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IF YOU WANT TO SEE your fellow citizens at their least appealing, look no further than online discussion forums. All too often, they’re a repugnant cesspool of anger, bullying and boastfulness. The comments posted on HumbleDollar are typically fairly civil, though even they occasionally veer toward the unnecessary nastiness that’s rampant everywhere else.
But here’s what these virulent commenters miss: Their postings reveal far more about themselves than about the subject they’re opining upon. Below are six comments I see on financial forums with some frequency:
1. “It’s easy to beat the market.” Those who make such comments usually tout their own market-beating record and sometimes even put a number on their annual return. But given that most professional investors fail to beat the market, such claims should be viewed with profound skepticism. How exactly did these self-proclaimed investment geniuses outpace the indexes? How much risk did they take? What benchmark are they using for comparison?
Maybe most important, did they really beat the market? In making their return calculation, did these braggarts conveniently forget to include the losers they earlier sold? Are they merely calculating how much their portfolio has grown over time, without backing out the new savings they added? Or are they simply assuming they beat the market—and didn’t even bother to calculate their return?
The biggest braggarts often own investments with cult-like followings. Think Apple, bitcoin and Tesla. For owners of such investments, their devotion is often undying—and scorn is heaped on those who raise any doubts.
2. “You’re market timing.” Apple, bitcoin and Tesla aren’t the only investments that inspire fanaticism. That brings me to a topic that hits closer to home.
Indexing is an investment strategy, not a religion—and yet some advocates delight in labeling others as heretics and then verbally burning them at the stake. I’ve seen financial writers scolded for the sins of “active management” or, worse still, “market timing.”
Guess what? Every indexer actively manages his or her portfolio and times the market, at least to a small degree. Are you going to invest that $50,000 inheritance today—or slowly over time? Will you rebalance now or wait? Will you put 10% of your stock portfolio in international stock index funds—or 50%? There’s an element of active management in all these decisions.
3. “Beware the bogeyman.” Okay, I admit it, I’ve never actually seen that phrase in a comment posted online. But for bogeyman, you can substitute any number of supposed evils, such as the Federal Reserve, higher taxes, index funds, Republicans, the federal budget deficit, how the consumer price index is calculated, Democrats, the shrinking of the Social Security trust fund and goodness knows what else.
This is silly. Why? First, even if such things are evil—which is doubtful—you can’t blame just one or two things for the world’s problems. The economy is far too complicated for that. Second, the problems raised by these purported evils are well known. That means they’re reflected in current financial markets and thus are unlikely to trigger a sudden selloff in the stock and bond markets. The financial markets react to new developments, not old worries.
4. “Why would anyone own bonds?” On countless occasions, I’ve seen investors excoriated on social media for having the “wrong” asset allocation. When we settle on our mix of stocks, bonds and other assets, we each need to consider a host of issues, not least of which is our personal risk tolerance, which—I know this will come as a shock—just happens to be personal. How could anybody dismiss somebody else’s asset allocation as “wrong” without knowing this crucial information?
5. “This article is so unsophisticated.” I’ve seen members of the peanut gallery—who obviously imagine they’re so much cleverer than everybody else—deride articles as “too simple” or “unsophisticated.”
Which raises the question: What would count as sophisticated? How about buying a global macro hedge fund whose trading strategy we can barely understand, while paying fees equal to 2% of assets and 20% of gains each year, thus pretty much guaranteeing we’ll lag behind the market, assuming the fund’s ridiculous amount of leverage doesn’t destroy it first?
Complicated investment products and convoluted trading strategies might bolster the fragile egos of the chattering classes, with their desperate need to appear smart. But for those of us who want to make money, I’d advise going for simplicity every time, because the price of sophistication is almost always far too high.
6. “The author’s an idiot.” I’m not in the habit of going up to strangers and calling them stupid. But this seems to be standard practice on social media, where it’s common to belittle the intelligence of others, dismiss their financial advice because it supposedly reflects some sinister political bias, or use ALL CAPS so readers know you’re somewhat unhinged and screaming at the top of your lungs.
But it gets worse. Often, the critic hasn’t really bothered to read the offending article, doesn’t really explain why the author is purportedly an idiot and doesn’t offer any thoughts that would leave the reader better informed. Constructive criticism? Don’t expect that—because that would open up the critic to criticism.
Jonathan Clements is the founder and editor of HumbleDollar. Follow him on Twitter @ClementsMoney and on Facebook, and check out his earlier articles.
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#4 I have never owned any fixed income. I consider Social Security to be my fixed income when I reach 70. I am probably in the minority. But I am free to do it my way. Do what is best for you.
Same – SS really operates as a big bond. I so rarely hear of others thinking of it this way (other than my Dad who suggested it to me first), I had to comment. I do hold about 6 years of expenses in cash, primarily in CD’s so it shouldn’t be necessary to sell stocks when the market is significantly down. I’m a 56 year old retiree living on my portfolio.
Great article! Well stated. One thing we all need to understand when commenting on articles or even posts is that the article’s likely intended audience is a specific set of people, not the entire universe. Thus, it does not fit everyone and we should not get our nose out of joint if it does not fit us.
So well written and nicely put. I’ll keep this in my favorites as a reminder to myself. Reminds me of James 1:19-20.
It seems the internet provides a loudspeaker for our least admirable qualities, but they’ve been around for a long long time. I appreciate your efforts to share your lack of certainty (i.e. wisdom) widely.
Great piece!
THIS IS AN IDIOTIC, UNSOPHISITICATED COMMENT to your excellent article!!!!!!!!!@@@@@
Boy is this accurate. I’ve experienced a few slings and arrows myself. There are other comments that come with nasty vibes as well. “Life insurance is a waste of money.” “Who would be dumb enough to buy an annuity?” I often read pompous post by people who claim to have any and all contingencies covered, have it all figured out for the next 30 years, nothing can go wrong. I sometimes tried to dissuade them of such a simplistic view, but my 77 years, my 50 years managing retirement programs and eleven years retired were mocked. Each to his or her own.
+1. A high five, and a thank you for sharing that experience with us.