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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

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

THE PHYSICIAN INVESTOR NEWSLETTER

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

Buying Art and Collecting in General, Part I of II

Issue #480, July 24, 2017

    This is based on Art Collecting Today: Market Insights for Everyone Passionate About Art by Doug Woodham (Allworth Press). I believe this book makes so many points about buying and selling art, and collecting in general, that it should be a core book in your financial library. I also like the author’s style: simple, direct, and interesting.
    I found the discussion about buying art by living artists to be the strongest part of the book, but it is far too detailed and nuanced to review here: you must read this for yourself. Is the current hot young artist the next Picasso or Van Gogh, and you can buy their works on the cheap, or are they just a hot young artist who appears to have talent, and may, but goes nowhere? How good is your eye for art and your judgement?
    RMD comment: like everything, some people have a better eye than others. But: also like everything, the more you practice and work at it, the better you get. You’ll be surprised how much you can improve your ability to appreciate the better works.
    Before being president of the Americas section at Christies, Woodham was a partner at McKinsey in wealth management. “Whenever I started working with new clients, I asked around to find out…who…were the collectors. (They) were inevitably (those) most open to new growth and overcoming obstacles”.
    RMD comment: That is an insightful comment. I’ve observed that the really smart people invariably have so much excess brain power that they have other interests besides their primary profession. I encourage you to collect, and for you to encourage your children to collect. It is a great introduction to capitalism. Along with playing a musical instrument, collecting is one of only a handful of pursuits that you can do your whole life. If I were interviewing people for school or a job, one question I would always ask is if they collect anything. It will quickly help separate the stars from the guys.
    Bob’s Rule #1 of Buying Art (Actually, this applies to ALL major decisions you make in life): Never talk yourself into anything. In art, they call this the “Wow” factor. You look at something and say “Wow”, or my personal favorite “this is the greatest thing since sliced bread”, this is what you should buy. You may not always be right (although you usually will be), and even if it doesn’t work out as a good investment, you still like it. Now say you buy a work you didn’t like but you thought it would be a good investment: a women (the gallery director said it’s a woman, but you’re not that sure) with 3 heads and 17 eyes. Five years later it’s worth one quarter of what you paid for it. Now whenever you walk in the living room, you know that all 17 of those gooney eyes are laughing at you. Art is a discretionary purchase: only buy what you really, really like (see below).
    Most of the discussion involves 6, 7 and 8 figures or higher art.
    RMD comment: The general points about buying, selling and collecting at that level are the same as buying less expensive material. The average physician makes $250K per year. Obviously, many make more. Over a 30 year career, this is $7.5M. If a physician saves 20% of what they make = $50K per year, they should have a net worth of $3-5M by age 65. If they are not divorced, which cuts your net worth by more than half, you could easily have more. Considering that art is one of the finer things in life, it is portable wealth, and it is a nice legacy for your children, you could easily afford a 5 or even low 6-figure work.
    Woodham emphasizes: All prices are negotiable. He notes that the people who get the best deals at the auction houses are not necessarily the ones with the best items to sell, but the ones who are the best negotiators. He also encourages you to negotiate when buying at galleries, even if you are a first-time buyer. You could get at least 10% off.
    RMD comment: At most galleries, the split with the artist is 50/50, that is, the gallery mark-up is 100%. At glitzy, high-end vacation destinations, say Maui or Las Vegas, the gallery mark-up can be 200%, so there is room to haggle (The mark-up on rare books at such glitzy destinations can easily be 5x or 10x).
    I’ll finish this discussion in next week’s newsletter.

                                                                        RMD
    The US Dollar was down again last week, and is now off 7% for the year. That is a huge move in any currency, esp. for the most-owned in the world. This is not lost on gold, which was up again last week. Watch $1,290, the double high earlier this year. If (when) gold breaks $1,300, I’ll have a lot more to say.
    I live on Bingham Road. George Caleb Bingham’s genre paintings, such as “The Jolly Flatboatmen” (National Gallery of Art), “Fur Traders Descending the Missouri” (Metropolitan Museum of Art), or “Lighters Relieving a Steamboat Aground” (in the White House) come to market rarely, if at all, and fetch far into 7-figures. His portraits are far less expensive: the most famous is of John Quincy Adams in the National Portrait Gallery. In 2010, I was in the financial position to buy a Bingham portrait. That fall, “Mrs. George Caleb Bingham (Sarah Elizabeth Hutchinson) and son Newton” came up for auction at Sotheby’s. In 10 seconds I decided to buy it and have never looked back. It was one of the best purchases of my life. Go to George Caleb Bingham on Wikipedia. The first painting is a self-portrait at age 24. The second is the one I purchased.
    RMD comment: trust your own judgement. If you are wrong, so be it: learn from your mistake and move on. I promised myself a long time ago I would never fail taking someone else’s advice over my own better judgment.
    Quote of the week. From the narration of the World Series of Poker 2017 Main Event; “Horses are smarter than us: they don’t bet on people”.
    RMD comment: I’ve read a lot of Mark Twain. His humor often involves 1) the absurd; the Siamese twins, Chang and Eng, fight for the North and the South in the Civil War. They are captured and exchanged for each other. 2) Taking the unexpected opposite: the coldest winter I ever spent was a summer in San Francisco.
    I recommend The Last Days of Stalin (Rubenstein, Yale U. Press). 1) Ever heard of the “Doctor’s Plot”? 2) It’s hard for us in the US to imagine what it was like to live in Stalinist Russia, although the people in North Korea have a pretty good idea. 3) What’s really scary is that the rhetoric of demonization, name-calling and intimidation is heard on today’s college campuses.   
 

 

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