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Physicians: I Don't Have a Financial Crystal Ball


Here are some common financial questions I'm asked that I frankly don't know the answer to, as well as a few I do have guidance on.

Financial advisors are commonly asked to pontificate on, "Why did the market go down yesterday?" or, "Don't you think a dollar collapse is imminent?" Even, "Don't you think mortgage interest rates will be lower next year?"

I don't know. Someone who says otherwise is misleading the questioner or themselves.

There is an inherent quality in many people that makes them resist answering questions in a way that suggests "they don't know."

Watch the financial media for a while. See how often you hear the words "I don't know." Yet, the pundits usually don't know. They are making things up with answers that sound good, but with no basis in reality. They might be right or wrong, and neither they nor we may know the truth. But to fund an investment policy or stock pick based on their information seems unwise at best.

There are certainly things we do know. I can tell you the expected cost of owning a home over 20 years, but I can't tell you what it is likely to sell for in 5 years, 10 years, or 20 years from now. I also don't know what the purchasing power of the dollar will be when you sell it.

I know that saving a high percentage of your income and investing it in a prudent and diversified manner is likely to bring financial security. I don't know what any particular stock will do over one week or 10 years.

I do know that most investors underperform the broad equity markets, buying high and selling low. I know that historically, a buy and hold approach with large indexed equity investments globally has returns greater than that of the average investor. I know that most activity managed mutual funds underperform the indexes they compete with. I most certainly do not know which of the few stock or funds will look good 10 years from now. I also know that anyone who tells you that they do know is foolish or lying.

We all want to be reassured and to have as many answers as possible. However, it is quite smart to also know when the answers are not evident. Success may indeed be a byproduct of proceeding without certainty.

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