Are personal finance bloggers really any different to Jim Cramer?
For those of us who are not American, so don’t know (or care that much) about CNBC. Jim Cramer is a stock pundit with a show called Mad Money on America’s biggest financial news network. Recently, Jon Stewart of The Daily Show (satirical news chat show, catch it on More 4 at 8:30pm on weekdays), called out CNBC and Jim Cramer for giving poor financial advice particularly with regard to the failure of Bear Stearns, and Lehman Brothers.
It got me thinking about how you should treat financial news and personal finance blogs.
In general, I think that it’s quite a lot like sports news, and reporting.
Sometimes we write pieces that are explanations of how semi-complicated financial products work – a bit like explaining the rules of cricket, or baseball. If it’s factual like this, multiple sources should give the same answer (there is only one correct answer to the question what is the ISA limit for 2008-09). I personally trust this kind of information if I am of the opinion that the source is legitimate.
the received wisdom
Sometimes we write pieces that described received wisdom, like suggestions for getting out of debt, or investing responsibly for retirement. This is kind of like describing how you can train for the marathon. Whatever you do, the outcome isn’t guaranteed, and there is the real risk that you could injure yourself even if you follow the suggested path if it’s not right for you. Fitness advice and suggestions are often caveated with the statement that you should consult a professional before making any major changes. Similarly, good personal finance suggestions is caveated with the statement that you should consult an Independent Financial Advisor if you want advice specific to your situation.
Personally, I use the collective wisdom on stuff like this. If it seems to make sense to me, and everyone is saying the same thing, I take it on board. I can if I think it is useful for my own situation, and most of the time it is not.
the pure speculation
Sometimes we write pieces that suggest that a certain stock is good buy, or sell. This in my mind is like a racing tip, and no more or less likely to be accurate. It’s not that people giving stock tips don’t know what they’re talking about, but more that none of us can see the future, and they can’t be sure what’s going to happen, much like the pundits before a horse race. Personally, I don’t bet on the horses except for entertainment purposes (i.e. I expect to lose every penny I put down) and I feel the same way about stock tips. You should make up your own mind.
what about plonkee money?
I try to be as careful as possible to ensure that I don’t cause any harm with my articles. I want to encourage people to be more confident with risk, to work out what their actual risk profile is and use it to inform their investing decisions. I want people to understand how investing works, why debt is unhelpful, and how money is not something to be frightened of.
I don’t want people to read my posts, and think that I know what I’m talking about, because I don’t. I don’t want you to take my word for it – everything here really is for entertainment. It’s a blog, written by a regular English person, with a regular life. I want you to read as widely as you can, take into account your own situation and act sensibly. If I’m getting in the way of that, I need to know, before I’m on The Daily Show getting lambasted by Jon Stewart.
- basic guide to Stocks and Shares ISAs: introduction
- foolproof money making scam
- pensions are actually invested in equities