Ten investing lessons learned (the hard way).
“Only a fool learns from his own mistakes. The wise man learns from the mistakes of others.”
—Otto von Bismarck
It’s late 1999. Technology investors are despondent as they parse their ravaged portfolios. The phone rings. It’s my father, a respected neurosurgeon, who has been eagerly anticipating a comfortable retirement. But something has happened. He tells me that he has been wiped out. He wants to know why. After all, he asked his advisor to position him very conservatively.
We found out—far too late—that 90% of his portfolio had been invested by his stockbroker in the infamous company Nortel. Ouch. The result has been very upsetting: despite working hard all his life, my dad has never traveled off this continent and is even reluctant to launder his clothes! This is because he is terrified he will run out of money. This disaster taught my family the first of many lessons.
Over the past 2 decades, David and I have been motivated students of the capital markets. We have been struck by how similar the practices of medicine and investing are, particularly in terms of the burgeoning importance of decision science. We have certainly made our share of mistakes and unforced errors.
We would like to share 10 lessons we have learned (mostly the hard way) in the hope that the reader might not stumble where we have. Don’t expect too much, though! It’s our consistent experience that most of us have to make our own mistakes: geniuses are truly rare.
We think these lessons have made us much better doctors and investors.
Drs Porayko and Wingnean are founders of 3P Financial, a pension advisory company for professionals. They are also registered dealing agents for McElvaine Investment Management Ltd., a portfolio manager.
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This article has been peer reviewed.
1. Silverman ME, Murray TJ, Bryan CS, editors. The quotable Osler. American College of Physicians, Philadelphia; 2003.
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Dr Porayko is a consultant anesthesiologist and critical care physician practising in Victoria. Dr Wingnean is a family physician practising in Edmonton, Alberta. He is also a co-founder of The Osler Fund and was a senior biotechnology analyst with TD Securities.
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