It seems counterintuitive. Why on Earth would a free financial website like Wealthy Retirement warn about getting free financial advice from your TV?
Because, as Steve McDonald explains in this week’s Two-Minute Retirement Solution, the talking heads on TV have a habit of lumping all investors into one category.
Transcript:
Free financial advice is everywhere, and most of it is not just useless, but dangerous.
One of my biggest concerns about the free financial information on TV is it always falls into the one-size-fits-all category. And, believe me, when it comes to money, in my experience, one size doesn’t fit anybody.
The people you see on CNBC and Bloomberg, for the most part, are well-qualified to be there. Some are the best minds in our business.
But they typically have about 30 seconds to address an issue that could easily take an entire semester to fully understand.
But more to the point, we are never given enough information about what their specialty is in the money world to be able to decide if what they are recommending has anything to do with our goals, time horizons or needs.
For example, a guest analyst may be recommending shorting gold or oil because his only job might be hedging oil for an oil company or gold for a mutual fund. His whole world is about shorting. He doesn’t do anything else. But you don’t know that.
His reasoning for shorting and his expected outcome are very likely a lot different than a person saving for retirement.
Or if someone is talking about the stock he likes. This guy could be managing money for a retirement fund, in which case he has a virtually unlimited time horizon. You do not. His picks will not suit your needs.
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Or the guest may be a trader or analyst who shoots for a one-month or one-week time horizon. Believe me, you and I have no business owning anything recommended by someone with that type of time horizon.
The point is you don’t know what his or her focus is. And specialties in the money world are amazingly specific and rarely the same as yours.
I know this misinformation is not intentional. But the outcome will be the same. We end up owning companies and packaged products that don’t serve our particular situation or needs.
And the bad information doesn’t have to come from TV. There are a lot of mutual fund salesmen and annuity salesmen, not as many as there were before the crash, but they can unintentionally have a one-size-fits-all mentality as well. And that can lead to a real disaster.
The bottom line: Make sure you know who is talking, what he or she is really about, and that your goals and needs are being addressed.
Good investing,
Steve