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DECEMBER 15, 2017

The best in medical writing

This issue’s installment in our long-running series, “Who is this?” profiles Richard Asher, a noteworthy figure who deserves much greater status in medical history. Although far from a household name, he left quite a mark, as you’ll note from the article (see page 4), including as a writer.

THE MONEY DOCTOR MAKING GOOD DECISIONS: UNDERSTANDING THE HERD MENTALITY

His published articles have been called timeless, well worth periodic re-reading today, decades after their initial publication. Below are brief excerpts from a few.

The Seven Sins of Medicine (The Lancet; August 27, 1949) Asher launched this article by stating that medicine had far more than seven sins to its credit. “There is an unlimited number,” he admitted. Alas, he only had time for Obscurity, Cruelty, Bad Manners, Over-Specialization, Love of the Rare, Common Stupidity (as opposed to Common Sense), and Sloth. Here is the first: OBSCURITY Both in writing and in lecturing clear style and short words are best. Obscurity is bad, not only because it is difficult Please see WRITING page 2

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aving success in investing or saving for future goals many times comes down to being aware of our natural behavioral instincts. The cost of making casual financial decisions can be significant. As humans, we are hard-wired with a number of traits that might have helped when we were cave men, but not so much today. One behavioral bias to think about and be aware of is the herd mentality, a term that describes how people are influenced by their peers to adopt certain behaviors, follow trends, and/or purchase items. In an article by Michael Kitces, he noted an example of the herd mentality discussed in Robert Cialdini’s book Influence: Science and Practice, which covers a wide range of research on what influences our behavior. He highlights one incident from Singapore in the 1980s when the customers of a bank began withdrawing their money in a frenzy one day for no apparent reason. As it turned out, the cause was surprisingly simple. An unexpected bus strike created an abnormally large crowd waiting at the bus stop in front of the bank. Customers passing by mistook the large busstop crowd for bank customers waiting to make

a withdrawal. They assumed that a huge line in front of the bank must mean it was in trouble, so they got in line themselves to get their money out. The bank was forced to close its doors to prevent an actual bank run. There is vast research on the herd mentality, probably the #1 reason for major financial mistakes. In a recent newsletter, Jeremy Grantham commented on the herd mentality noting, “the enthusiasm of the crowd is hard to resist. Watching neighbors get rich at the end of a bubble while you sit it out patiently is pure torture. The best way to resist is to do your own simple measurements of value. Then hero-worship the numbers and try to ignore everything else. Ignore especially short-term news; the ebb and flow of economic and political news is irrelevant.” In making good decisions it is important to recognize the biases in our own thinking. It is easy to see how the herd mentality can factor into our decision-making. Markets go down and people become more concerned. The media tells scary stories and we jump out with the herd. The market goes up and people get more excited. We hear stories of people getting rich and we jump in with the herd. Please see MONEY DOCTOR page 10

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