Why is there so Much Bad Consumer Investment Advice

I probably shouldn’t say anything terribly negative about some of the popular on-line investment sites for consumer investors.

It would be like biting the hand that feeds you or maybe defecating where you eat, depending on your level of adolescence. Given the fact that I used the word “defecating” instead of some readily available alternatives, I’ve demonstrated my maturity to my own satisfaction.

I’m a little reluctant to saber rattle  because as I’ve been trying to raise awareness of the Szelhamos Rules blog and the Option to Profit book, I’ve been posting comments pretty much everywhere that I can, as you’ve come to realize if you’re on Twitter. It’s the current day version of subway grafitti, except without any artisitc merit.

Rant baby RantSo instead, I’ll rant, because I don’t really understand the imagery behind saber rattling.

Many of the postings are in response to articles that appear on such consumer investor sites. Interestingly, I don’t have the same opinion about broadcast investment stories. That may be the case because so much of it is just background noise and there’s really no great way to respond in a timely fashion.

The real reason that I should consider treading lightly is that a disproportionate number of clicks on this blog site and resultant book sales have come from readers of those sites.

Thank you readers. Laszlo the Dog feasts again tonight owing to your largesse.

As I wrote that, the adolescent in me thinks “Large Ass”.

I know that’s not really funny, but it really is.

I’m at a midway point in the investor spectrum. Compared to the individuals that I follow on Twitter, I’m woefully inept, at least in terms of jargon, understanding of technical analysis and depth of social media following. Most of my Twitter followers are there because I strategically used hashtags on such words as “prostitute”, “Charles Manson”, “Filipino Mail Order Brides” and “TeaBagger”.

Lord knows it’s not content related.

On the other hand, I’m very satisifed with my trading results, so I’m not terribly concerned about being a rube in a sea of city boys. I know that there’s nothing terribly sexy about going to the bank with unrolled nickles and dimes, while wearing my Crocs. I suppose that I’d have greater self-esteem if I had a bunch of Benjamins and wore Bruno Magli’s, but I’m okay with my ghetto investor status.

But compared to the cross section that I’ve seen on such sites as SmartMoney.com, I have a highly fissured brain, at least when it comes to investing, or at least as it comes to the perception that the editors and writers have of their audience.

By the way, I’m not referring to the audience.

Oh, and I have two pair of Crocs, one being faux-fur lined.

What particularly bothers me is the quality of advice that appears on these sites. So much appears to be counter to what reality says is real.

If you read this, please don’t expect much in the way of documentation. I save the arguments that I can back up on my “Premium Content” site.

Today was the day that really broke the proverbial camel’s back. I didn’t really bother keeping a log of all of the articles over the past few weeks, but they’ve given me many opportunities to respond and trumpet my own philosophy in a “What you talkin’ bout, Willis” kind of tone.

If you were to glance at some of the articles appearing in the past week you would have walked away with the belief that the individual investor should look to time the market, insofar as to know which sector to invest in and when.

Good luck with that timing strategy.

You would also be lead to believe that some stocks with high P/E ratios had little downside risk. Really? Green Mountain Coffee Roasters? The next drop in that one should be reasonably vertical. One disappointing word from Starbucks and GMCR late climbers on are going to jump ship and there’s really not a lot of support between $45 and $80.

Today there was an article on a new retirement caluclator, as if there was a shortage of those. The message in the article was that the new retirement calculator would lead you toward a path based on irrefutable knowledge.

After all, numbers don’t lie. Unless you picked the wrong numbers.

That path is based on the same kind of warrantless assumptions that every other calculator is based upon. You really may as well load your thought processes down with “your number”, either being placed into a false sense of security or a state of steady panic, leaving you paralyzed to act either proactively or otherwise.

Instead, the article completely ignored the fact that the assumptions may turn out to be wholly inaccurate, and to my thinking, they completely ignored the steps to take to accumulate the funds necessary to have a fighting chance of making it to retirement.

What really galls me is that there is a consistent bias that the average investor class individual doesn’t have the ability to take responsibility for their portfolio and by so doing, they consistently steer people toward those paths that are littered with return reducing obstacles.

Roll over retirement plans are consistently treated as vehicles that should be maintained in the same  sub-standard performing accounts offered by the employer du jour. Brokerage house recommendations ignore the existence of discount brokers. Independent thought and reliance on developing personal investment skills is ignored.

The reality is that if the professionals were so good, there wouldn’t be the wide range of price movements seen, particularly over short periods of time. It’s not the little guy or the uninformed investor that’s been disrupting markets with ill timed and ill advised investments.

It’s the professionals. The very same that cloak themselves with the sophisticated tools, algorithms and investing instruments.

The very same professionals who just came out today with downgrades of Research in Motion.

They’re the smart ones, though. Besides being a weatherman, what other job can you be so woefully bad at, yet still be considered a shining star?

Yet, the general investing public is too often considered to be unable to behave in a discerning fashion. As if they don’t know what crap is (crap just being another synonym used by one of a certain level of maturity).

If I were conspiracy-centric, I would say that this is just another example of “The Man” trying to keep the little guy down. It is almost like the concept of the company store. You become so indentured to your overlords that you never even think about venturing out on your own, or you just can’t.

Fortunately, I don’t harbor that kind of mentality.

Today I practiced what I preached. I used proceeds from some of my assigned shares to pick up downbeaten shares in some other companies. I also dumped shares of dead money stocks to take advantage of the tax losses.

If warranted, I may buy them back within a tax deferred account and then avoid the wash sales rule.

Every single position that I picked up today, I had previously owned within the past few months. Visa, Halliburton, Sallie Mae and some more shares of Freeport McMoRan. These were now all down to prices that I had originally purchased them at over the past year.

All of life is a big cycle and stock prices are no different.

I quickly sold call options on Sallie Mae, Visa and Halliburton and used proceeds to pick up even more shares.

One of the articles that I saw today raised the question of whether individual investors should use on-line brokerage accounts. The emphasis, obviously was on the lack of hand holding. What they didn’t discuss was how that hand holding is so restrictive. Where in the world would you ever find a broker to pull off the kind of trades you need to protect your portfolio from the wild gyrations induced by the smart city boys with the Bruno Magli’s?

Even though none of the above may sound like a real rant, I should let readers know that 3 LCD monitors were harmed in the writing of this piece.


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