Financial Wisdom for the Ages

"Education is when you read the fine print. Experience is what you get if you don't." That's just one tidbit of financial wisdom in columnist Jeff Brown's latest column.

To go directly to the bottom line, a psychiatrist named Ballard has said that “The term work-life balance is a false dichotomy between 2 parts of life. It implies a 50-50 balance and yet there are many elements to a whole life.” Our lives are really of one piece, financial and otherwise. We could just stop there, but there is a lot more wry wisdom to share.

Such as “Suckers are beneficial to society; they cover the overhead.” (Name withheld to prevent reprisals.) This was said by a Wall Street broker commenting upon the many foibles of the average investor who, for instance, insists on buying at the top of a hot market and, in short-sighted panic, sells when the cycle rotates downward. “Their” losses pay a disproportionate share of the bills to keep financial institutions afloat and profitable for wiser, cooler heads.

In that vein, a guy named Osterweis was quoted as saying “Investing is a marathon (for the average investor). You can’t run at the pace of the guys who take the lead because you do not have the staying power to do so and (thus) you are setting yourself up for some kind of disaster.” Meaning you lose money. See the above paragraph.

I like the ad that says “It doesn’t matter who insures you. Until it does.” That’s why those other ads touting a 15% reduction in your premium might be leading us up the wrong path. We should consider buying insurance backward, starting with ratings of how well insurance companies handle, and pay, claims. Claims might be uncommon and we might be in denial that we will ever have one, but when the need rises up it is always a major deal and all insurance claim departments are certainly not created equal. Think about it.

Another insight that I like is that “All business requires guessing.” And, heaven knows, educated guessing is also a big part of medical work, science and best practices notwithstanding. And many business people admit that their success has come not from slavishly following a business plan. But from their efforts, again, working backward from whatever assets and opportunities are at hand.

David Gelles wrote that “If you look at the fortunes that have been made in private equity and on Wall Street, very few have been made going with the wind. The great ones were the big bets.” - “He had the courage to lose sight of the shore,” said one admirer of a big winner. What they did not say about the big bets is that they were not made with hard-earned managed care money, acquired one patient at a time, but with other people’s money, acquired in bulk or large boluses. If a doc wants to get rich, he/she is in the wrong business for that fact alone.

Here are some fast and loose tidbits;

• “Variety may be the spice of life, but consistency pays the bills.” — Doug Cooper

• “Education is when you read the fine print. Experience is what you get if you don’t.” — Pete Seeger(!)

• “Channel-surfing the nightly cable news, one is reminded that certitude is the enemy of sanity.” - Kathleen Parker, The Washington Post (true for money affairs as well) And 2 corollaries; “It is the mark of an educated mind to be able to entertain a thought without our accepting it.” — Aristotle; and “The fundamental cause of trouble in the modern world is that the stupid are cocksure while the intelligent are full of doubt.” – Bertrand Russell

• “The Donald Trump Rule; owe a bank $1 million and it’s your problem. Owe them $1 billion and it’s theirs.” - Anonymous (probably a cynical admirer of Trump’s success managing his many failures)

• Finally, remember what most of us have learned the hard way, “Choice always involves costs.”