HELPING PHYSICIANS ATTAIN FINANCIAL SECURITY
By Robert M. Doroghazi, M.D., F.A.C.C.
Reciprocity and Pragmatism
As time has gone on I have worked hard to become more pragmatic. I try to prevent my ego or my feelings from causing me to make a bad decision. It may seem difficult, and at first it is, but it actually makes life much easier.
Reciprocity in business is pragmatism. If you do business with me; I’ll do business with you. It is how life works. Let’s see if we both can make some money.
In the 2nd edition of my book The Physician’s Guide to Investing: A Practical Approach to Building Wealth, I devote a short chapter to “The Importance of Relationships: Goodwill, Friendship and Reciprocity”. I note reciprocity is a basic rule of business that businessmen understand and physicians often don’t appreciate.
As time has gone on, I have come to the conclusion that many businessmen also don’t understand reciprocity. When I establish a business relationship, if the situation is appropriate, I try to make a subscription to my newsletter part of the deal. It has worked to my advantage in more ways than I had originally imagined.
To return to the original theme of pragmatism: I have told several businessmen that they will get my future business if they take a subscription. In the end, they have made far more from my business than the $75 they paid for the subscription. And to a person, they have found the advice profitable, so they weren’t paying for nothing. They profited from my business and from my advice.
I have been doing business with someone who has profited greatly from my account. He has declined to take a subscription. I like him and he has done a good job. I am a creature of habit and routine, so I really don’t like change.
But his unwillingness to reciprocate encouraged me to look around. I have found others who do exactly what he does for far less (like 50%, or even more, less). Think about it: He is about to lose an account that has generated more than $1,000 in commissions this year because he will not take a $75 subscription. I give him a dollar in business and he won’t even flip me a dime. So be it.
Moreover, I am not shaking him down for the $75. He is receiving in return something you subscribers in the US, Canada and the Middle East are willing to pay good money because the advice you receive has been profitable.
There is a local merchant I do some business with. I wanted him to take a subscription, but he is older, his computer no longer works, so he doesn’t take email. It is not profitable for me to send this letter via US mail.
Instead, I occasionally send him issues that apply to his business, which he then distributes to selected customers. He profits because the letters encourage people to buy his product and I profit by getting exposure I wouldn’t otherwise. He also gives me a discount when we do business.
I would like you to take home two points.
1) Be pragmatic. Suppress your personal feelings and ask yourself: Can I profit from this? If their money is green, and they are honest, take it. I believe this is one of the basic realizations that allows some to succeed and causes others to fail.
2) Apply this to the people you do business with. If you are a reasonable person, a reasonable physician, a family member of theirs doesn’t already see another physician, and you accept their insurance, it is not unreasonable to anticipate they see you when they need a physician.
There are obviously circumstances where this doesn’t apply, where expecting reciprocity will just make you appear mercenary. But likewise, don’t forget it either.
RMD
Want another example of pragmatism? Many years ago I was called in very early Saturday morning to see a man of about 30 who presented with chest pain, focal neurological symptoms, and then lost consciousness. Top on the differential diagnosis was aortic dissection. A neurologist was also consulted.
As we were waiting for the radiologist to come in to perform a CT scan (this was before trans-esophageal echo), we went through his wallet because we had absolutely no information on him; his name; nothing. The neurologist said “I know this guy. He presented to one of the other hospitals in town about a year ago with the same story. He’s a coke head and as soon as he wakes up, he’ll be gone”.
There was a $20 bill in his wallet. I said “We better take that; it might be all we get”.
Sure enough: As soon as he wakes up, he pulls out his NG tube, his Foley catheter (that’s good for 15 GOMER points), and his IVs. With blood dripping from his arms, he is out the door in less than 5 minutes—with the $20 bill still in his wallet.
Rick Harrison of “Pawn Stars” was interviewed on 9/2/11. “The one thing I can’t keep in my shop is gold and silver bullion. Whatever we put in the window in the morning is gone by the end of the day. Every day”.
RMD comment: I again recommend the core holding of your entire investment portfolio be US 1 oz. Gold Eagles in your personal possession.
From CNNMoney on 9/3/11: “Grandpa Still Works. Kids Can’t Find Jobs. Financially fearful older Americans are staying on the job, as 16 to 24-year old employment is the lowest on record”.
Wall Street Journal (9/7/11). “More Americans are reaching their 60s with so much debt they can’t afford to retire”.
RMD comment: When I started this newsletter 5 years ago, it was my intention to make gold the subject of the first letter. Instead, I wrote on debt. Debt is the final common denominator of almost all financial disasters.
The subject of next week’s letter will be where you can find the best return for your money. My conclusion is to pay off debt (and buy gold).
On Monday, I sent an Interim Bulletin highlighting the terrible action of the German DAX. Their market bounced for a few days, but on Friday was down 4%, its lowest finish since July 2009. The Italian FTSE MIB index plunged 4.9% to a 2-year low.
The DJIA is again re-testing the 10,600-10,800 range, the lows of the last month. If it breaks below this, it could easily test the 9,800 level, the lows of the late spring/early summer of 2010. Please be careful.
This is from a new subscriber, a young man starting his last year of med school.
“Dr. Doroghazi. Some of the things in your newsletter are common sense, combined with useful investing tips I can tuck away for later in my career. I was raised well and understood the value of a dollar from an early age, which seems to be a rarity nowadays. I will mention your newsletter to other interested students”.
RH, OH
RMD response: The greatest frustration in my work is not being able to get the attention of physicians early in their careers, before they make mistakes and learn bad habits. You have no idea how often I have heard docs in their 50s, 60s and 70s say “I wish I’d read your work sooner”.
I discount the subscription for students to $10; about the cost of a large beer at the ballgame or a trip to Kentucky Fried. The physician-in-training rate is $25; the cost of half a tank of gas, an inexpensive bottle of wine at a restaurant, or a week’s worth of daily trips to Starbuck’s. A few, such as this young man, recognize this newsletter as a solid investment, but many just blow it off, and continue their spendthrift ways.
There is a long interview in today’s Barron’s with Martin Murenbeeld, who first became interested in gold in the 1960s. He made several points worthy of note.
1) “A major correction (in gold) is unlikely before 2013…the Federal Reserve has indicated it will hold US interest rates near zero until mid-2013 (He later explains how negative inflation-adjusted (real) interest rates, as we have now, are bullish for gold).
2) Over the long term, gold-mining stocks out-perform bullion. This year, bullion has far out-performed the miners (Regression to the mean suggests the miners will now out-perform. Note that Royal Gold (RGLD), GDX (Market Vectors Gold Miners ETF), Newmont (NEM), Randgold (GOLD) and GoldCorp (GG) are at or near new highs, and have recently far out-performed common stocks).
3) “We tend to describe silver as high-beta gold…Unless you are a professional, buy gold, not silver. The average investor can’t handle the volatility”.
Suggested reading:
1) Machiavelli: A Biography (Unger, Simon & Schuster). Every year I try to read several of the classics. About 4 years ago I read The Prince. This book provides perspective on how and why Machiavelli came about to write The Prince.
2) “Obama and the Burden of Exceptionalism”: Shelby Steele, Wall Street Journal, 9/1/11. I consider this the most important opinion article of the year. “Post-‘60s liberals, with the president as their standard bearer, seek to make a virtue of decline”.
3) Feathers: The Evolution of a Natural Miracle (Hanson, Basic Books). Fascinating. Will explain some things you always wondered about and many you never knew about.
4) Crash of the Titans: Greed, Hubris, the Fall of Merrill Lynch and the Near-Collapse of Bank of America (Crown Business). The subtitle says it all, and I like Farrell’s writing style.
I am always running things through my mind to draw my own conclusions, to see where something will end up, or maybe even to make a new observation.
I’ve been thinking about this for a long time: Take 1,000 young, chosen, healthy people, with an equal number of men and women, who between them possess all of the knowledge we currently possess—carpenters, farmers, engineers, physicians, mathematicians, warriors, survivalists, electricians, mechanics, chemists, physicists, anthropologists, computer programmers, sailors, seamstresses, etc.
At a time of bounty; say early summer, put them somewhere with nothing: no food, no clothes, no tools, no matches, no written knowledge, nothing. How long would it to recreate the world of 2011? I don’t mean every building or every city, but the civilization we have now: with bountiful food, clothing, warm homes, domesticated animals, electricity, automobiles, airplanes, advanced medical care such as vaccinations and medicines, telephones, computers, etc.?
When I first started to think about this, I thought it would take at least 1,000 years. The more I think about it, the less time I think it would take. Here are the stages 1) Just surviving. Within one year, 25% of the people would die. 2) Successful hunter-gatherers. 3) Agriculture and domestication of animals. 4) Metallurgy, construction, and harnessing of power equivalent to the sophistication of Imperial Rome. 4) Power from fossils fuels and the Industrial Revolution. 5) Electricity, then automobile and airplane. 6) Finally: sophisticated medicine and computers, such as today.
I believe the key is leadership. If there were a Narmer (Menes, the first pharaoh), Moses, Octavian (Augustus), Washington or George Marshall, it could be done in less than 100 years. If not, it could take the same 50 millennia it took to progress from Cro-
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