No. 10: Rich people don't rely on false prophets

Posted Dec 6th 2008 10:00AM by Daniel Solin
Filed under: Getting Started, Rich in America, Personal Finance

This post is part of a series where personal finance expert Dan Solin looks at money secrets that help the rich stay rich. See more.

There seems to be no end of brokers, advisors, and talking heads on television who give advice to guileless investors. They discuss where the markets are headed, what stocks to buy "now," what stocks to sell, and which fund managers are "hot."

They endlessly analyze economic data and interpret it for those of us too unschooled to understand it. They tell us how it affects the markets, and what steps we can take to profit from this knowledge and from their insights.

Often they provide this information in breathless reports delivered from the floor of the New York Stock Exchange, which serves to heighten the urgency and importance of their message.

For the most part, they are false prophets. The information they impart is irrelevant to a sound investment strategy. In fact, listening to it and relying on it is harmful to your financial well-being.

Here are some examples:

Most of the major brokerage firms had an "outperform" or a "buy" rating on Lehman Brothers until the stock dropped by 80% or more.

Half of the analysts covering Freddie Mac and Fannie Mae had a "buy" rating on these stocks right up to the day the Treasury announced it would bail them out.

There is no evidence that the "target prices" set by analysts on stocks have any predictive value.

The false prophets make a good living peddling information of no value to investors.

Rich people don't rely on them.

You should ignore them as well.

Dan Solin is the author of The Smartest Investment Book You'll Ever Read (Perigee Books, 2006) and The Smartest 401(k) Book You'll Ever Read (Perigee Books, 2008).

Tags: broker, secrets of the rich

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Reader Comments (Page 1 of 1)

12-06-2008 @ 1:31PM

solomon azar said...

Nikola Tesla did not solve energy crisis- Nor Albert Einstein- SOLOMON AZAR HAS
My name is solomon azar, I took the ideas of many scientists the world has grown and finalized an ideology and experiment to end the global energy

crisis with no greenhouse gases-That was the easy part-now i find myself trying to gain FAITH of my fellowman to spread this story-WHY-

for i did everything alone-a garage scientists who is successful- and now i need to be proven correct- so i come upon the fantastic invention called the

net- invented after thousands of years- if not millions of the monkey race of man only to be ridiculed and bullied- like the jackasses that harassed

several teenagers to suicide-

what i have found is disgusting and the reason why innocence is raped killed and beaten- why man goes to war over and over again- YOU DESERVE IT-

Truly- as a scientists and observer- i have found the reason for mans madness at times- it is meant to be- to antagonize and harrass each other- hardly

any time to just relax in life- always on guard- WHY-

go live one day in nature and see how hard it is- technology is great and makes life far more stable- so get your head out your ass and understand there

are still many grandparents alove right now that remember when the automobile first came out- the refrigerator- the television- medicine for this

ailment and so forth-

and to this day half the children of the earth still die from simple drinking water untreated-

GET YOUR HEAD OUT YOUR ASS NOW BEFORE GLOBAL WAR BEGINS-

wars have always come and gone- a natural part of life to keep a civilzation the strongest- or die by your neighbors hands that keeps the torch brighter

than another to find answers-

and now in a century man declars war to end all wars forever since ww1-ONE CENTURY NOW-

when will it end-

I am your messenger- over one year i state these words- you will never give me an ear to listen or an eye to witness until i give you a miracle- for

part of your animal ways is giving someone attention ONLY after they do something for you-

CATCH 22

you care not to help me or investigate my science deeds because i say messenger of god- thus- only true solution will never be uncovered as YOU are an

ignorant and selfish creature that says you love god by majority in the world- yet- does nothing when a disciple asks for help-or anyone for truth- and

this is part of my message- i have much to say- and you will surely understand if total economy crumbles and you lose your jobs-and go off to war- for

many look for answers why afterwards-

but for first time in human history- a chance comes for peace without global war- your window closes very fast as the military pawns have been set and

iran russia pakistan and many others are ready-

ONLY a messenger can create peace between the nations without global war- but it seems man is still a savage monkey race-not children of god- thus- let

the lessons continue