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The Complete Series Of Everyone Needs A Little Radiologist In Them:
I have been very fortunate to have found a career in Radiology.
Out of all the medical specialties, I think my personality and temperament meshes best with Radiology.
I get great satisfaction when I am able to apply a concept or skill used in the realm of medicine (and especially Radiology) and translate it to benefit my financial realm.
It is multi purposing at its finest.
So here are some of the following concepts I have gleamed from being a radiologist/physician and how I apply them in my everyday/financial world:
Radiology Concept #1:
Need to see the forest from the trees
One would think that the closer you looked at an imaging study, such as a chest x-ray, the better you are able to pick out abnormalities.
One would be wrong.
There are many times I am staring at a particular study, just inches from my nose, to then have a lesion suddenly become conspicuous as I backed away from the screen.
The lesion was there all along, but because I was super focused on a smaller field of view it was hidden amongst the background noise.
By increasing the distance from my eyes to the screen, I increased the field of view I could analyze and now take in the bigger picture, seeing the forest from the individual trees.
A similar phenomena happens to our pathologist colleagues who routinely have to shift between various powers of magnification under the microscope to truly get a feel for what is on the slide.
It is very easy to become ultra-focused on one part of the investing process and ignore larger concepts which can lead you to financial peril.
Those who are Bogleheads have championed the cause of low cost index funds (i.e. passive investing) over those that are actively managed.
I wholeheartedly believe in this philosophy and have the majority of my market holdings in passive index funds which have a low expense ratio.
So what happens if you become obsessed with reducing investing costs?
If a low expense ratio is good, is not a zero expense ratio even better?
Not so fast.
When Fidelity introduced no-fee index funds there was a lot of discussion generated about whether an investor should abandon the Vanguard ship (the first company with low expense ratio index funds) to take advantage of this new offering.
Given that the expense ratio was already incredibly low (at the time of creating this post the expense ratio for Vanguard is 4 basis points (or 0.04%)), some investors were ignoring the forest and only concentrating on the tree.
Trying to minimize the expense ratio even further may actually backfire financially on these unsuspecting investors.
Imagine a scenario of an investor that has a taxable brokerage account with a large holding in Vanguard that had shown significant gains (not an unusual situation given the long bull run we have had).
This investor is solely driven to keep expenses low and decides to liquidate these shares in Vanguard to “take advantage” of the no-fee Fidelity index funds.
By doing so, he or she would have then unintentionally created a substantial taxable event via capital gains which would wipe out any potential savings the 4 basis points gain would have had over the long run.
This is focusing too much on the trees and not the forest.
Radiology Concept #2:
The train wreck.
The “train wreck” terminology is used in radiology to describe a situation where a particular large study (typically a CT scan) has every abnormality imaginable.
After a particularly grueling day (or in residency near the end of an overnight call), the last thing you want to have to read is a train wreck case.
Everywhere your eye scans there is a reportable finding.
In my mind I am doing mental calculations of how long I am going to have to spend on this particular study and how lengthy my dictation will be, causing me to become crestfallen.
Sometimes it is difficult to even know where to start faced with the sheer enormity of findings in front of you.
The best way to approach these cases is to follow the teachings of a popular saying:
“How do you eat an elephant? One bite at a time.”
Once I have resolved to start interpreting the case, I make it more digestible by indeed taking it one bite at a time.
I turn to the basic fundamentals ingrained in me from my residency training.
I use my personal algorithm and attack each system one by one.
Lo and behold, before I know it, I have completed the study (and almost always it was not as bad as I initially anticipated).
Sometimes we get bogged down in too much minutiae that happens when we over-analyze a potential investment.
We can then have what is called “analysis paralysis” and not invest in anything at all in the face of limitless opportunities.
This is precisely what you do NOT want to do.
The main benefit of investing is that you are actually invested.
Sitting on the sidelines with cash because you are paralyzed to act will have an overall detrimental effect on your finances (due to the erosive effect that inflation has in regards to purchasing power).
What seems like a daunting task with a myriad of options can be broken down into more manageable components.
Starting out with an Investing Policy Statement would be my advice if you are just beginning your financial journey.
Radiology Concept #3:
The scout view
When a patient undergoes a CT, the performing technologist does a preliminary scan of the patient so that they can then localize the relevant anatomy for the true dedicated study (the image obtained is called the scout or localizer view).
When the actual images are sent to the radiologist for interpretation, this scout view is included which often looks like a low quality x-ray.
You may think you would not need to look at a lower quality scout view when you have 100s of higher quality images to view.
You would be wrong.
There are many instances where I have picked up an unsuspected mass that was included on the scout view but not on the actual CT component.
One of my favorite radiology wins was when I picked up a subtle mass next to the heart which happened to be included on the scout view but not on the Abdomen CT images.
If I had chosen not to have looked at this lower quality image I would have never known that a mass was lurking (and neither would the ordering clinician) until perhaps it was too late.
That particular patient then underwent a dedicated Chest CT which confirmed that there was indeed a pulmonary neoplasm .
Do not dismiss a potential source of information that can aid in the decision making process based on perceived bias.
There is a segment of investors who do not acknowledge any information unless it comes from a financial advisor with a string of initials behind his or her name.
We have been conditioned by society that the more you pay for something the better it is.
Paying for financial advice, by this line of reasoning, should always be better than information freely obtained on the internet.
Gleaming information from a financial blog, for instance, would be beneath these individuals and they tend to ignore it completely.
I personally have made some of the best investment decisions from information I encountered not only through the actual blog posts but the very informative discussions that often ensue in the comment section.
Radiology Concept #4:
The lawyer danger zones.
During my residency training, one of my attendings told me to pay particular attention to certain locations in a study as these were the areas that pathology was known to hide and could be missed if not careful, setting us up for malpractice suits.
We were always instructed to scrutinize “all four corners of the film” as these areas tend to be omitted in a routine search pattern.
Pulmonary nodules hiding in the very last images of the lung bases on a CT scan are one such “lawyer danger zone” as he put it.
Reading up on cases of malpractice in your particular specialty may uncover certain trends that may help you identify specialty specific lawyer danger zones to be aware of in your own practice.
These seemingly innocuous components of a particular study can have drastic financial implications down the road if you choose to ignore them.
In addition to avoiding the financial impact of having a medical malpractice suit on your hand this concept has emphasized the importance of looking closely in areas that tend to get glossed over.
Most investors are led astray by the seemingly minuscule numbers that firms charge for advising clients.
A 1% AUM (account under management fee) for example does not seem to be all that onerous at face value, however this can lead to 10s, if not 100s of thousands of dollars in management fees over the lifetime of a portfolio.
These fees can be insidious and rightfully can create a financial danger zone that takes away from your financial success.
Please stay tuned for more installments of this series in subsequent weeks.
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