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Bonds Are a 'Safe' Investment: A Big Lie Gets Even BiggerWhile I agree with BloggingStocks' Zac Bissonnette that Suze Orman certainly has a place in the financial advice world -- she is not equipped to advise the serious investor. Watching her show on CNBC on the weekends can be entertaining as the callers have unique and unusual problems.
Ms. Orman is qualified to advise her callers and readers on insurance matters, home, life and auto. She is certainly qualified to advise her readers to not spend more than they make. Saving money is certainly an admirable quality of life. She has excellent insights into 401k plans and the various rules and regulations surrounding them. Her expertise on how to handle and retire credit card debt is legendary and hopefully many readers have followed her advise.
But are you ever going to ask Suze Orman for a stock idea? Can she tell the difference between mutual fund portfolio managers and how they operate? Has she ever analyzed or discussed a company's balance sheet, free cash flow analysis or growth rate vs. PE multiple, i. e. the PEG ratio? Has she ever commented on sector rotation and flow of funds? The answer is no to all of the above questions.
She is a personality on the air and has certainly achieved personal wealth and success, but for hard-core investment advice and strategic asset allocation, she is definitely not one of the go-to people.
Suze Orman is excellent at listening and commiserating with her listeners and she is great at "raising issues." The biggest complaint is she is not very adept at "providing solutions."
Georges Yared is the author of "Stop Losing Money Today" and "Baby Boomer Investing."
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Reader Comments (Page 1 of 1)
3-17-2007 @ 4:45PM
doug said...
no, but she does recommend low cost ( Vanguard ) and index- based ETF's, either will outperform 75-80 % of your hot managers or ' hot" sectors
3-21-2007 @ 4:22AM
Don F said...
Ms Orman gave some very very bad advice in a testimony before congress on the student loan industry. She actually stated that there are too many student loan companies. What part of competition does she not understand? Should we get rid of half of the mortgage companies to improve a homeowner's ability to borrow. WOW... What business school did she attend???!!!!
What Ms Orman does not realize is that the mid-tier student lenders SAVED $10 BILLION in interest that graduating senior borrowers will not pay in 2006 ALONE. That is $8,600 per borrower for 1.5 million borrowers. What forced this --- duh, competition.
Perhaps she should check her facts before she is trotted out by the House Dems to spin their attempt to suck this $10 Billion back into the US Department of Ed in order to defray some of the recent overspending. (This, by the way comes in the form of "cutting student loan rates in half.")
Rates are cut in their plan, BUT only for the smallest of loans AND (here's the kicker) are returned to their original level in six years. Don't most people graduate in 5 or 6 years? And, oh, by the way, you can no longer save the $8600 in competitive benefits when you do graduate because the US Dept of Ed is increasing the origination tax on a consolidation loan by 100%.
The students will pay Suze. Check it out.
3-17-2007 @ 7:16AM
Zac Bissonnette said...
Suze Orman is a personal finance guru not a stock-picking guru, so I don't really see the point in the criticism. It's sort of like saying that Jim Cramer doesn't give a lot of advice about which is better, a traditional IRA or a ROTH IRA. It's apples and oranges. Suze if personal finance. It's not about PEG ratios, etc. Her advice on investments consists of advising non-investor types to buy index funds, and how aggressive they need to be to provide for their retirements. She appeals to/helps people who aren't financial gurus.