Bear Market for Advice

I really, truly, dislike most "financial advice" vehicles. I stopped subscribing to Money magazine about 15 years ago after their year-end tax advice included "consider moving to a lower-tax state." I find interviews with fund managers deceptive, because they talk about specific stocks as if they were the sole focus of a fund's existence, rather than part of a (narrowly) diversified portfolio. But most of all, I despite talking heads, particularly those that aim to be a cross product of ESPN commentators and Barrons in its 1980s glory days.

Take Jim Cramer proclaiming Bear Stearns would be bought for upwards of $12B. That was written two months ago, with a straight face and supposedly valued insight. Huh? Cramer says "I think you will make great money." If you followed his advice, you effectively lost every bit of money you put in, once you subtract transaction costs. Bear was purchased at 99% off, not 90 points below its high of last spring.

Big bets without a surrounding portfolio (risk mitigation or diversification strategy) only increase the risk of ruin -- a phrase for gamblers, not investors.

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Hal Stern's thoughts on software, services, cloud computing, security, privacy, and data management

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