Wednesday, November 03, 2010

How To Avoid Losing Your Money, Part 2

Above is a sample of "financial lewdness" that passes as financial journalism to consumers that they use too often to make investment decisions. Please do not forget the following:
  1. 99% of financial information comes from organizations that generate 100% of their revenue from selling advertising.
  2. Just as entertainment, in the form of gossip and indecency, sells so do great sounding article headlines.
  3. A news organization is funded by advertisers, has no investment professionals, but too often portrays their "words" in such a way that it both sounds like advice and people actually use it as if it were reliable advice.
Let me expose what the above article contained:
  1. "They just get more attractive" is a great teaser headline. Just as effective as, "You'll never look better," from a plastic surgeon. It may sound good, but you better stay away or you will end up with irreversible results!
  2. Master Limited Partnerships, many of which have gone up over 75-100% in value over the past several years.
  3. REITs, many of which have already gone up over 75-100% in value over the past several years.
  4. Telephone company stocks, which operate in a vicious, dog-eat-dog business. WFG recently sold one of the stocks profiled, Century Telecom (CTL). They are suggesting you now buy it!
The S&P 500 index barely yields even 2%. WFG's Paid to Wait stock portfolio currently yields around 3.5%. So, am I stupid or smart based upon the above? I will let my 26 years of experience lead you to the right answer.

INVESTING LESSON

Never, ever use financial lewdness as the basis for making investment decisions. Just as freedom of speech is permitted, so is being unintelligent. Kind of harsh I know, but needed if I am going to make even a small dent in the armor of the billion dollar Wall Street and Madison Avenue marketing machines.

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