Second Grader Beats Wall Street...

[mamaham]

Just finished reading "How a Second Grader Beats Wall Street"..... by Allan Roth

A quote:

"This isn't a formal survey, but can you guess which professionals I've found to be the very worst investors?  Hands down, it's physicians."


Thanks to Dr. Dahle who is working to change this!  He has certainly helped our family.  Thanks also to all those on the forum helping answer the many questions!

[Zaphod]

mamaham wrote:

Just finished reading “How a Second Grader Beats Wall Street”….. by Allan Roth

A quote:

“This isn’t a formal survey, but can you guess which professionals I’ve found to be the very worst investors?  Hands down, it’s physicians.”

Thanks to Dr. Dahle who is working to change this!  He has certainly helped our family.  Thanks also to all those on the forum helping answer the many questions!

Click to expand...

Pretty sure you can lump dentists in there as well. Something about our kind of training that makes us just very poor investors.

[Hatton]

I think 2 assumptions defeat doctor investors.  1.  We believe that we are smarter therefore we can invest better than the average person.  2.  We assume other people are always ethical (fiduciary).

[jfoxcpacfp]

hatton1 wrote:

I think 2 assumptions defeat doctor investors.  1.  We believe that we are smarter therefore we can invest better than the average person.  2.  We assume other people are always ethical (fiduciary).

Click to expand...

If I could add a 3rd - doctors often think they have plenty of money to burn and can make up for their mistakes (not necessarily on this forum, but in the rest of the world).

[willpmd]

I would add a fourth.  Physicians tend to be overly conservative worst case scenario thinkers.

I can't tell you how many of my colleagues are riding "low risk" investment strategies in their early 30's because an all stock portfolio is just too risky.

 

[Zaphod]

willpmd wrote:

I would add a fourth.  Physicians tend to be overly conservative worst case scenario thinkers.

I can’t tell you how many of my colleagues are riding “low risk” investment strategies in their early 30’s because an all stock portfolio is just too risky.

 

Click to expand...

Yep. We are trained to think worst first in medicine and this bleeds over to investing where it is very detrimental if taken too far. Oddly, there is also the comfort with great risks that gets us in trouble as well. Probably the risk taking side goes first then the ultra conservative side steps in. Both are bad.

Why I always stress probabilistic thinking in regards to everything. Efund, allocation, disability insurance other sources of income, loans vs. investing, etc...all these things are impacted. It will usually point you in a direction opposite of what feels comfortable. Still hard to follow through.

[mamaham]

"....They tend to be very confident....And although they have every right to be confident about their intelligence and knowledge, it just doesn't translate to being smarter than the market.  Exercising that excessive confidence can be costly."