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Comment by jcampbell1 | Hacker News Reader

I once talked to someone that worked for one of the brokerage houses, and they ran a report to measure the investment performance of the aggregate portfolio of people with M.D. in their title (doctors). It turns out that they were systematically terrible investors with low returns and high volatility for every period and any measure.

I think the problem physicians face is that they spend everyday all day as the smartest person in the room, and are paid to make snap decisions that are rarely scrutinized. That is a recipe for disaster when it comes to investment.

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The theory of "Ego depletion" suggests that physicians use up their rational decision-making capacity during their intense day jobs, so make bad (more emotionally-driven) decisions at the end of the day.

Sounds plausible to me... like Buffet says, it's about temperament.

Marginally related: nice old article about Taleb vs Neiderhoffer: http://www.gladwell.com/2002/2002_04_29_a_blowingup.htm

Both brilliant guys, IQs off the charts, but the difference is clearly temperament. Neiderhoffer was the genius and squash champ at Harvard. The typical M.D. probably has life experience closer to his.

In contrast, Taleb writes a lot about his family suffering through the Lebanese civil war. I know who I would trust with my money :)

I hold the unconventional opinion that physicians spend 15 years memorizing flashing and steadying their hands.

Well they also probably have less time than even the average person to read, learn, and do research.

I think the real problem is that they are never explained the EMH during their lunch hour. Instead they hear about other doctor's winning investments, and it creates a stupidity cycle. I am pretty sure if I asked about investing at any tech company during lunch, someone would explain EMH to me. I could be wrong.

I personally don't believe markets are always efficient, but I always think from the perspective of why I think the market is right or wrong.

As any engineer knows, nothing is 100% efficient.

I think a better way of describing the market is as a competitive game. Roger Federer may not play tennis "perfectly" -- what would that even mean? -- but you know what's going to happen if you or I step out onto the court with him.

To be fair, this kind of performance would probably be seen over any sample of the brokerage house clients.

Even professional mutual fund managers systematically underperform the market.

I don't know that I would go that far. It may be that they know a lot about medicine but don't know a lot about investing, the same way a car mechanic, line cook, etc may not be good investors. Many physicians are much more serious than just making snap stuff. I think 1) investing is hard and 2) many people are not good at it so it is not surprising that a lot of MDs would be not good.

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