小医生是治疗人的病, 大医生是治疗病的人

I came across this Chinese saying in a variety show and what it means is that “an inexperienced doctor treats the illness, but the experienced doctor treats the person”. Taking from the context of the show, young doctors are only able to help relief the symptoms and to prescribe the correct medication for the patients. But the more experienced doctors can pinpoint habits in life such as overworking, anxiety, or unhealthy diets that results in the illness.

Many times, at school or at work, we tend to be superficial or parochial with our recommendations. I’m guilty of this as well. It’s not that we have failed to tackle the issue at hand but rather, there are great underlying roots of the problem that could resurface the issue.

For instance, all relationships produce occasional friction. We tend to untangle the difficult, unhappy situations with a surface-level solution - by agreeing to disagree. At the very end of the day, discontentment can bottle up and erupt into an irreversible situation of animosity.

Working relationships in the corporate world also work the same way as well. To maintain a good front to others, we often take on more work at our own expense. To appear agreeable to unreasonable requests, we just wallow ourselves deep in our work and contain our emotions. This hides the root cause of the issue to the higher-ups to effect a change that could brighten the lives of many.

In the same way, the fear of investing is not a symptom, not an illness, but rather, an ingrained psychological barrier. Many are afraid of investing because of the risks associated – and risk is often frowned upon as a negative connotation to the topic.

Since we have started this post with Chinese, allow me to aptly point out that risk in Chinese is named as 危机 which can be directly translated as 危险中的机会. It’s the opportunity within the danger.

Many out there choose to opt for Fixed Deposits from banks which offers a guaranteed return for a lock-in of 5 to 10 years for returns that can hardly beat inflation out of their fear of risks. Some of us may even believe heavily in dividends from blue chips that forces us to forsake capital gains almost entirely. It isn’t wrong for us to be risk-averse and for us to have survived till now, we must be risk-averse to avoid overly dangerous activities. But the key word here would be “overly”. Investment in stocks or bonds can be risky, but they aren’t overly dangerous if we were to “lock in” over many years the same way as fixed deposits require us to.

There is the upside that is way greater than the downside. In fact, it would be more nonsensical for us to pay for our thrill rides on roller coasters as compared to investing. For us to take the risk of any malfunctioning of the safety devices, we should be compensated for that rather than for us to fork out money! As they say – the stock market is akin to a roller coaster ride. So, let us embrace and change how we view risk!

Ask yourself: If being offered to flip a coin, you’ll get $15 for Heads but you’ll need to pay $10 for Tails. Would you do it in one toss? Probably not because chances of winning will be 50-50. But, if offered 10 times, you must belong to the left side of the intellectual spectrum to say no. It only takes 4 wins to break-even, and 5 wins or more to profit. Binomial distribution P(X<4), X~B(10,0.5) shows us that is only a 17.2% chance of losing money nominally (3 or less wins)!

On the other hand, there may be some overly zealous investors that delve into the likes of Crypto, Leveraging, or Options that amplifies gains and losses. No doubt they can make you rich overnight but what are the chances? Cognitive biases such as over-confidence, overweighing small chances, and availability bias kicks in. We must recognise clearly that we may fall prey to the belief of our ability to be the rare few to rake in the returns. We must know that small chances are truly small, very much like gambling if we take an uncalculated jump. And the salient news of rags-to-riches comes cherry-picked from a huge pool of bags-to-ashes.

Have a countercheck on your own innate biases and approach an “experienced doctor” who can be a trusted friend of yours to weigh in on your concerns or your over-exuberance. Just like how at times I may waver with my own investment decisions when the market takes a hit, I check in with my buddy on his views to realign my belief and to clear the biases I may have developed from seeing red.

If you're interested to chat on this topic or to exchange ideas, please feel free to drop me a message on Telegram @elijah2212 or through email elijah.thj@gmail.com!