A practical, focused investor with a $20 million portfolio

Monday Morning Millionaire Program member, Florida dentist Dr. J. S. manages his portfolios that add up to $20 million. I interviewed him recently.

Milan: How did you get started?

J. S.: I graduated in 1980. I worked as a US Navy dentist and as an associate until 1987. I then bought a practice with money that I had saved and continued to grow the practice.

Milan: Did you inherit any money to get started?

J. S.: No, there was no inheritance. I started from scratch. I attended a program run by Dr. Michael Schuster. The program stressed being debt-free as soon as possible.

Milan: Most self-employed dentists have equipment leases. How did you start your practice without borrowing for equipment?

J. S.: I saved from my income while working for the Navy and as an associate. I associated for three years, until 1990 and then I bought an old, three-operatory practice. Using the existing old equipment, I grew the practice. I saved until I was able to add one more operatory. Not having debt allows money for investing that would otherwise be used for debt servicing. I kept doing that and built up the practice to its present 19 operatories without ever borrowing money.

Milan: There are four ways to invest in the market. We can invest for growth, invest for income, invest in value, or invest passively, the way that the Monday Morning Millionaire Program recommends. For most investors, passive investing is the best way to grow a portfolio, according to Warren Buffett, one of the most successful investors in history. How did you invest?

J. S.: I primarily invested for growth looking to buy securities at good value. On the rare occasion when the premiums on derivatives were high, I sold puts and calls. Premiums are high when volatility is high, as it is now.

Using SPY to reflect the entire market, I sold covered calls on my SPY holdings with one-week expiry dates. If I was assigned and needed to sell the SPY shares, I used the cash which I received to sell cash-covered puts on SPY. If the market dropped below my strike price requiring me to buy SPY, I then sold covered calls on it again.

Milan: How do you think that a recent graduate would rate on our scorecard exercise?

J. S.: Very poorly.

Milan: What about a mid-career dentist?

J. S.: Not much better.

Milan: According to the ADA, 96% of dentists cannot retire at age 65 and maintain their lifestyle. You have two young nephews who work with you and your son is entering dental school in the fall. What advice would you give them? What advice would you give to the 25-year old J. S.?

J. S.: First, live substantially below your means. That is, spend much less than you earn. Don’t use money which you don’t have to buy things which you don’t need to impress people whom you don’t like. Next, aim to be debt-free by age 40. These two points are essential.

Milan: Prevailing retirement advice is to live on 4% of your portfolio. That way, you are very unlikely ever to run out of money. 4% of $20 million is $800,000. That is more than four times greater than the amount that the average dentist in North America earns. Why are you still working?

J. S.: Because I do enjoy it, so it is not really work. I am 62 years old and feel strong and healthy. I enjoy mentoring my nephews, my son and other young people. I see no reason to quit. My portfolio earnings allow me to be involved with philanthropy. At this time, I wouldn’t want it to be any other way.

Milan: Thank you, J. S.. I am sure that Monday Morning Millionaire Program members will derive a lot from this interview.

Dr. Milan Somborac

The Monday Morning Millionaire Program supports do-it-yourself (DIY) investors which I have been for over 50 years. About my team and me

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