The two doctors

Suppose you go to a doctor to consult about some problem you have. You are told to do nothing, just eat well, exercise and you'll get well again. Contrast this with another doctor who prescribes four tests and a scan and then prescribes a few expensive medicines. How do people react to these two situations? When I narrate it like this, most of you would sense where my preferences lie, but in the real world, when the patient feels that there is something wrong with him or her, and when no one else is paying any attention, it is natural to prefer the second type of doctor. Everyone likes their problems taken seriously; everyone prefers the feeling that 'something is being done.' A lot of people, when faced with an experience like that with the first doctor, would even resent paying a fee because the doctor did not do anything. The result is that the marketplace pushes doctors towards the second type of approach. There's not much financial success and growth in the second model. It's pretty much the same with investment advice. I've been seeing this first hand for years. Some acquaintance approaches me for investment advice. I look over the investments, listen to th

This article was originally published on February 21, 2022, and last updated on February 10, 2023.