Student debt, market noise, and the psychology of investing come under the microscope in this episode of SoundPractice.
This transcript of the discussion has been edited for clarity and length.
Mike Sacopulos: My guest today is Ed Coburn. He runs the financial publisher Cabot Wealth Network, which since 1970 has helped hundreds of thousands of people become better investors. Ed is editor of the Cabot Investing Guide — everything you ever wanted to know about investing but were afraid to ask — and author of the forthcoming book Investing Without Hype. It is my pleasure to welcome Ed Coburn to SoundPractice.
Ed Coburn: Thank you very much. It is nice to be here.
Sacopulos: We are going to talk about some of the investment questions that come up most often. Since this is the podcast of the American Association for Physician Leadership, I want to start with something that affects a lot of physicians early in their careers: student debt. How should physicians think about balancing student loan repayment with investing for retirement or other long-term goals?
Coburn: Student debt is a huge issue, and I do not think any group is more affected than young doctors. The power of compounding is enormous, so the sooner you can start saving for retirement, the better. That said, the rates students pay on their debt are so much higher than what corporations pay that it's hard to count on investment returns that match the interest you're paying — so you want to pay it down as quickly as possible. My practical advice: you are a doctor, you are earning a doctor's salary, but your lifestyle should still reflect the grad-student years for as long as you can manage it while carrying student loans. Do not let your lifestyle get ahead of you — that's where people in every field get into trouble. Be aggressive about paying down debt, and if you can put a little into a retirement account so it starts compounding, that is great. If you have to wait until the debt is paid down first, that is fine too. Either way, the case for starting early only gets stronger.
Sacopulos: That's good advice. Over your career, you must have seen intelligent people make some rather poor decisions. What are the biggest investing mistakes you see smart, successful professionals make?
Coburn: Most doctors were excellent students — smarter than average, at the top of their class. But thinking you are smart can actually work against you as an investor. The market is full of smart people, and assuming you will outperform them simply because you are smart is usually a mistake. Keeping your ego in check is essential; humility and discipline are among the most important traits an investor can have. The second common mistake is getting caught up in the noise — hearing that everyone just piled into a stock that is run up, and buying at the top out of excitement. Without a plan and discipline, reacting to that noise gets people into trouble. So it really comes down to two things: the overconfidence smart people can fall into, and getting swept up in the emotion of the moment.
Sacopulos: You mentioned having an investment plan. Do you think people should put their plan in writing?
Coburn: Ideally, yes. Some people in the industry take a hard line and say a plan does not really exist until it is written down, and there is something to that. Knowing your objectives, your timeline, and your risk tolerance matters, because plenty of stocks can make people money without being a good fit for their goals or risk profile. I'd also say that for every stock, you should know in advance what would make you sell — both on the upside, when you'd take partial profits, and on the downside, how far you're willing to let it fall. You do not have to buy or sell an entire position at once. Having that plan written down gives you something to come back to, especially early on, so you can say, "This is too risky, I'm not comfortable with this," instead of reacting in the moment.
Sacopulos: I am curious about your new book, Investing Without Hype. Tell us a bit about it — and what exactly is "hype" in today's investing world?
Coburn: When Cabot got started in 1970, Main Street investors faced an information-scarcity problem. Today it is the opposite — we live in an attention-scarcity economy, and for young doctors especially, your attention may be your most valuable asset to manage. TV commentators, bloggers, podcasters, and financial influencers all depend on how much of your attention they can capture, so everything gets exaggerated: a dip becomes a crash, a strong stock becomes meteoric. And there's very little accountability for the predictions media personalities make, because they are not rewarded for being right — they are rewarded for clicks and eyeballs. That constant barrage makes people hypersensitive and pushes them toward rash decisions. A big part of the book is about finding a few reliable sources of information, relying on those, and tuning out the rest. AI adds to this dynamic too — it's a wonderful tool, and I use it every day, but it can generate so much information that it adds to the noise, even though it still can't replace human judgment built from real experience.
Sacopulos: That is very helpful, and I agree completely about the noise out there. My problem is a practical one: how do I know what is noise and what is useful? What should I look for in a reliable source?
Coburn: If a source leans heavily on predictions, that is a red flag — very little about investing is certain. And if someone uses absolute language — "I'm one hundred percent certain, this is a lock" — that disqualifies them right away. Those are the two biggest warning signs. I would also point out that we now have the ability to check our investments every second on our phones, and that is not good for us. I look at my own portfolio about once a month, partly out of professional curiosity. The third filter is understanding incentives: is this person trying to sell you something, or just trying to build an audience so they can charge more for ads? Understanding incentives is a powerful filter.
Sacopulos: I am interested in the role psychology plays in investment success — and in investment losses. What behavioral mistakes show up most often during volatile markets?
Coburn: Human psychology is the single biggest factor behind successful investing. This book turned out to be as much about behavioral finance as it is about investing strategy. We have already touched on overconfidence and herd mentality; loss aversion is another big one — people get irrational and dump a stock simply because it is down five percent. Everyone knows in principle to buy low and sell high, but in volatile times, without a plan, individual investors often do the opposite: buy high and sell low. Disciplined professional investors like Warren Buffett do well because they follow strict guidelines instead of getting emotionally attached to a stock they happen to love.
Sacopulos: This may sound like a simple question, but I do not mean it that way: what is the difference between gambling and investing? Both involve betting on a future outcome.
Coburn: It is a great question, especially now that prediction markets and sports betting are blurring the line further. Investing started as ownership — people pooled money to build a factory and owned a piece of it. If everything fell apart, you had a legal claim on part of the company's assets. With cryptocurrency, if everything falls apart, you are left with nothing. Investing also comes with an enormous amount of data you can study to try to anticipate and influence outcomes. Gambling is really more of a crapshoot. Cryptocurrency and prediction markets have blurred the line, but they still are not investing.
Sacopulos: Do physicians listening to this podcast need a broker? Or are they better off putting money into a few good mutual funds and avoiding high fees?
Coburn: I do not think anybody strictly needs a broker or advisor — though I have reached the age where I have started working with a wealth advisor myself for estate planning. Cabot Wealth Network is not a wealth advisor; we do research and analysis and make it available by subscription. For most people, starting with a handful of mutual funds or ETFs is a fine place to begin, especially if you don't have much time to devote to it — it's nearly impossible to beat the market with an index fund, but the market does tend to rise over time. From there, as you build knowledge and confidence, buying individual stocks is where you can start to beat the market. And it does not have to be tech stocks — one of the best-performing stocks of the last eighty years has been what's now Altria, formerly Philip Morris. Never a glamorous stock, but phenomenal if you reinvested the dividends. Diversification matters too: studies show you get most of the benefit of diversification with twelve stocks, and nearly all of it by around fifty. Beyond that, you start diluting your winners with mediocre performers, which works against your chances of beating the market. I currently hold about fifty stocks myself. And again, you do not have to buy or sell an entire position at once — dollar-cost averaging in and out reduces the psychological wear and tear of watching a stock jump right after you sell it.
Sacopulos: That is a good point. As we wrap up, tell us a bit more about Cabot and how people can find you — and what they should expect when they do.
Coburn: Cabot Wealth Network is based just north of Boston in historic Salem, Massachusetts, and we publish information for investors across most major strategies — options trading, growth and income strategies, dividends, momentum trading, value investing, small-cap, and global investing. We stay away from short selling, commodities, and futures trading, where amateurs are at a real disadvantage against full-time experts. On the subject of incentives: we have no advertisers. The only revenue that has kept us in business since 1970 is customers paying for subscriptions. If we are not helping people, they stop paying, and we get the message. We do not tout anyone's stocks, and we take no compensation from anywhere except our customers, which makes it a lot easier for me to sleep at night. People can find us at cabotwealth.com, where I write regularly for a free daily newsletter, and I am happy to share my email: ed@cabotwealth.com.
Sacopulos: It is good to know there is no hidden agenda here, and that the business is built solely on the quality of the information you provide. My guest has been Ed Coburn of Cabot Wealth Network. Ed, thank you so much for joining us on SoundPractice.
Coburn: Thank you very much for having me. It truly was a pleasure.
