Read This Before Taking ‘Free’ Investment Advice…
May 18, 2015
Investment advice ranges from thoughtful to dumb to downright criminal. When it’s “free,” even the best intentioned, fundamentally sound advice can cost you dearly. Before you act on anything you see on TV or read online, please read this first!
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I have no bones to pick with media “personalities” who dispense investment advice on TV or online. I’m no hypocrite.
I appear frequently in the print media — and as a guest expert, providing commentary and background on business-related topics all over network and cable TV shows.
I regularly stand in for Neil Cavuto on his show, Your World With Neil Cavuto. And even more incriminating, I anchor my own show, Making Money With Charles Payne, every weekday evening on Fox Business News.
Frankly, I believe in the immense power of the media to democratize information for a deserving audience. I wouldn’t do it if I didn’t believe this is a net positive for hardworking individual investors.
To be clear, I’m not calling anyone out as a charlatan. Though there are plenty out there. I’m not even calling out those of us who should know better, but who nonetheless insist on riling up investors in pursuit of ratings.
Though again, you and I both know they are out there, too — and who they are.
I’m not even calling out so-called “experts” who get caught up in the excitement and flail their arms in reaction to the latest geopolitical, data or business headlines — and who unwittingly put their viewers in great peril in the process.
Every one of these problems is serious. So, too, is the mindless pabulum media types spew out just to fill up airtime. Every one of these drawbacks has brought ruin to at least one hardworking investor caught up in the dragnet.
But I’m sensing you know better than to be bamboozled by these antics. For one thing, you’re taking the time to read this. That tells me a lot about you. You’re patient and thoughtful and you seek out honest, expert counsel.
But I do have one urgent warning I hope you will consider. It’s a pernicious outcome I’ve seen play out with alarming frequency and punishing results on countless occasions over my 30-year Wall Street career.
It’s popular in some circles to hate on Jim Cramer, host of MadMoney on CNBC. Sometimes, I actually think Cramer gets a raw deal.
True, Cramer was a stock market cheerleader in the late stages of the great bull market. True, too, he was a loud proponent of a widely owned and richly priced group of large-cap technology companies.
But Cramer wasn’t the only one who marveled as tech giants Cisco and Intel and Oracle and Sun Microsystems, among others, rocketed higher to nosebleed valuations that were clearly unsustainable, dragging the S&P 500 higher with them.
When the bottom fell out and the markets nosedived, a lot of CNBC viewers — along with a lot of other investors — got crushed. Critics pounced – and they were ruthless. But here’s the thing. We all make mistakes.
What’s bothers me now is that without admitting their role in the crash, many “free advisors” in the media turned overly cautious. As a result they’ve made things worse by discouraging their views from participating in the current rally.
This constant “fighting the last war” and the rapid trading and heightened skepticism it encourages costs investors money. And even when investment advisors in the media do get it right, viewers don’t get the message.
Don’t get the wrong idea. I’m not here to condemn Jim Cramer. But I’m not here to praise him, either. I hold this tech-wreck story up as a particularly telling example I bet you can relate to. But it’s really just one of many.
And to be honest, it’s nobody’s fault. In fact, it’s human nature. It’s why we let magazines and newspapers pile up on our tables — and why we don’t complete free webinars we sign up for online.
It’s why we forget to watch TV shows but rarely walk out on movies.
Making matters worse, truly actionable investment advice doesn’t lend itself to mass-market “free” distribution. For one thing, it’s simply too nuanced to accommodate the individualized needs of a mass and diverse audience.
Plus, when your hard-earned money is on the line, you need to be reachable at odd times should something come up or circumstances change. You need an accessible place to archive past and active holdings and recommendations.
Just as with free advice, you need to be on hand to hear new recommendations, but you also need to be available and committed to receiving timely updates and follow-up information — especially when it’s time to sell or buy more.
This is something I learned in the 80s working as a full-service broker and later confirmed over 25 years running my independent stock research firm — where timely communication is a paramount concern of my clients.
I think I have the perfect solution…
I hope you will give the dangers we just discussed some thought. Even better, I hope you’ll give some serious thought to joining me in my unusual new wealth-building project.
Please be sure to watch your inbox bright and early on Wednesday morning, May 20, 2015.
I think you’ll find it’s a perfect solution to the drawbacks associated with free advice. For starters, you’ll get first dibs on my most-timely commentary, guidance and specific recommendations — 75% of which you’ll never hear me utter on TV.
You’ll know exactly which stocks I want you to buy and most important (because investors assure me that this is their greatest challenge), you’ll know the MOMENT I want you to take your profits and move on.
Just as my institutional clients recently locked in gains on F5 Networks (up 210%)… Cal-Maine Foods (up 213%)… Expedia (up 243%)… Kandi Technologies (up 324%)… and InterMune (up 391%).
In short, you’ll receive precisely the quality of research, analysis, and recommendations that have until now been reserved for my institutional clients, many paying thousands of dollars a year.
I can’t wait for Wednesday to get here. I’ll be in touch soon!
If you think you might be interested in hearing more, I’ll be back touch Wednesday morning May 20, 2015. I’ll make sure you are the first to hear when I invite a small number of investors to join me on Wednesday morning.
Editor, Smart Talk