Over the last few years I’ve had a number of investors ask me about various recommendations they’ve heard from media sources. It might be a broker on radio or TV, a blogger or a print journalist. Some of the scenarios they paint can be pretty scary. Their advice can often be pretty radical (i.e. “Sell everything and buy gold”). The question is, should you listen to them?
One of the main criteria I use to decide if they are worth listening to is, do they sometimes change their position? For example: If someone was bullish on real estate in 1995 and in 2005, their position doesn’t really change with circumstances. Real estate was relatively reasonably priced in 1995, but not in 2005. Someone who is bullish or bearish all the time probably has an agenda. On the other hand, if someone were bearish on stocks in 2007 but became bullish in early 2009, that person has an actual opinion, not just an agenda.
I think about Alan Abelson who writes for Barron’s. He’s a great writer and he always has something witty to say about the financial scene. The only problem is that he is always bearish on stocks. He was bearish when I started reading his column in the 1980s, he was bearish at the market bottom in March of 2009, and of course he’s still bearish today. How useful is that?
Ask the question “Does this person always have this opinion?’. If their position never changes, you might want to make a different change…. to another station.