The Financial Guru
Back when I was a financial young’un, I went to one of those free seminars hosted by a mutual fund company. Speaking there was a financial “guru” that I had admired for some time. I had read his books, watched his weekly tv show, and scanned his newspapers columns. I really thought he knew anything and everything about finances.
He was selling a can’t lose investment that supposedly not only provided a good return but saved the investor on taxes too.
What a great deal, right?
Well, he wanted us to sign up immediately. Being the cautious sort, I preferred to take the info home, do my own research, and run it by some mentors (including my financial advisor).
All I bought at that seminar was a monthly subscription to his insiders newsletter priced at $120 for the year (a lot of money for an investor who was at that time only investing $25 a month).
The first month went by. Didn’t receive my newsletter. The second month went by. Still nothing. The third month came and I called the 1-800 number. No longer in service. I e-mailed the address given. Bounce back. Hit the website. No longer there.
In the meanwhile, I had looked into the investment. Hhhmmm…looked feasible but not something the tax people would be too happy with (are they ever happy?). Brought it to my mentors. One by one, they told me what was wrong with it. No use having mentors if they’re shy about giving their opinions. My mentors sure weren’t shy.
By the end of the year, I read in the newspaper that the “guru” was fighting charges, security fraud or something like that. Needless to say, the investors were being audited by the tax people (I get audited every year ‘cause I’m aggressive not ‘cause I try to scam the system). Note that the investors were audited. It didn’t matter that they took someone else’s advice. They were held responsible.
That $120 taught me a valuable lesson. I always, always, always do my own homework when looking into investments, no matter where the information is coming from.
I’ve worked with my financial advisor for well over a decade (we won’t say how well over…). I trust the guy. I know he’s about as anal and buttoned down as a man can get (yep, lots of fun at parties). I STILL do my own research on his suggestions. He is my advisor and that’s what I use him for…advice. I have the final say. I make the decisions.
Why am I sharing all this? Well, I’m no financial guru by any stretch of the imagination (goodness no), but I’m going to be talking about what has worked and has not worked (yep, I’m messed up, I’ve lost money, I challenge you to find an investor that hasn’t) for me. Key part of that sentence is “for me.” Personal finance is called that ‘cause its personal. That means what works for me might not work for you. No getting around it (and I’ve tried, believe me, I’ve tried), ya gotta do your own research.
Kimber doesn't understand why personal finance has to be so darn dull and complicated. Past mentors have taken the time to break the process down into simpler steps and language. Kimber now passes these learnings along to readers at www.nolimitsladies.com.
10 Comments Add your ownSubscribe
1. Jason | October 16th, 2006 at 9:52 am
I checked with my advisor, and she said this is good advice.
Unforeseen things happen in the stock market all the time. If you don’t do your own homework, you’ll have no idea how to handle these situations.
Recently, a couple of our forums members have inherited stock in some way, one through an actual inheritance and another by taking over his investments from his financial planners. I advised both of these people to immediately sell all of the holdings and start with a clean slate. Why? Because they hadn’t yet done their own homework.
Without doing your own homework, how do you know what to do when a stock you own falls in price? Should you buy more now? Should you get out? You have no idea.
What if the price goes up? Should you be taking profits? How far is the stock going to ride?
If you choose to actively control your stock portfolio, you need to have an understanding of all the stocks you own. You can’t simply keep a portfolio and check it every year to see how much you’ve made.
This goes the same when you are trading on tips from newsletters, TV shows, or other gurus. Chances are you are listening to a smart guy (maybe he isn’t even a criminal). But even the best investors can be wrong more often than they are right? They just know how to cut their losses when things don’t pan out how they intended.
If I invest on the advice of Jim Cramer without doing my homework, what am I going to do when his thesis doesn’t pan out and he doesn’t address the fact on his TV show? I’m either going to sell scared or sit on my ass and lose money until he tells me what to do about it (which could be a while). If I did my own homework (something Jim stresses a lot), I’d understand what was happening to my stock more and could make a decision on my own (fancy that).
2. Steve | October 16th, 2006 at 10:56 am
A great article Kimber, welcome to the club!
Jason, tell them to play stop losses for $0.50 below the current price, don’t sell outright!
And, if they have gains, it might be better to wait and sell in January to delay the taxation for 16 months, but I’m not sure what their current stock situation is.
In any event, great advice Kimber, and remember, Jim Cramer is wrong a ton of the time and Rich Dad, Poor Dad is full of shit and a big ol’ liar. http://tim.2wgroup.com/blog/archives/000210.html
3. Kimber | October 16th, 2006 at 12:28 pm
I enjoy Jim Cramer’s mad money (I think he’s a marketing genius) but my biggest issue is that he only gives one side of the equation. He tells people to buy but gives no guidelines (other than continue watching the show) as to when to sell. So you have a bunch of nervous, anxious investors calling in every night asking “is it time to sell yet?”
He also gives a 30 second reason why. It gives the impression that that is a person needs to know in order to invest.
4. Kimber | October 16th, 2006 at 12:37 pm
Steve, thank you for the welcome.
I appreciate that even though you and I have completely different viewpoints on the value of Rich Dad, you have invited me to post here. It is telling of the discussion type format you wish to promote.
I may not agree with everything Jim Cramer, Robert Kiyosaki, or Suze Orman have to say but each add value especially in their own expertise. Just as the “guru” in my post added value (not in this specific example, but in other areas, he was bang on with his advice). To dismiss them completely is to dismiss this value.
5. Steve | October 16th, 2006 at 12:49 pm
Discussion is what it’s all about! Even when we completely disagree.
I think Cramer and Kiyosaki and Orman are all great at what they do, which is marketing, not investing, though I do enjoy listening to and watching Cramer and I believe Suze is giving her advice to people who don’t want to manage their investments and her advice doesn’t really hurt anyone, it’s just overly simplistic to me, which is fine if that’s what you’re into.
I totally disagree with Kiyosaki (liar in Japanese I believe) simply because he comes from dishonesty and lies about it constantly and I find his books rather simplistic and bordering on childish.
I like the Automatic Millionaire guy until he gets to his chapter on Mutual Funds, which is the most rediculous chapter I’ve read in any investing book and any ‘investment teacher’ who actually prints, “You’d have ONLY LOST 20%! (don’t quote the 20%, I don’t have the book handy)” is an idiot.
I’m going to post about the two best investing books of all time in a future article, maybe you’ll find some great insites from them!
In any event, it’s fun to read everyone’s different strategies and opinions, so thanks for sharing yours with the site! I look forward to reading more about your strategy!
6. prlinkbiz | October 16th, 2006 at 8:51 pm
What is it exactly Kiyosaki is lying about?
7. J | October 17th, 2006 at 11:10 am
IMO Suze has good advice if you want to be “debt free” and a middle class person…
I’m with prlinkbiz, what did Robert lie about?
-J
8. Kimber | October 17th, 2006 at 11:35 am
I am also confused about what RK is lying about.
The man isn’t talking about anything new.
His theories (passive income, the three routes to wealth, leverage to speed up the process) have all been discussed for decades. All he’s done is package them in one easy to read book and add urgency by discussing current events (baby boomers, etc).
So Steve, share…what lie is burning your boats?
9. Value Investing News&hellip | November 12th, 2006 at 3:51 pm
The Little Book of Value Investing on InvestorGeeks…
Jason over at InvestorGeeks.com puts together a nice analytical review of the much talked about “Little Book of Value Investing”.
…
10. Hon office furniture.&hellip | January 14th, 2008 at 9:03 pm
Hon office furniture….
Hon office furniture. Hon office furniture workplace solutions….
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