You Can Lead The Investing Public To The Market, But…….

Last week I kicked off a new writing gig over at AOL’s DailyFinance.  It will be different from what I do here on the blog in the sense that I’ll be writing less about trading and more about the markets, personal finance, and business in general.  I’m very grateful to have to chance to write for a broader audience, but already I have been reminded about how the individual investor can be their own worst enemy.

Case in point; a reader by the name of “Valerie,” who decided to comment on my piece “How to Improve Your Market Returns in 2014″.

The piece is about how a good market service can analyze thousands of stocks and distill them down to a manageable list of candidates for you to consider.  I asserted that subscribing to such a service was an efficient and cost-effective way to use  technology to your investing benefit.  I went to great pains not to suggest any specific services, nor to paint them as a panacea for investors, but just one of the tools they could add to their arsenal.  I also warned that there are scammers in this field and that you should always go with a service that offers a free trial first to make sure they are legit and that they fit your investing style.

So here is how Valerie weighed in on the subject (emphasis is mine):

Individual investors should be very VERY wary of anyone who claims to be able to “predict market moves”. The best minds in the investment field (who manage multi-billion dollar funds) can’t do this, consistently, and neither can these so-called “services” claiming to be able to pick the next big stock winners.

One aspect that the writer of this article conveniently glosses over is that paying 99 bucks a month for this questionable “advice” is almost 1200 dollars a year, PLUS the cost of trading stocks added to that. It’s hard to generate profits, if you are shelling out that much money for expenses. Potential taxes on all that trading should also be an important consideration, and that isn’t even mentioned in the article.

And what is going on with the writer’s belief that an internet chat room is the best place to get investment advice?? It isn’t. “Interacting with other traders” in chat rooms isn’t a good way to improve your investment returns. They will brag, endlessly, about their few big winners, but they will NEVER tell you about their many big losers.

The best advice?? If someone wants you to pay for their “stock picking service”, get a firm hold on your wallet and run. (Want to double your money quickly?? Fold it over and tuck it back in your wallet. LOL)

If you absolutely can’t resist the lure and excitement of stock trading, set aside just 10% of your investment funds for this as “fun money”. For the other 90% of your portfolio, stick with the proven long-term stock winners. Those “dull and boring” blue chips aren’t exciting to brag about to your friends, but their dividends and appreciating stock prices will make you rich over a period of time.

After reading this, I made a rookie mistake and decided to get into a good ole’ fashioned “flame war,” something I haven’t done since the Money Talk BB’s on Prodigy back in the early 90′s:

Hi Valerie,

The only problem with your argument is that you have absolutely no idea what you are talking about.

Nothing you say has anything to do with the ideas in the article. It is not about “predicting market moves” or a “stock picking service,” it is about streamlining the process of finding good stock candidates for a fee.

How much is your time worth? Is it worth $0.68 per hour? Because if you are paying $99.00/mo for a service where they spend 40+ hours a week watching and analyzing the market, then that is what it costs. And for that minimal fee, you get the 8,000+ stocks in the market boiled down to a list of 5-10 that you can consider. That to me is the most efficient use of money vs. time that I can think of for an investor.

And I even went as far to indicate that “yes” there can be some shady operators out there, but that most legitimate ones offer a free trial.

So, you could try a service for free, see if it works for you, and if they know what they are doing, and if so, subscribe to them for pennies a day to make your life easier….

OR…..

You could just dismiss the idea completely.

You made your choice.

Thanks for reading.

-B

Valerie then came back with a seven paragraph, five-hundred word retort, which I will not be so cruel as to burden you with here, but suffice to say, I quickly remembered why you don’t get into arguments with anonymous people on the internet — because they actually have the time to write seven paragraph, five-hundred word retorts.

Still, I can’t say that I wasn’t frustrated.  I felt like I was trying to introduce punk rock in the 70′s, or rap in the 80′s, to someone who felt musical perfection had already been achieved in the form of Foghat.  And no matter how much I tried to show them something different, cutting edge, and thought-provoking, they just wanted more of the same — double-live albums filled with twenty-minute guitar solos.

Interacting in the financial blogosphere and on StockTwits as much as I do, it is easy to forget that I’m living in a bubble in terms of market knowledge, and to those on the outside of the bubble my ideas and insights, no matter how normative I think they are, seem like the ramblings of a naive lunatic at best; and a financial charlatan at worst.

That makes my job over at DailyFinance more difficult, but also more challenging, which I like.

Check out my first two pieces for DF, The Man Who Saves CEO’s Billions in Taxes  &  How to Improve Your Market Returns in 2014 and let me know how I am doing.

Brilliant stuff like this rains down like..well, rain, on my stream during the week.  If you want to get wet, follow me on Twitter and StockTwits.  You can also pick up my book Trading – The Best of the Best: Top Trading Tips For Our Times by clicking here.  All proceeds go to fight pediatric brain cancer.

Brilliant stuff like this rains down like..well, rain, on my stream during the week. If you want to get wet, follow me on Twitter and StockTwits. You can also pick up my book Trading – The Best of the Best: Top Trading Tips For Our Times by clicking here.

2 Responses

  1. Couldn’t agree more! On the internet there are always people with more free time on their hands and with less common sense than you could possibly anticipate.

    Thanks for your always informative and funny (market) comments.

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