April 5, 2020

When finance people say dumb things

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The more that I earn my livelihood from financial services the more I see the same commentary appear again and again. Call me a cynic but it’s about time that the financial media be it print, TV or digital copped itself on and stopped trying to sensationalise basic issues. With the advent of reality TV, the move to reality investment market TV leaves, at times, the likes of the X Factor and Big Brother in the shade. Every now and again there is a beacon of clarity and for my touch of “real” investment common sense I always find “The Motley Fool” refreshing because they usually tell it as it is and not a sugar puff version of things. Finance people say dumb things all the time, but knowing the difference between wisdom and a lack thereof is what’s important.

A memorable article “The Fool” published highlighting the sensationalist aspect of our industry was called “29 Dumb Things Finance People Say”. I don’t intend on replicating it and have a link to the actual article below. My personal favourites from it are:

1. “They don’t have any debt except for a mortgage and student loans.”

OK. And I’m vegan except for bacon-wrapped steak.

2. “Earnings missed estimates.”

No. Earnings don’t miss estimates; estimates miss earnings. No one ever says “the weather missed estimates.” They blame the weatherman for getting it wrong. Finance is the only industry where people blame their poor forecasting skills on reality.

3. “He predicted the market crash in 2008.”

He also predicted a crash in 2006, 2004, 2003, 2001, 1998, 1997, 1995, 1992, 1989, 1984, 1971…

4. “More buyers than sellers.”

This is the equivalent of saying someone has more mothers than fathers. There’s one buyer and one seller for every trade. Every single one.

5. “Stocks suffer their biggest drop since September.”

You know September was only six weeks ago, right?

6. “We’re cautiously optimistic.”

You’re also an oxymoron.

7. [Guy on TV]: “It’s time to [buy/sell] stocks.”

Who is this advice for? A 20-year-old with 60 years of investing in front of him, or a 82-year-old widow who needs money for a nursing home? Doesn’t that make a difference?

8. “The Dow is down 50 points as investors react to news of [X].”

Stop it, you’re just making stuff up. “Stocks are down and no one knows why” is the only honest headline in this category.

9. “Investment guru [insert name] says stocks are [insert forecast].”

Go to Look up that guru’s track record against their benchmark. More often than not, their career performance lags an index fund. Stop calling them gurus.

10. “Investors are fleeing the market.”

Every stock is owned by someone all the time.

More of the Motley Fool article can be read at:

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