Dentaltown February 2021 - 10

howard speaks
column

Conservation Efforts
During economic downturns, you've got to cut costs and expenses
I lived through the craziest bull market from 1994,
when Amazon went public, until it all popped in 2000.
For those six years, I just rode four stocks: Intel and
Microsoft, which they called " Wintel, " and Dell and
Cisco, and I swear they'd all double two or three times
a year. But I realized that things couldn't keep such an
upward trajectory too much longer and cashed out in
November 2000-the only time I've made more money
from stocks than dentistry. The following March, the
whole thing collapsed.
Am I crazy for thinking that's about to happen
again? Tesla's valued at $578 billion-more than Toyota
and Volkswagen, Mercedes-Benz, GM, BMW, Honda,
Ford and Suzuki, and I'll even throw in couple of the
Indian car companies. More than pretty much every
car company known to man combined, and they try to
explain it as saying, " Well, it's more than a car company, "
even though 80% of its revenue comes from selling cars.
In 2017, Microsoft was valued at $600 billion; in
2018, $850 billion; now it's $1.6 trillion. Meanwhile,
the currencies of Europe, Australia, South Korea, China
and Japan are all going up against the U.S. dollar.
I think we're getting ready to switch gears again:
Until recently, we were in fourth gear, going 100 miles
an hour down the highway, but soon we're going to have
to come to a complete stop, turn it around and go the
other way. The people who can do that usually just a
month before everyone else tend to come out clean.

What does this mean for you?
It's time to move your mindset from expansion
psychology to contraction psychology.
Almost all the dentists I know
live above their wages: They have
too much house, they have too much
car, they have too much vacation. I've
talked about this for 40 years! Now,
it's even more important than ever
to live below your means. Usually
your family goes to Disneyland every
year for vacation? This year, maybe
staycation instead.

One of the popular threads on Dentaltown's message
boards right now is a stock-picking thread that's titled
" Let's Gamble Some Money. " But how many dentists
are doing this with their life savings right now, instead
of just a sliver's worth of " fun money " ? Be conservative
and cautious so all your bases are covered!

The owner-operator advantage
Convenience stores and dental offices have more
in common than you might think: There are about
150,000 of each in the U.S., and about 65% of them
are owner-operated while the other one-third are owned
by consolidations.
During the recent expansion period, individual
convenience store owners were getting squeezed because
chain owners were adding restaurants, wine cellars
and bars and the like. But when there's a contraction
and nobody's going to Circle K to buy a $50 bottle
of wine, the owner-operators are going to have to cut
costs-and because the easiest dollar earned is a dollar
in expenses saved, they'll likely lay off an employee or
two and cover more hours
themselves.
Dentists, too, will
likely need to think
about how they can
accomplish what they
do, but with fewer people
on staff. If you can't remember
the last time you were so busy that
you were running behind, you
probably can't afford that
extra assistant, no matter how helpful her
presence was during
busier times.
L e ave you r
comment under
this column at
dentaltown.com!
I want to hear
your ideas. ■

by Howard Farran, DDS, MBA, publisher, Dentaltown magazine

10

FEBRUARY 2021 // dentaltown.com

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Dentaltown February 2021

Table of Contents for the Digital Edition of Dentaltown February 2021
