NYT Article on Physician Investors

Ron Lieber wrote a column in the New York Times recently about Physician Investors entitled “Investment advice for doctors, first do no harm.” It's a great article, and contains good advice and several examples of how to torpedo your investment plan.

He suggests that physicians make investment errors due to three pitfalls:

1) Impatience:

The life of a physician-in-training is one mostly of deprivation. After years of debt, apprenticeship and little sleep, it’s no surprise that doctors want to reward themselves when the first big paycheck arrives….

The cure?  Remember this:

Doctors have a shorter working life than many people because they generally start no earlier than age 30 or so. They earn a lot, but they also pay more in taxes, receive little to no financial aid for their children’s educations and have fewer years for their retirement money to compound.

2) Faith:

Doctors are used to a tremendous exchange of information on a very open level….”there is no guile, no trickery. Everyone works together in a medical setting to get a good outcome….But in the world of financial services? Not so much. “Physicians are viewed as marks, because they are known to have money,” he said.

The cure? Skepticism.  Assume that the main objective of anyone who works in financial services is to separate you from your hard earned money.  You won't be far off the mark.

3) Confidence:

Hubris is perhaps the most common wealth destroyer here. The problem is that they think they know better, that there is some secret formula to beat the market….Overconfidence is not unique to doctors, but given that they are already well above average in terms of raw intelligence and income, it can be all too tempting for them to think they can size up investments as quickly as they take a patient through triage.

The cure?  A small investment of time in financial education and a healthy dose of humility.

My favorite quote from the column was this:

There is a high barrier to entry in the medical field and a low failure rate,” he said. “All they have to do is systematically put 20 percent or more of what they make in nice, dull investments, and they’re set for life. Why kill themselves to hit grand slams when they’ve already won the game?

Here here!  Good investing is boring investing.  Like amateur tennis, which is won by making fewer mistakes than your opponent, investing is all about not doing stupid things.