HELPING PHYSICIANS ATTAIN FINANCIAL SECURITY
By Robert M. Doroghazi, M.D., F.A.C.C.
I am sometimes asked what are my qualifications to provide financial advice. This is a legitimate question. You should not pay your hard-earned money for worthless advice.
I will note that I have not had any formal instruction on finance or investing or economics. In one regard, this is an asset. It is accepted fact that in all disciplines, one half of what we are taught will eventually be found to be in error. I believe people on the inside are most concerned with what half is wrong.
Not having been taught standard dogma, I can look at things with no preconceived notions (or prejudices). I wonder which half is right. As soon as I read about the efficient market hypothesis, I was skeptical. The same with the mantra of buy and hold. Not having any formal training has provided me the opportunity to be skeptical.
But that is really a “negative” qualification. Now for the positive ones.
I think I am a relatively bright person and was a reasonably successful physician. I graduated from the University of Chicago, Pritzker School of Medicine, Alpha Omega Alpha (the medical honorary fraternity) and with Honors. While a 4th year med student, I wrote an article published in the American Journal of Cardiology that is still occasionally quoted more than 30 years later.
I performed my medical Internship and Residency at the Massachusetts General Hospital, Harvard’s principal teaching affiliate, the most competitive internship in the world. While I was a Cardiology Fellow at Barnes Hospital (Washington University) in St. Louis, I wrote and edited (along with Dr. Eve Slater) the book Aortic Dissection.
I have stated over and over—and over, that just because one is a smart physician, does not make them a successful investor. What I am saying is that I was a very successful, hard-working physician: and medicine was not even my primary calling! My father wanted my brother and me to be physicians, so that was our direction. But medicine was work.
What I do now is fun. I read and discuss financial things all day. I can just watch the ticker tape. I can’t get enough of the financial information. My dream is that before I die the market be open 7 days a week because I find the weekends so boring without it.
I believe the advice I provide is solid. Warren Buffett said that my book The Physician’s Guide to Investing: A Practical Approach to Building Wealth should be “required reading at med schools”.
I have also been quite successful in my personal financial life, managing my own money. When I went off to college in September, 1969, I had $12,800 in the bank. That was 1960s money, when silver was still in circulation. It would translate into more than $100K in current money. I paid my own way through college and med school. I accumulated sufficient assets (even after a divorce) to retire at age 54.
Issue #67 detailed my independently-verified investment results. For 9 years, during the worst bear market since the 1930s, I beat the S&P 500 by an average of more than 13%—PER YEAR!! (These numbers were generated when I was in my late-40s and 50s. I wonder what my results would have been had I devoted my entire life to investing and managing money rather had it as a self-trained sideline interest). This year the S&P 500, including dividends, is up about 5.5%. I am up15%.
The bottom line is that I am very good with money, it was my natural calling.
RMD
On October 3, I spoke at a symposium in Chicago put on by OPM Education (http://www.OPMeducation.org). Their mission is “To educate the next generation of physicians on the business of medicine and provide a comprehensive set of resources enabling the physician to be informed and knowledgeable about the business of medicine”. The principals are Drs. Bonnie Simpson Mason and Jeffrey Kerina, both board certified orthopedic surgeons. I was quite impressed and learned a lot.
Of course, such courses and services wouldn’t be required if medical schools did their job and taught physicians about how to open and run a practice and how to invest their money wisely.
Interest rates continue to drop. The rate on the two-year note finished the week at 0.34% and the five year finished at 1.10%. They can’t go much lower and at some time will go much (much) higher.
My recommendations:
1) Keep the duration of your fixed-income portfolio short.
2) For the money you must keep in fixed-income, consider TIPS (Treasury Inflation Protected Securities).
3) Because I believe the US Dollar will continue to lose value (purchasing power) over time, it is hard to imagine a poorer investment than a 30-year US Treasury bond.
With Christmas less than three months away, I want to remind you, as I do every year, to avoid the use of gift cards. They are a jip. There are often hidden fees, which can be quite substantial, and many are only partially redeemed or not redeemed at all.
My suggestion: give money. It may not be imaginative, but there should be no complaints.
I am reading The Creature of Jekyll Island: A Second Look at the Federal Reserve (Fourth Ed, by C. Edward Griffin, American Media). The book makes many points which I plan to include in future letters. The following is taken from the book.
“The abandonment of the gold standard made it possible for the welfare statists to use the banking system as a means to an unlimited expansion of credit.
The law of supply and demand is not to be conned. As the supply of money increases relative to the supply of tangible assets in the economy, prices must eventually rise. Thus the earnings saved by the productive members of society lose value in terms of goods….
In the absence of the gold standard, there is no way to protect savings from confiscation to inflation. There is no safe store of value…
This is the shabby secret of the welfare statists’ tirade against gold”
Alan Greenspan, 1966
RMD comment: Greenspan was later seduced to the Dark Side. When this is all over, he will be considered one of the great villains in the destruction of the US dollar.
I again emphasize that the value of gold is not going up; the value of the dollar is going down. For 2,500 years, one ounce of gold has bought 300 loaves of bread or a fine suit of clothes. Exchange your increasingly worthless dollars for some gold.
I went to medical school at the University of Chicago and I am now President-elect of the Alumni Association of the Pritzker School of Medicine and Division of the Biological Sciences.
Chicago has a football tradition equal to any school in the country. Chicago was an original member of the Western Conference (now called the Big Ten) in 1892. Their coach was Amos Alonzo Stagg (who died in 1965 at the age of 102. I have a letter with Stagg’s autograph). Stagg was elected to the College Football Hall of Fame in the charter class of 1951 as both a player and coach, the only individual honored in both areas until the 1990s. He was also inducted into the College Basketball Hall of Fame in the first group of inductees in 1959. Stagg’s 314 victories were the most by a college football coach until Bear Bryant.
On December 2, 1942, the first nuclear chain reaction, supervised by Enrico Fermi, a Jew who immigrated from Fascist Italy, took place under the west stands of Stagg Field. Dr Leon Jacobson, Dean of the Pritzker School of Medicine when I started med school in 1973, was a junior physician whose job it was to monitor the participants of the Manhattan Project for evidence of the side effects of radioactivity.
In 1935, the first Heisman Trophy was awarded to Jay Berwanger, Univ. of Chicago. Berwanger was the first player chosen in the first NFL draft. The Eagles sold his rights to George (Papa Bear) Halas. Berwanger passed on pro football when Halas wouldn’t agree to pay him $25,000 for two years.
By the late 1930s, Chicago was no longer competitive in the Big Ten (the student body was less than one-tenth the size of schools such as Michigan, Wisconsin and Minnesota). In 1939, University President Robert Maynard Hutchins decided that academics were more important than athletics and the U of Chicago dropped out of the Western Conference (to be later replaced by Michigan State). The University of Chicago has had more Nobel Laureates than any school in the world. .
Site by Delta Systems powered by ExpressionEngine