This was supposed to be a presentation that I was going to give at Ignite Raleigh. Unfortunately, stock picks didn’t seem to be the interest of most people. Social media was the primary focus. Everybody wanted to know how to use Twitter, Facebook, et al for marketing and advertising purposes. Those are great, but I feel I would be doing you all a great disservice if I didn’t at least write about it.
The premise isn’t so much fitness trainers, just that fitness trainers gave me the idea. I have known personal trainers who give out stock tips to their clients as if they are serving double duty. Which I guess I shouldn’t complain, when people ask me about workout tips, I usually provide them. With the caveat that I really don’t know what I’m talking about and anything I tell you is third hand. Kinesiology and nutrition and some other terms that I’ve never studied are complex. A lot like investments. So I am the first to say I am no expert. After all, I work out six times a week, figure I eat healthy, and can’t drop a pound to save my life.
My reason for writing this is not so much the lack of expertise among the fitness trainers (they could be well studied in capital markets and understand securities more than the average person and maybe even more than some investment advisors), so much as the lack of understanding about the particular investor. Which is what gets me going about financial opinion writers/pundits/tv critics.
Unable to tear my eyes from the television, I watch these shows and marvel at the dearth (10 dollar word) of bad advice being given out. Not because the advice is bad, just that those providing it have no idea whether or not they are giving the right advice. A good example would be recommending to someone who is obese that they need some more fat in their diet. We don’t know if the advice fits.
So it is fascinating to me to see these people on television. Let’s start with Cramer. Booyah, anybody? Jim Cramer is a former hedge fund manager who used to work at Goldman Sachs. Jim Cramer is a smart guy and he is also a very animated guy. He is also wrong quite a bit. Oh, not about the stocks that he picks (although Barron’s did an article a few years ago pointing out that the stocks he picked went down rather quickly), but the fact that he has no idea what else everybody has in their portfolios. Do his picks make sense for everybody out there? Unlikely. In fact, they are probably a small minority of people that they do make sense for.
What about Suze Orman? What about those teeth? Those teeth are nice and bright, and can be a little scary… but what about her advice? Suze makes an effort to gather some information. However, that information gathering is cursory and there is no verification. Plus, others who may be in similar situations may apply her advice to theirs, but may be off because of other circumstances. Suze is also smart and has done quite well for herself. But here she is wrong. Not because she isn’t good at what she does, but because she is providing advice out of context.
And everybody’s favorite, Dave Ramsey. Dave Ramsey has made quite a name for himself. Poor guy has had to file bankruptcy before and advocates zero debt. Forget credit scores and the like. Pretty much the opposite of Suze Orman. Well, Dave does what they all do. Provide blanket advice for problems that the advice may not fix. Or even address. I know I am getting pretty close to blasphemy here, but really it is getting quite out of control.
But what about you Mike? You write things on this blog all of the time and you don’t know about my situation. That’s true, I don’t. But the advice I provide generally talks about being careful about making those decisions and often involve asking you to consult a professional (me or someone I think you should talk to). Also, I never give specific recommendations, as that would be irresponsible and really should be illegal. Why? Because I don’t know your situation. In order to properly give advice, a professional needs to know the situation. Physicians read your charts, attorneys use discovery and financial advisors ask you questions and look at your financial statements.
So why shouldn’t you get your stock picks from your fitness trainer? Because he doesn’t know your specific situation.