Ten Signs Of Questionable Financial Writing

As a person who has devoured a ton of personal finance information in the last year, I’ve discovered that many writings about personal financial issues are quite good, but there are a lot of junk floating in the water, too. Here are ten things I look for to quickly tell me not to bother reading the article – if you see a magazine trumpeting a message like this on the cover or a book that violates multiples of these points, back away slowly.

SEVEN FUNDS YOU MUST BUY NOW OR ELSE YOUR WALLET WILL DISINTEGRATE!
Warning Sign #1: Irrational promotion of specific financial products

Individual tips are great when they’re backed up by solid research and thorough investigations, but articles that trumpet specific tips above all are usually barely more than paid placements or writers hoping to drive up the value of their own funds. Back away slowly unless you see a lot of research and comparisons as to why you should buy these funds.

GET 350% RETURNS WITH ONLY 5 MINUTES WORK A WEEK!
Warning Sign #2: Little or no homework needed

If there was an easy way to get rich, everyone would do it. The truth is that people who beat markets do a ton of research and really understand the market inside and out. So why should you believe some joker who promises that you can get rich with only a tiny amount of research?

I, JEB WATKINS, MADE BILLIONS IN THE STOCK MARKET – AND YOU CAN, TOO!
Warning Sign #3: Bragging about record with no evidence

Some people will claim incredible returns and then believe that just because of the claim, you should listen to what they say, yet there is no data backing up these claims. If a great fund manager with results that can be proven makes big claims, I’ll listen; otherwise, why should I lend an ear to someone who expects me to believe in them because of their record – but can’t prove it?

BECOME A BILLIONAIRE GUARANTEED WITH THESE FIVE STEPS!
Warning Sign #4: Promises and guarantees that are beyond rationality

When someone makes a guarantee that can’t feasibly be kept (usually tied to incredible returns or a large amount of wealth), then that article is usually full of nonsense. There is no guarantee above the return of a treasury note, so to claim guaranteed wealth from investments is just bogus.

SAVE BIG MONEY BY BUYING AN LCD TV INSTEAD OF A PLASMA!
Warning Sign #5: Saving money by buying one version of a consumer good instead of another

When you go to a store and plunk down your credit card on anything outside of essentials, you’re doing the opposite of saving money. Buying a $3,000 television instead of a $4,000 one isn’t saving $1,000, it’s blowing $3,000 on something you don’t need.

MY SYSTEM BEAT THE S&P 500 BY 20% EACH OF THE LAST FIVE YEARS!
Warning Sign #6: Promises of a “system” that beats the market

If your “system” could beat the market time and time again, then why aren’t you working at Goldman Sachs instead of shilling your system in a print publication?

THE FUTURE AT OVERSHOE TECHNOLOGIES IS HOTTER THAN MAGMA!
Warning Sign #7: Overly glowing corporate profiles

If an article tells you nothing but the upside in a company, they’re not doing their research. No company lacks competitors or business issues, no matter what they try to claim.

INVESTING IN URANIUM HAS NETTED A 200% RETURN EACH YEAR SINCE 2000 – SO BUY NOW!
Warning Sign #8: Quoting incredible returns without discussing risk

Even if an investment is making incredible legitimate returns, there are reasons why not everyone is in it, and it usually comes down to risk. Why is this investment taking off, and why might it not continue along this path? If you can’t answer those questions, you’re not answering the question.

SAVE MONEY BY EATING 100 GHERKINS A WEEK!
Warning Sign #9: Frugal “tips” you can’t imagine anyone doing

I often read frugal articles that do reduce spending by an incredible amount but lead to a lifestyle that would be unbearable for many people in the West. Just because you can get a ton of turnips for a quarter doesn’t mean I want turnip pancakes for breakfast every day.

WE EVALUATE 9,500 FUNDS – AND TELL YOU THE TEN BEST!
Warning Sign #10: Huge amounts of investments evaluated at once

If one article evaluates a thousand funds, how well is each fund actually being analyzed? Even if a person spent an hour on each fund, that’s twenty five weeks of nothing but research for just one article. In other words, the greater likelihood is that the “evaluation” is just a number crunching and the “best” ones were ones that floated to the top due to a few metrics that the person invented.

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  1. rhbee says:

    I couldn’t help but notice that you used billion in the place of million. And you are right, we have become so out of touch with reality that a million doesn’t seem like enough anymore. It reminds me a Dorothy Parker short story about two girl friends who work in New York and at lunch like to stroll past the windows of the high end jewelry stores and imagine what they’d buy with a thousand dollars. One day they decide to go inside and actually inquire about a piece they really admire. When they come outside, there’s a pause and then they begin the game again only this time they have to imagine what they’d buy if they had a million.

  2. Homo economicus says:

    This is a really great article. It nicely pinpoints those gut feelings many of us have about the sleazy, cheezy, and hopefully unsuccessful marketing efforts of financial system shillers.

    I’d also like to add number 11. Statements that regularly need to be emphasized with exclamation points ! are good warning signs too. See #1 to 10 above as good examples of this.

    The one thing that I see as a recurring patten in the examples above and with many of these cheezy approaches to selling financial systems and approaches is that it involves shortcuts to learning the information yourself. As a society we seem to do this with many things: weight loss, finances, parenting, and more. Instead of doing the hard work everyone wants the shortcut to the top. Everyone wants to come out of school and step directly into an upper level management position without doing any of the work to get there. Warning: if it seems to good to be true… it probably is.

    I’m going to link to this article.

  3. Cmauch says:

    As someone who works in the financial sector, I concur, and often have to point this out to members of my own company, and other people I work with.

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