Why You Can't Build Wealth Reading Financial Trash
You can't build wealth reading most financial commentary - especially when it comes from people who manage "OPM" (other people's money).
For example, what do you think an investment manager who makes his or her living managing stocks might recommend you do with your money no matter when it's time to invest? That's right, no matter what's going on in the markets or the world, they'll always tell you that now is a good time to invest in stocks.
Most recently, we saw an example of this sort of nonsense in an Opinion in the Wall Street Journal. Bob Doll, the fellow who penned the propaganda, manages equities for Blackrock. Blackrock is, if not the largest, one of the world's largest investment management firms.
Of course, he's just giving his opinion in the article, so we can't be too hard on him. If you read the article, he makes absolutely no attempt to back up his claims. His argument basically comes down to saying that "the spirit of innovation and entrepreneurship that has defined America in past crises will prevail again and propel our markets forward." So buy stocks.
Now, re-read that comment and tell me exactly what it means. It certainly sounds nice. It's almost inspirational. In fact, Mr. Doll brings in references to the early Puritan settlements and the whole "City on a Hill" concept that inspired generations of Americans to believe that we were and are an exceptional nation. And in many ways we were.
Are we now? Well, it's always possible that our people will look back at our glorious history and become more like the pilgrims who journeyed here in the 17th and 18th centuries or the pioneers who pressed out into the frontier to establish a new life for themselves. But that's a subject for another time. The relevant point here is that this is more rhetoric than convincing argument. And that's why reading this sort of stuff can be so dangerous to you if you're trying to build wealth.
So here are the lessons to learn:
First, don't waste time reading the opinions and propaganda of people who make their living managing money in one way. For example, if they manage bonds, they're certainly never going to tell you that now isn't a good time to invest in bonds. And if they manage stocks, they won't be telling you to stay in cash rather than invest with them.
Think about it. Have you ever read anyone say "Hey, I manage stocks, but, you know what, I wouldn't be putting my money into stocks right now. They're too expensive and you'll probably lose money if you invest right now."
Second, whenever you read an article talking about investing, look for substance, not fluff. Phrases like "we believe" (a favorite in the investment management world) don't tell you much of anything. Who cares what someone "believes." If I tell you I believe that stocks should go up 12% this year, wouldn't you want to know why? And wouldn't you want some stronger conviction than mere "belief"?
Warning: you'll have a lot of trouble finding articles that provide all that much in the way of substance. You'll find articles that throw around a lot of numbers, but they're just as dangerous as the ones that just waste your time with fluff. Unless you really understand the numbers, you can easily be impressed by the sheer volume of statistics - most of which may not really say very much.
Try to hold the author's feet to the fire. Look for what's true in his or her statements, not their opinion.
Build wealth with a plan in mind. Base your decisions on conclusions drawn from solid research - research based on verifiable facts. I know, it's not easy. It takes a lot of work.
Your other choice is simply to save a lot and put your savings somewhere safe. Don't invest a lot of your savings unless you're really sure that you invest safely. In fact, if you save and invest safely (at least some portion of your savings), you just might build wealth in the end.
As for Mr. Doll, he's making millions and millions of dollars working at Blackrock. I'm sure he couldn't care less about what I think of his opinions. All I'm saying is that you shouldn't care about his opinions either.
Do yourself a favor and stop reading all the nonsense and trash out there. And build wealth by saving and investing safely.
For example, what do you think an investment manager who makes his or her living managing stocks might recommend you do with your money no matter when it's time to invest? That's right, no matter what's going on in the markets or the world, they'll always tell you that now is a good time to invest in stocks.
Most recently, we saw an example of this sort of nonsense in an Opinion in the Wall Street Journal. Bob Doll, the fellow who penned the propaganda, manages equities for Blackrock. Blackrock is, if not the largest, one of the world's largest investment management firms.
Of course, he's just giving his opinion in the article, so we can't be too hard on him. If you read the article, he makes absolutely no attempt to back up his claims. His argument basically comes down to saying that "the spirit of innovation and entrepreneurship that has defined America in past crises will prevail again and propel our markets forward." So buy stocks.
Now, re-read that comment and tell me exactly what it means. It certainly sounds nice. It's almost inspirational. In fact, Mr. Doll brings in references to the early Puritan settlements and the whole "City on a Hill" concept that inspired generations of Americans to believe that we were and are an exceptional nation. And in many ways we were.
Are we now? Well, it's always possible that our people will look back at our glorious history and become more like the pilgrims who journeyed here in the 17th and 18th centuries or the pioneers who pressed out into the frontier to establish a new life for themselves. But that's a subject for another time. The relevant point here is that this is more rhetoric than convincing argument. And that's why reading this sort of stuff can be so dangerous to you if you're trying to build wealth.
So here are the lessons to learn:
First, don't waste time reading the opinions and propaganda of people who make their living managing money in one way. For example, if they manage bonds, they're certainly never going to tell you that now isn't a good time to invest in bonds. And if they manage stocks, they won't be telling you to stay in cash rather than invest with them.
Think about it. Have you ever read anyone say "Hey, I manage stocks, but, you know what, I wouldn't be putting my money into stocks right now. They're too expensive and you'll probably lose money if you invest right now."
Second, whenever you read an article talking about investing, look for substance, not fluff. Phrases like "we believe" (a favorite in the investment management world) don't tell you much of anything. Who cares what someone "believes." If I tell you I believe that stocks should go up 12% this year, wouldn't you want to know why? And wouldn't you want some stronger conviction than mere "belief"?
Warning: you'll have a lot of trouble finding articles that provide all that much in the way of substance. You'll find articles that throw around a lot of numbers, but they're just as dangerous as the ones that just waste your time with fluff. Unless you really understand the numbers, you can easily be impressed by the sheer volume of statistics - most of which may not really say very much.
Try to hold the author's feet to the fire. Look for what's true in his or her statements, not their opinion.
Build wealth with a plan in mind. Base your decisions on conclusions drawn from solid research - research based on verifiable facts. I know, it's not easy. It takes a lot of work.
Your other choice is simply to save a lot and put your savings somewhere safe. Don't invest a lot of your savings unless you're really sure that you invest safely. In fact, if you save and invest safely (at least some portion of your savings), you just might build wealth in the end.
As for Mr. Doll, he's making millions and millions of dollars working at Blackrock. I'm sure he couldn't care less about what I think of his opinions. All I'm saying is that you shouldn't care about his opinions either.
Do yourself a favor and stop reading all the nonsense and trash out there. And build wealth by saving and investing safely.
Comments