Mutual Funds for the Utterly Confused

What happens when you thrust a group of medical students into a situation where their knowledge of subject is put into practice? It could be problem, even if it is something simple like blood pressure and blood pressure regulation. When a student learns an underlying principle, the ability to put into use is not always as easy as it sounds. Why?

Anna Fyrenius along with Charlotte Silen and Staffan Wirell asked that same question. They understood the complexities of medical study where the unfortunate side effect of intense learnng and that this sort of problem developed because of an inability to conceptualize the situation. In other words, they knew how things worked but not necessarily why, how what one organ did was completely dependent on how another reacted, and how to solve the problem along this time line.

They introduced the subject of their paper as an “oversimplification and reduction of inherent complexity are factors pointed to as being involved in the creation of misconceptions in physiology” or the students had no concept of the connections because it was explained in a point A to point B method somewhat similar to a “if this happens, it was because of this happening prior”. And as we all know when we discuss the human body, that is not always the case.

In the world of bond investing, it is about simplicity yet the underlying principles of this type of investment cannot be ignored. You don’t need to know how to fix a car to drive one, but some knowledge, whether learned or experienced over time, gives you a good deal of working knowledge about how the car drives, how it reacts under certain circumstances, and what skills you need to bring to the experience in order to avoid an accident. But this experience can be costly when it comes to investing. Lost money is not easily retrieved even after it has taught you the lesson.

The principles involve a discussion about yield and risk. Bond investors have numerous choices when buying fixed income securities but by and far, the best way to purchase a bond is through a mutual fund setting.