You work hard for a living and have basic goals: You want to provide for your family, educate your children, and plan for a retirement with dignity. Above all, you don’t want to be a burden on your family and friends in your senior years by running out of money.
In an effort to achieve these goals, you turn to huge industries that spend hundreds of millions of dollars annually in an effort to persuade you of their expertise. The securities industry represents that it can manage your money by engaging in stock picking, market timing, and fund manager selection. The insurance industry says you can have the best of both worlds (participate in market gains and have protection against losses) by purchasing variable annuities or equity-indexed annuities (also known as “fixed indexed insurance products” and “indexed annuities”). The financial media serves as a conduit for the services and products offered by these industries. In exchange for massive advertising revenues, the media serves up an endless array of financial “experts” who say they can predict the direction of the markets or select outperforming stocks, bonds, and commodities.
Financial shows are not reliable sources of information that could actually help you make intelligent investment decisions. Instead, they are more like reality TV shows, injecting a false sense of drama and urgency in order to maintain the illusion that you need to be glued to your TV set lest you miss a moment of their “analysis” of current events. This explains the breathless reports from the floor of the New York Stock Exchange and the prominence given to Jim Cramer’s latest stock picks, as if they had any predictive validity. Financial news has become indistinguishable from entertainment news.
Unfortunately, you may be inclined to follow the advice you hear on these programs. Doing so has historically clobbered your returns and, in many cases, ruined your chances of achieving your financial goals.
You will very rarely see as guests in the financial media legitimate financial experts, whose advice would actually help you achieve market returns that are yours for the asking. These experts include Burton Malkiel, William Bernstein, Eugene Fama, Kenneth French, Robert Merton, John Bogle, Roger Ibbotson, William Sharpe, and Myron Scholes. These are distinguished professors of finance, Nobel Laureates, and authors. Their views on intelligent, responsible investing are supported with solid, peer-reviewed data.
You don’t see them because their advice is inconsistent with filling the coffers of brokers and actively managed mutual funds that support the financial media. The dominance of these advertisers has turned the financial media into one massive infomercial, where advice inimical to your best interests is freely dispensed, and solid, academically-based investment advice is suppressed.
I recently experienced how difficult it is to break into the financial media with a financial show that would be entertaining and would provide advice you would find genuinely helpful. I accepted the challenge of a reader who suggested I stop complaining about the existing state of the financial media and propose an alternative. I put together what is known in the trade as a “sizzle reel” and tried to interest the networks, cable, and highly trafficked Internet financial sites in the show. The reaction was overwhelmingly positive to the reel, but negative on distributing the show. Privately, I was told they didn’t want to offend their advertisers in the securities industry.
Take a look at the sizzle reel below. You will understand why it is your broker’s worst nightmare. Maybe a groundswell of demand from you and other investors for a show that represents your best interest will make a difference. You deserve better.
Dan Solin is a senior vice president of Index Funds Advisors. He is the New York Times bestselling author of The Smartest Investment Book You'll Ever Read, The Smartest 401(k) Book You'll Ever Read, The Smartest Retirement Book You'll Ever Read, and The Smartest Portfolio You'll Ever Own. His new book, The Smartest Money Book You'll Ever Read, was published on December 27, 2011.
The views set forth in this blog are the opinions of the author alone and may not represent the views of any firm or entity with whom he is affiliated. The data, information, and content on this blog are for information, education, and non-commercial purposes only. Returns from index funds do not represent the performance of any investment advisory firm. The information on this blog does not involve the rendering of personalized investment advice and is limited to the dissemination of opinions on investing. No reader should construe these opinions as an offer of advisory services. Readers who require investment advice should retain the services of a competent investment professional. The information on this blog is not an offer to buy or sell, or a solicitation of any offer to buy or sell any securities or class of securities mentioned herein. Furthermore, the information on this blog should not be construed as an offer of advisory services. Please note that the author does not recommend specific securities nor is he responsible for comments made by persons posting on this blog.