No this post has nothing to do with Buffett. In fact not even with Bitcoins. It has something to do with doctors!
Subra I wish to invest Rs. 60,00,000 in bitcoin is it a good idea asked a doctor.
I said ‘all i know is that bitcoin is easy to spell’ and I personally have no investment in that asset (if indeed it is one).
Last week I read that a mutual fund – Bitcoin Investment Trust – was quoting at a PREMIUM OF 70% to the base bitcoins that it was holding, and buyers exceeded sellers. Most of the people know only one thing about bitcoin – ‘it is the asset that has grown the fastest in the past few hours, days, weeks, and months’. Other than that people know nothing.
Brings us to Super Senior Citizens (old fashioned, eh?) Warren Buffett and Charlie Munger who hide under the cloak of “knowledge circles” of “competency of what they understand”. Exactly what you learnt in school “Foolish people rush in where Angels fear to tread”.
Now let us come to doctors. Most of the people I meet are around 50 years of age. Well educated of course (I meet ONLY specialists, which means almost 8 years of education + 2 years of internship, at least). And the invites go out really to the best of doctors in that city. Which means I am really meeting the creme-de-la-creme among the doctors too.
Most of the doctors do not know how much sum assured they have in their policies, they know ONLY the premium that they pay.
Most of them would have 90% of their “investible surplus” in bank fixed deposits.
Many of them who invested in mutual funds in the past WITHDREW that money when they saw negative returns.
Many of them have invested in mutual funds in the past, HELD FOR 5 YEARS seen a loss and withdrawn.
Most of them would not know the difference between investing direct and investing through an adviser.
Many of them are skeptical about using an adviser, as they are suspicious
Many of them get intimidated or irritated by the jargon that fund salesmen use
Most of them have met relationship managers, wealth managers, advisers,….without understanding that they are SALESMEN first.
Many of them think Wealth managers have wealth targets.
Now many of them know that wealth managers have sales targets, not wealth targets.
Brings me to Charlie Munger’s ‘circle of competence’. An ophthalmologist does not do a heart surgery for fun, does he? No. He is educated and trained to take care your eye. That he does competently and brilliantly. Even in investing, as in life what does matter is accurately (perfectly is difficult) assessing where your ignorance begins and not fooling yourself into thinking that you know more than you do. Hey doctors “I do not know” are the best words when it comes to investing. Feel good saying that. It helps.
Most doctors are in denial that they will retire. Many of them have no clue what to do for accumulating money for 40 years of retired life.
It is worrying to see some doctors (thank God they are a super minority) who trade in Futures and Options, and other speculative transactions. People who lack financial knowledge are just as likely to be confident of what they know, it is easier to deal with doctors who know that they do not know. I have met one doctor who lost more than a MILLION US $ in FnO trades. Was bailed out by his doctor father. This amount is perhaps his life time earnings.
Are there easy solutions? I am not sure.
I am starting to think there are solutions. I am going to write more for doctors – and it is just as applicable to the common man, do keep reading!
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