Investing Basics for Physicians

Use this tool: 👉 Graham–Buffett Margin of Safety Calculator

What it does:

• Computes a quick “fair P/E” anchor from the current 10-year Treasury yield
• Lets you compare that anchor to a stock’s current P/E
• Helps you frame a margin of safety before buying

Helpful data sources to pair with the calculator:

• Company P/E & EPS: Yahoo Finance, Google Finance, Nasdaq company pages
• 10-Year Treasury Yield: U.S. Treasury daily yield curve or FRED “DGS10”

Reminder: The fair-P/E anchor is a frame, not a law. Growth and tech stocks often trade above it because of forward expectations. Use the margin-of-safety idea to protect peace first.

Need introductions (CPAs, attorneys, bankers, or capital desk)?

Submit a request here: GigHz Custom Request

Notes to Remember

• P/E Ratio = Price ÷ Earnings per share → shows how many dollars you pay for $1 of company earnings.
• Risk-Free Rate Anchor = Use the 10-year U.S. Treasury yield as baseline.
• Buffett/Graham Formula:

Fair P/E ≈ 1 ÷ (2 × Risk-Free Rate).

• Example: If 10-year Treasury = 4%, fair P/E ≈ 12.5.
• Margin of Safety: Always buy at a discount to your estimate of fair value (e.g., pay $60–70 for a stock you think is worth $100).
• Discipline Over Hype: High-growth/tech often trade at 30–60× earnings — but without margin of safety, you rely on “perfect” execution, which is rare.
• Track Records Matter: Buffett favored companies with durable earnings across multiple cycles.
• Calculator: Use the Margin of Safety Calculator to quickly anchor fair P/E and test margin of safety

Downloads:

In this lesson, we explore three pillars every physician should understand: real estate, public markets, and angel investing.

1. Real Estate

• Strengths: Leverage, depreciation, cash flow, tangible assets.
• Underwrite carefully:

• Cap Rate – Net Operating Income ÷ Purchase Price.
• IRR – Time-weighted return including cash flows and exit.
• DSCR – Debt Service Coverage Ratio (≥ 1.25).
• Exit Timeline – When and how you get capital back.
• Depreciation is powerful in rentals and syndications, but not in hard money lending.
• Most tax-efficient ownership: via an LLC, especially if you qualify as a Real Estate Professional under IRS rules.
• Loan options range from DSCR loans (property income-based) to conventional mortgages, portfolio loans, SBA, or hard money depending on use case.

2. Public Markets (Stocks & ETFs)

• Liquid, tax-efficient, low maintenance.
• Dollar-cost averaging (investing the same amount regularly) beats trying to time the market.
• Long-term winners are usually broad index funds (e.g., VTI, SPY).
• Speculative plays can pay off but carry high risk. Buffett-style investing = **margin of safety, compounding, patience.

3. Angel Investing

• High risk, high reward: ~90% of startups fail.
• Limited to accredited investors ($200k+ income or $1M net worth, excluding home).
• Only risk what you can lose.
• Due diligence questions:

• Who are the founders? Track record?
• Is there real traction/MVP?
• What’s the moat (IP, partnerships, regulation)?
• What’s the exit path?
• Your medical insight can add real value in medtech or healthtech deals.

Tools & Links

• Real Estate Investing Calculator
• Graham–Buffett Margin of Safety Calculator
• Custom Request Form (introductions to syndicators, accountants, capital desk)

Notes to Remember

• Real Estate: Cash flow + depreciation + leverage = strong foundation. Underwrite every deal.
• Stocks: Dollar-cost averaging > market timing. Stick with broad, diversified funds.
• Angel Investing: 90% fail — invest only what you can lose. Founders matter more than ideas.
• Use LLCs and tax-efficient structures where possible.
• Match asset class to your risk tolerance and long-term goals

Downloads:

Good investing isn’t about predicting the future perfectly. It’s about asking better questions and making sure your upside outweighs your downside.

Core Principle: Your downside should always be smaller and more contained than your upside. That doesn’t mean zero risk — it means the payoff, if right, more than compensates for the losses if wrong.

Examples:

• Startups: Roughly 90% fail. If you back 10, nine could go to zero — your winner must return 10x+ just to balance the math.
• Real Estate: Even if a deal underperforms, you still hold an asset that can be refinanced, restructured, or sold. Collateral reduces downside.

Seven Key Questions Before You Invest:

• What’s the real risk — not the pitch?
• What must go right for this to succeed?
• When and how will capital be returned?
• Who else is in the deal, and why?
• If it underperforms, is there collateral or a recovery path?
• Do I actually understand the model?
• Does this align with my goals and risk tolerance?

Context Matters:

• Funding Rounds:

• Pre-Seed/Seed = prototype + traction
• Series A = prove repeatable product-market fit
• Series B = scale ops
• Later = expansion, pre-IPO
• MedTech & Pharma:

• Devices → 510(k), De Novo, PMA
• Drugs → Phase I (safety), Phase II (efficacy), Phase III (large-scale)
• Exits: IPO, M&A, dividends, buybacks. No clear exit = no clear return.

📂 Supporting Tools & Downloads

• Deal Evaluation Checklist (DOCX) → Pressure-test any real estate, startup, or private equity deal before committing.
• VC Rounds & Milestones Cheat Sheet (DOCX) → Understand what each funding round is designed to achieve, typical dilution, and investor expectations.
• Regulatory Pathways Quick Guide (DOCX) → Quick reference for device and drug approval stages, timelines, and risks.
• Interactive Calculator → VC & MedTech Upside vs Downside Investment Calculator — model portfolio hit rates, IRR, and risk scenarios.

Notes to Remember

• Upside must outweigh downside — always.
• Real assets = partial recovery; startups = often zero salvage.
• Ask the seven key questions before saying yes.
• Match risk, timeline, and exit to your personal goals.
• Use the checklist and calculator — never invest blind

Downloads: