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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.

Gambling and Las Vegas

Issue #495, November 06, 2017

    I’ve written about this many times before, but some things are worth repeating, like telling your children not to do drugs.
    I’ll get right to the point:
The casino is in business because the casino always wins.
Don’t gamble.
    I talk about this in the context of attending a convention in Las Vegas. LV has the most hotel rooms in the US and certainly a lot of glitz, but I believe those who plan such conventions are doing the attendees a dis-service.
    I think everything about Las Vegas is a hustle. It somehow creates a mind-set that seduces people to spend more money than they would anywhere else. The hotel rooms are very expensive. The first time I went to Vegas I wondered if there was still any marble left in the world. The food is very good, but over-priced: 20-30% by my personal estimate, even compared to places like Manhattan or Boston. You go to shows you never would otherwise, just because you are there, and spend twice as much as the same performance would cost elsewhere.
    One of the dumbest things I believe I’ve ever heard is “I’ll take $100 to the casino. If I win, I win. If I lose, I had a good time”. RMD comment: Just give the first casino employee you see a $50 tip, get it over with, and leave. You’ll be $50 ahead.
    The absolute worst thing that can happen when you first walk into the casino is—you win! Do not underestimate the addictive power of gambling. You hit a straight flush on video poker, or plop down a red chip ($5) on #27 on the roulette wheel and win $175 (the payoff on a single number is 35 to 1), or hit 2 points in a row at craps, and you somehow believe you’ve got the magic touch. You don’t. See Fooled by Randomness by Taleb.
    If you feel an obligation to do something with others in the group, I suggest craps. It is a social game, encourages visiting (and whooping it up if you win), and can be fun if the table gets hot. Play at the $10 table. If you bet only on the Pass Line and take 2 to 1 odds, the house has about a 0.4% advantage. Any other bets, and the house will take your money much faster. They give free drinks, so go before supper and get your cocktails for free.
    As the stewardesses on Southwest Airlines (LUV) say when you land in Las Vegas, “Welcome to Lost Wages”.     

    Tesla (TSLA) is down from more than 380 to barely 300 in the last month.
    RMD comment: I have no opinion on the company or their cars, but it allows me to make 2 points. 1) The only thing (at least at present) that makes Tesla cars competitive with the internal combustion engine is tax credits. The tax bill just proposed does away with those credits. Point #1: whatever the politicians give, they can take away.
    2) An analogous point concerns tax deductions and credits for your investments, such as a piece of real estate. An investment must be able to stand on its own. If there are legitimate deductions, all the better. But “investments” structured just to generate deductions are flimsy at best, and if determined by the IRS to be abusive, will expose you to back audits, and future audits for as far as the eye can see. I would rather be standing at the bar next to a totally inebriated, upset ex-heavy weight champ than have the IRS on my case. At least you could offer to buy the champ another drink.
    From the interview in today’s Barron’s:
    “Xi’s (Jinping, China’s leader) entire imperial ambition rests on his ability to transform the renminbi into a reserve currency and a trading currency…If anything is a threat to the US, it’s the renminbi becoming a new reserve currency…The next step is for oil to be priced in renminbi…China has announced it will have a gold market trading in renminbi in Hong Kong…It’ a massive game changer.”
    RMD comment: The article notes it is Xi’s plan that China have the world’s strongest military by 2050. They already challenge us in the South China Sea. But a strong military isn’t enough. Russia has a strong military but a 3rd-rate economy. China must also challenge the US economically, and to do that the renminbi must be a reserve currency.
    And the key to that is gold. The “official” gold reserves of the US are 8,133 tonnes, and 1,847 for China. But: China is the world’s largest gold producer at 457 tonnes in 2016 (Australia was 2nd at 270 tonnes), and has been for some time. Zero Chinese gold appears on the world’s market: they keep it all, and have for many years. Many tonnes of gold flow into Chin via Hong Kong. Of course I have no idea how much gold the Chinese have (or for that matter, how much we have), but it is safe to say it is a lot more than the official numbers. They could already have caught us. Would you rather take a 30-year Treasury bond that is really just a piece of paper, printed at the will of the politicians, or the renminbi, that could be converted to gold at any time? 
    Two weeks ago I wrote about Bitcoin and the other digital (crypto) currencies. Last week, the CME Group (CME, the largest exchange world-wide) said they would create a futures market for Bitcoin.
    RMD comment: Bitcoin surged to above $6,500 on the news, with the cumulative value of the Bitcoins “in circulation” exceeding $106B. This is just one more legitimization of Bitcoin, and the digital currencies in general. I cannot recommend you start trading in Bitcoin or any digital currency, but I do encourage you to learn more, because digital currencies, and the blockchain technology it is built on, are here to stay.
    One of the allures of Bitcoin is that there will be a limited supply of 21M (close to 17M have already been “mined”). Likewise, note that there are already divisions of Bitcoin, like bitcents. Maybe the supply isn’t so limited.
    Since the beginning of my financial writing, I’ve noted that I believe a basic flaw in the strategy of our income taxes is that investment and savings are discouraged by taxing interest and dividends, while debt is encouraged by making interest on debt tax deductible. The proposed tax law drops many of the deductions for taking on debt, so I believe it is a step in the right direction.
    I highly recommend The Best Land Under Heaven: The Donner Party in the Age of Manifest Destiny (Wallis, Liveright, Norton). The book has every emotion you can imagine: heroism, courage, kindness, envy, despair, betrayal, murder. I found how the Donner party was rescued to be the most thrilling. The book is also a step by step illustration of how to make good and bad decisions. A person who made repeated bad decisions in their financial life once told me, “Bob, a little bad advice goes a long way”.     

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