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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.

Who Can You Trust? Part I of II

Issue #506, January 22, 2018

    This week and next, I’ll review Who Can You Trust? How Technology Brought Us Together and Why It Might Drive Us Apart by Rachel Botsman, Public Affairs.
    In both editions of The Physician’s Guide to Investing: A Practical Approach to Building Wealth, I have a chapter on “Who Can You Trust?” In the Great Depression, some Hungarian friends had a legal problem and signed their home over to Grandma and Grandpa Nagy until it was cleared up. That’s how I define trust: to sign your home over to someone with complete confidence you would get it back.
    Can you trust your family? Hopefully—but: fifty percent of first marriages end in divorce. Talk to any bank trust officer about families fighting over an estate. The brutal truth is that whenever money is involved, it can get nasty. (Apparently) loving families will break up over insignificant sums of money, or who gets grandma’s dinner plates.
    If there are even 10 people on earth, including your immediate family, you could trust with anything, you are 1) a saint of a person, 2) have a large, and loving family, or 3) you are terribly naïve.
    “It can be plausibly argued that much of the economic backwardness in the world can be explained by a lack of mutual confidence”.
    RMD comment: Trust holds society together. People trust our system. Would you invest in Venezuela, Zimbabwe, or even Russia?
    The first level of trust is local, based on social capital, the connections among individuals. Dunbar’s number says our brains are designed to have a social group of about 150 people. Within this group is an inner circle of about 15 that you can turn to for support (see above). “The second level is institutional trust, based on contracts, courts and corporate brands…creating the foundations for an organized industrial society”. The third level is distributed trust. Ex: through Airbnb and Uber, you let people you’ve never seen or met into your home and drive you around.
    RMD comment: Critical to all levels of trust is reputation, to be guarded at all costs.
    The possibility that people will find out about your wrongdoing makes people behave. If people believe they are being observed and judged, even if they aren’t, they behave better. “For institutions to retain credibility and confidence, there must be penalties for wrongdoing”.
    RMD comment: That is one of the most important points of the book: to build trust, people must be held accountable for their actions.
    Familiarity builds trust. It’s easier to trust new things when they are combined with something familiar, or at least made to appear familiar. 
    How do other people influence our trust?
    1) The more who do it, the more likely we are to accept it, especially when we are unsure. RMD comment: When you do something different than everyone else, you are either really right or really wrong. Likewise, think for yourself. Don’t do something just because others do it.
    2) Unexpected users: the less likely a person is to do something, the more influence it has on others. Ex: RMD doing anything new.
    3) Smile.
    4) “Uniforms can be a powerful shortcut for enabling trust”.
    5) The endorsement of a third party. Peter Lynch of Fidelity Magellan notes that praise from a competitor carries great weight with him.
    6) Institutional trust: A degree from U. of Chicago, Booth School of Business. This applies to brands: Coca Cola, Bud Light, McDonalds.
    7) Someone speaking in their area of expertise. A physician giving medical advice carries more weight than an athlete giving medical advice. 
    “Trust and verification go together”.
    RMD comment: I have personally met 2 con men, and read about many others. There is always a hole in their story. Legit people and institutions make honest mistakes, but the cause is usually obvious and quickly corrected. Never dismiss an irregularity (see below).
    “One of the issues we face today is the speed and ease which we are trusting. Efficiency can be the enemy of trust. Trust needs friction. It needs time…and effort…we need to allow for those little, innocuous interactions to happen. Systems are becoming so seamless that we are not fully conscious of the risks”.
    “An illusion of information can be more dangerous than ignorance…trust has two enemies…bad character and poor information”.
    The 3 traits of trustworthiness:
    1) Are they competent?
    2) Are they reliable? Can I depend on them? Will they follow through? Being on-time is often used as an indication of reliability (RMD comment: I get an A+ here). 
    3) Are they honest? This involves integrity and intentions. Do their intentions align with yours? You won’t take advantage of the other person if you want to continue a relationship. Botsman admits honesty is by far the hardest to prove and predict.
    In next week’s newsletter I’ll talk about distributed trust and the digital age. “If you are a Facebook user, what is the statistical likelihood you have been a guinea pig in one of its experiments? According to the company, it’s 100%”.
    You’re not paranoid if someone really is chasing (or watching) you.

    Con men will often try to build a façade of respectability by making showey charitable donations. It’s just overhead for them.
    Lowry’s remains quite bullish, and sees no signs of an imminent market top.
    From the book: The typical American spends an avg. of 52 min. per day in traffic.
    RMD comment: Driving is completely dead, non-productive time. In Issue #465 (4/10/17) I discuss the importance of living close to your work. A busy physician has only 2, or at most 3, marginal hours per day: don’t waste a quarter to a third of it driving. 
    This talk about trust brings up the topic of co-signing a note. Since Issue #156 (5/9/11), I’ve heard more horror stories on the subject. Why are you being asked to co-sign in the first place? Answer: because the bank feels the person is not a worthy borrower on their own (usually for good reason). Instead of helping them, I submit you are doing them, and yourself, a dis-service. By co-signing you are getting them into a situation they shouldn’t be in in the first place. You are also hurting yourself because when they default, the bank comes after the person with the money = you. You co-sign a note, you are liable. Period.
    This is the sort of advice where if just one subscribers can avoid a 6 or 7-figure loss, it would pay for everyone’s subscription for a lifetime.
    I remind you of this every tax season.
    1) Initial contact from the IRS will always be via US mail. If you are contacted by phone or by email, it is a scam.
    2) Do not deal with the IRS directly, all contact should be via your accountant or attorney. An IRS attorney told me that the first questions always asked is “Have you reported all of your income”. If you haven’t, you have lied to an agent of the federal government, and even though you weren’t under oath, it is a felony (ex: Martha Stewart and the FBI). They’ve got you, and the know how to use the leverage.
    3) Communications with your attorney and physician are privileged. Communication with your accountant is not. You say “I’m an honest man, I have nothing to hide”.
    RMD comment: Don’t be naïve. What if you pose an innocent question about something that is actually illegal? You could have a lot of explaining to do. 
    I was going to talk about the precious metals, but I’ll wait until there is more weakness in the US Dollar and a clear breakout of gold above $1,365.
    The Christmas offer I made was so successful I’m going to continue it indefinitely.
    1) For $50, give a 1-year subscription to a friend, and I will extend your subscription for 1 year.
    2) If you take a 2-year subscription for $150, you can give a 1-year subscription to a friend. A lot of you already take 2-year subscriptions, so this costs you nothing.
    3) For $25 per year per person, a relative, or relatives (some people do this for as many as 4 or 5 family members) can “piggy-back” on your subscription

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