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I ONCE DREAMED OF writing for one of the high-profile personal finance magazines—but that was before I had a rude awakening about the “journalism” they sometimes committed.
As a mid-career business journalist at a respectable daily newspaper, teaching myself about investing, I had looked up to these magazines, then in their heyday, and viewed them as a career possibility.
My worlds came together one day when a top magazine ran a story touting the stock of the electric utility that served my area. The reporter quoted a sell-side Wall Street analyst as saying the stock was one of his top picks.
I called the analyst so I could write my own story. No, he explained, he wasn’t that high on electric utilities in general, though my local utility was a decent one within the sector. It seems the reporter had been assigned to write a story about how attractive utility stocks were, and that’s what the reporter did. His editor deserves most of the blame. Or perhaps the blame lies with the personal finance magazine business model, which requires hyping new investments every issue.
I was stunned. I told the analyst that my own newspaper would have fired me for an act of such dishonesty.
Suddenly, the “big time” magazines in the Big Apple weren’t so appealing.
Today, the personal finance magazines are leaner and some have folded. Still, advertisements and headlines proliferate on the internet under every stock or exchange-traded fund quote you call up.
“Open a gold IRA.” “Former CIA economist sees depression ahead.” “Three most-popular stocks on Robinhood you should buy now.” “Rare all-in buy alert.” “Tech stocks to buy for crypto exposure.” “The #1 Stock to Buy Right Now.”
At least those are just advertisements. Almost as bad are some of the online personal finance news sites. I once wrote for one while I was between jobs, and I have a friend who has written for another. Outside of his pieces, its investing content is mostly dreck, such as, “Day-Trading Tips for Beginners.” At the site I wrote for, they were so intent on search-engine optimization that editors would insert phrases like “for your 401(k)” in articles that weren’t applicable to 401(k)s at all. When I raised the issue, I was told that SEO trumps all.
The bottom line: In case you didn’t know it already, it’s reader beware out there. Especially if you’re investing (ahem) for your 401(k).
beautiful closing sentence. (ahem).
Morningstar, reputable. Enough said!
It is difficult to find quality objective analysis of financial products. At bottom, they are like any other products being marketed to potential buyers. Every article has a slant. Trust your gut, and do research. All you can do is distill as many real facts as you can from as many different sources as you can find, and then make your own assessment.
However, I also highly recommend getting educated as best you can about finance in general so you will know which information is more important for you, and you can understand what the numbers actually mean. Something as basic as understanding the time value of money ($1 today is not worth the same as $1 a year from now, and 10 years of dividends at $1 a year won’t actually deliver $10 worth of value) can help a lot. And if you can understand the two or three most basic formulas in finance, you’ll be ahead of most investors.
Bill, thanks for an inside look. One of the early mental exercises for my daughter was a discussion of a writer’s bias. Even with histories, biographies or other works that we read aloud, she learned to read with more discernment, or maybe had inherited a healthy dose of her parents’ skepticism. There’s always someone looking to sway us to their opinion, especially if it lines their pockets. How do I learn more about that SEO? 🙂
I read many of those magazines back in their heyday. I recall that one of the stocks at the top of almost all their “recommended” lists was Worldcom.
Another influential writer and financial radio host – never short GE (General Electric). Started working for GE in ‘73 and bought lots of company stock (I know….). Stayed with that company’s stock until I could no longer stomach losses – almost 50 years of purchases and dividend reinvesting. Ugh….
I no longer subscribe to the couple magazines that educated and informed me ~25 years ago. I do continue to get daily EMail articles and summaries. However, it’s tough to distinguish between actual content and ads masquerading as unbiased content. Luckily, I’m old enough (or have the scars and bruises) to recognize the bias in come-ons for annuities (from annuity salesmen) and precious metals (from a company that happens to facilitate your purchases of them).
The misuse of marketing should be taught in schools. Annuities are no longer marketed as annuities. Lifetime income is the newspeak. Variable annuities are now marketed as “financial strategies” that limit the downside. Never mind cost or limited upside.
Warning! Abbreviation Police: SEO?
SEO is search engine optimization. The full phrase is in the prior sentence.
SEO = Search Engine Optimization.
It has been in the common lexicon for awhile now and easily googled.
I understand not everyone will know every abbreviation but when it comes to commonly used ones (CEO, ATM, etc.), it can usually be assumed that the large majority of readers will either understand or have the ability to look it up.
Pet peeve of mine!
Editorial suggestion:
If an abbreviation is to be used later in an article the first time it is referenced in an article it should be spelled out in full with the abbreviation in parentheses immediately after.
It’s a shame journalist get paid to fool many of us all the time. I see these catchy headlines every day and question if there is much truth to them.
Author/teacher Andrew Hallam wrote a similar article a few months ago.
https://www.aesinternational.com/blog/the-crash-of-the-us-dollar-is-imminent-or-is-it?ref=andrewhallam.com
One of the reasons I value Humble Dollar so much is the honesty with which writers bring their ideas to us. Thank you Jonathan for keeping the site clean and free of the interferences that William mentions.
I second your comment Nate. Thank you.