What They’re Teaching at Medical School

Ross Moorman: “I first came to know you when the chairman of my department (University Hospital, Jacksonville, FL) greeted us on the first day of my residency. He did NOT offer great words of wisdom about the treatment of diabetic ketoacidosis or how to tell whether chest pain was a heart attack or last night’s burritos. He actually showed us a copy of your investment guide and proceeded to tell us that we had to read it during our three years of training. I did, and have recommended it to others.

“Since those formative years, I have read many other investment books as well. I’ve used Ameritrade and Brown and Sharebuilder, and even looked at Folio(fn), which deserves serious attention as soon as they offer margin accounts. I’ve read Business Week and Forbes and watched CNBC ’til the early hours.

“The question that I pose to you is as follows: After all the study, and hype, and personalities, shouldn’t we all just invest $500 every month in Spiders, and be done with it? Is it so simple? Is that why you spend your considerable talents talking about plates nailed to the dining room table? Should we be spending our time trying to do what we do even better, and investing the difference in Spiders, or even ‘Wilshies’ (my dreamed of depository receipt that mirrors the ENTIRE U.S. stock market–or even the ‘Totally Universal Wilshires’ that mirror the stock market of the entire world in one easily managed share)?

“Is it that simple?”

Yes. Largely. Except that if you’re a doctor, you should be putting away $600 a month, not $500. And whoever you are, you shouldn’t be doing it on margin.

Of course, if “everyone” indexed, indexing wouldn’t be so smart. Terrible companies and great companies would all be accorded equal enthusiasm, which would soon make the terrible ones grossly overpriced and the good ones, bargains. But everyone will not index. So for most people, indexing (with that portion of one’s funds dedicated to stocks) is a wise choice. Attempting to do better, most people — because of transaction costs and taxes — will do worse. There’s the entertainment value, the challenge, the dream . . . what if my little speculation went through the roof! . . . and there’s the feeling of connectedness to the world around you . . . I own Cisco! I own Home Depot! (well, I don’t but if I did). But from a cold money point of view, a doctor would be better off in Spiders than in an actively managed portfolio, studying medical charts rather than stock charts. Maybe that’s what the chairman of Ross’s department had in mind.

David Letterman on why Senate candidate Rick Lazio failed to march in New York’s Gay Pride parade: He didn’t know what to wear — and he was feeling fat.

Monday: Where do Maine lobsters come from?