future.
    Second, Bitcoin has been all over the news because of its skyrocketing price (I avoid the term value). The week after Trump’s election last November, Bitcoin traded between $725-750. On January 3 of this year, it broke $1,000 for the first time in 3 years. The previous high was $1,242 in November, 2013. Bitcoin then tanked to about $450 by September, 2014 after one of the exchanges went down. By August 1 of this year, it was $2,787. On Wednesday it traded around $5,650, and closed on Friday above $6,100, up about 500% for the year.
    RMD comment: That is Dutch tulip bulb, South Seas Company, 1920s Florida real estate, beany baby, 1999 la-la land bubble territory. Unless you can out-trade a 22 year old who can do differential equations in his head, avoid Bitcoin at present.
    IPO stands for Initial Public Offering; it’s how many companies come to market. There are now ICOs, Initial Coin Offerings, where people have raised millions of dollars in minutes by offering a new digital currency.
    RMD comment: This is like getting $15,000 to do Jennifer Lopez’ hair. I say to myself “Why can’t I get some of that action”.
    Third: the main point of this newsletter, and why I discuss this now. Bitcoin, and the other digital currencies such as Ethereum, Litecoin, Dash and Ripple (see below) are gaining credibility in the real world. Gold Money allows you to store precious metals in their vaults around the world in London, Switzerland and Hong Kong. They are about as “hard money” as you get. Gold Money recently announced the digital currencies could be used to fund purchases.
    RMD comment: I presume Gold Money immediately exchanges the digital currencies for US Dollars, Swiss Francs, Euros, etc., but the fact is they accept digital currencies.
    Apparently a home in Texas was purchased last month with Bitcoin. The seller did not accept the Bitcoin directly, rather, it’s what the buyer brought to the table, and it was then converted to dollars to complete the transaction. Goldman Sachs (GS) announced they were considering opening a trading desk in digital currencies.
    What are the strengths and weaknesses of the digital currencies?
    They are outside the banking system, essentially person to person. Several months ago Jamie Dimon, CEO of JP Morgan (JPM), dissed the digital currencies. That’s not surprising, he’s just talking his own book.
    As is so often the case, a strength can also be a weakness. The digital currencies are outside government control. That’s good for you, but governments don’t like things they can’t control because they can’t tax it.
    There is a finite supply. At the very beginning it was announced that only 21M Bitcoins would be created, by the process of “mining, which involves solving complex algorithms. Currently more than 16M Bitcoins have been “found”. Compare this to fiat (paper) currencies, which can be printed at the whim of the politicians.
    There in nothing “backing” the digital currencies. The US backs the dollar, Japan backs the yen, etc. Likewise, one can argue that the strength of a digital currency is that it can stand alone, they are no one else’s liability.
    The digital currencies have been compared to gold. A distinct advantage of the digital currencies is that they can be sent around the world any time at the speed of light. I feel confident that as of today more people will accept 4 oz. of gold than one Bitcoin, but the digital currencies are steadily gaining in credibility. 
    The digital currencies share one major advantage with gold in that they can’t be created out of thin air (see above). But the principle advantage of gold is its history: it has been accepted as wealth and money for over 5 thousand years. What if there is a disaster, the banks are closed, or there is even social unrest and armed conflict? The digital currencies just don’t have the track record of the test of time.
    In summary:
    1) The concept of blockchain will revolutionize how information is stored.
    2) The digital currencies are here to stay. More and more transactions take place via the Internet. The stocks of Visa (V), Mastercard (MA) and PayPal (PYPL) just keep going higher.  It would be worth your while to learn more about the cryptocurrencies.
    3) If you wish to dabble in digital currencies, start small. 
    Ripple: interesting choice of names for a cryptocurrency. Ripple and Thunderbird were the cheap wino wines when I was a teenager. Redd Foxx used to joke about them on Sanford and Son.

    Should you buy General Electric (GE)? It’s down almost 25% for the year.
    RMD comment: I’m not recommending that one way or the other, but this allows me to make several important points.
    1) The general idea is to buy low, when there is “blood in the streets”. A) Don’t buy just because something is lower. It is usually weak for a reason, and could go much lower before it turns around (if it does. GE will, but Polaroid and Digital Equipment Company (DEC) didn’t). B) The real question: is GE a buy now? Is it undervalued? Guys like Warren Buffett and Peter Lynch make their living being able to evaluate everything; sales, cash flow, ROI, debt, about a company to answer this question. Can you?
    2) The action on Friday looks like a “capitulation” sell, a reversal. GE traded as low as 22.1 (down 6%), but closed at 23.83, +0.25 for the day, on 5x normal volume.
    3) I prefer to buy on strength. Danaher (DHR) reported strong results on Friday and broke to a new high (see chart below).

    A subscriber sent me a piece put out by Standard and Poors about how often the market retreats and how long it takes to recover. Since WW II, there have been 56 pullbacks (decline of 5-9.9%), 21 corrections (10-19.9% decline), and 12 bear markets (decline of 20% or more). The market took only 2 months on average to recover from the pullbacks, 4 months to fully recover from the corrections, and 14 months to recover from the 20-39.9% bear markets.
    RMD comment: Several subscribers interpreted the last 2 newsletters as suggesting I encourage market timing. That is not the case. The point of the newsletters was that for those currently on a fixed income, or contemplating retirement in the near future, that bear markets, long periods of subpar performance, do occur, and prudence suggests that you have sufficient cash reserves and plan accordingly. 
    This month’s American Journal of Medicine (I’m on the Editorial Board). “Change in cardiopulmonary fitness from Low to Intermediate/High fitness was associated with a 35% and 59% lower risk of all-cause mortality, respectively”.
    RMD comment: About 10 years ago at Dr. Wm. C. Roberts’ annual Cardiovascular Conference in Williamsburg VA, there was a talk on what physicians should do to maintain their own health. The speaker’s response to those who say “I haven’t got time to exercise” was “so, you’ve got time to be sick?” Maintain an ideal weight. Walking is the universal exercise. Weight training is also important: pump some iron.       


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