Lose the Wall Street Research MSMedia Blogs

Sometimes, these things just all come together at once:

The other day, someone sent me this rant by Scott Ritter (video below). Ritter goes off on a tear, but he makes some valid points. Note the crowd’s response not to his criticism of Bush or Congress, but if the media (I find placing so much blame on the press a little weird).

Then this evening, I see an interesting rant by Felix Salmon, Blogonomics: What CFAs Read, referencing another article: Blogs Slow to Influence Financial Advisors. Felix was not than enthralled with the CFA article.

I want to suggest another, perhaps more insightful approach.

The article in question is somewhat mixed in its criticism of blogs — but it has the sort of common sense bromides that can be applied to almost anything about investing. Like CEOs, or Wall Street research, or the mainstream media — anything some people accept mindlessly.

Indeed, you can rewrite the article: Anywhere you see the word "Blog" substitute the words "Wall Street Research" or "Corporate CEOs" "Business Press" or "Mainstream Media." The end result is nearly the same.

Here’s my rewrites (in italics):

“I don’t want to leave the impression that I would invest a client’s money based on a tip from a Wall Street Research.”

“Many who write articles in the Business Press are not professionals, most are not even licensed to render financial advice.”

"Russ Thornton of Thornton Wealth Management looks to the Mainstream Media for good “talking points” from investors whose investment strategy is similar to his. ‘It helps to see how others communicate and share investment concepts so I can become a better communicator myself.’ " 

"Some Corporate CEOs may offer useful information, but even their fans believe you should approach them skeptically."

Hey, that’s pretty sharp stuff!

The article appears to be about blogs, but its really about critical reading and independent thinking. At least, that’s my take. Note we previously discussed similar issues in Lose the News . . .   


Lose the News (June 2005) 

Who Do You Trust?  (January 2008)

Investment Strategy Blogs Slow to Influence Financial Advisors
Susan B. Weiner, CFA   
Advisor Persepctives, August 19, 2008    

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What's been said:

Discussions found on the web:
  1. Pat G. commented on Aug 20

    “critical reading and independent thinking.”

    Are there really that many people out there anymore that can multi-task?

  2. Jim Haygood commented on Aug 20

    ‘Robert Harding Financial’s Jeremy Mitchell said to beware because “Many who post these types of blogs are not professionals, most are not even licensed to render financial advice.” ‘

    Hilarious! ‘Professionals’ are subject to herdthink and groupthink just like everyone else. Plenty of CFAs had their clients in tech stocks, as they rode over the waterfall in 2001.

    I’m not even sure what “professionalism” means in the financial markets. Yes, there is professionalism in knowing the nuts and bolts of securities and how they are settled. But since markets are inherently unpredictable — or at best, predictable with only a slight edge over a crapshoot — to hold out a recommendation as more credible because it comes from a “professional” is ridiculous.

    I read only ONLY blogs. I don’t read ANY “professional” research. Doing research/analysis, stock underwriting, and stock brokerage under one roof is an inherent conflict of interest. Professionalism does not exist in this institutional structure. Wall Street will remain a glorified carny-barking enterprise until it stops the shameful sponsored-shill routine.

    The disgraceful spectacle of Wall Street “professionals” pimping the bullish side in 2000, and again in 2007, pretty much permanently queered me on believing in people who claim to have scientific knowledge of what they do not.

    What’s great about the Wall Street-engineered train wreck that we’re in now is that many of these “professionals” are going to have to get real, socially-productive jobs for a change. I expect professional standards in making my hamburger. That means tomatoes, lettuce, pickles, onions and mustard. And make it snappy, if you please.

  3. m3 commented on Aug 20

    one of the key aspects to this subject, and the video, is that people need to start blaming themselves for their ignorance, rather than constantly pointing fingers. i’m totally with you on the aspect of critical thinking.

    that goes for joe-6-pack, as well as financial advisors.


    i agree.

    the chutzpah of “advisors” who are paid to (badly) underperform a stock index on a perpetual basis, chiding people for looking for alternative information to their non-stop cheerleading/stocks-for-the-long-run nonsense is infuriating to me…

    maybe if they did their jobs, people wouldn’t resort to this stuff in the first place.

  4. a CFA PM commented on Aug 20

    Wait a minute, I’m not sure some of the readers know what a CFA is. It’s NOT a certified financial advisor, etc- it stands for Chartered Financial Analyst. I’m sure Barry knows that as designations go, it’s top-tier compared to CFPs and other more-papery designations. Most of us are on the buyside, not the sell-side.

    Anyway, I am an avid blog reader- I start my day with CR, Yves, Barry, RGE, FT Alphaville and many others- but I’m not sure how much I’d want to admit that to the wider world. I know that ISI people read Barry and the others, because I’ve had conversations about what we’ve read with them. And I know at my firm (a roughly $50bn buyside firm) blogs are widely read among PMs/analysts below 40.

    So mock all you want (but make sure you know the designations- the CFA is a 3-level exam process that I compare to law school- the pass rate for Level I was only 35% this most recent time, and it takes most successful candidates 5 or 6 years to get through all 3 levels). I saw the call for respondents but until the top of the industry starts openly talking about blogs as a valid research tool, I’m not putting my name out there as a reader.


    BR: I doubt this site is for Chartered Financial Analysts.

    From the About page:

    Advisor Perspectives provides data showing the investment trends of high- and ultra-high net worth investors, whose money is managed by fee-only independent Registered Investment Advisors.


  5. Deano commented on Aug 20

    I’m sorry, but the BS of “your voice/vote counts” doesn’t have much meaning anymore. We are managed by big money controlling what happens in this country, not the single voter anymore. I listen to this video, do all the things he talks about, go out in the street and yell “I’m mad as hell and I’m not going to take it anymore!” What comes back??? Dead silence!! This all sounds good until you try and do anything about it and you get overwhelmed by the money and the shear numbers of 300 million people in this country. So I write to the media networks and say “you are feeding us BS”. What happens?? Nothing! Again, dead silence and completely ignored by any of the big media conglomerates because the money drives their decisions. This is the old rag that the citizens of this country have been fed for years and has become a laugh since big money started running this country (media, investing, politics, future policy strategy, etc.): Your single vote is not important any longer!

  6. Stuart commented on Aug 20

    One of the principle problems with much of the analysis out there, irrespective which designated it tucks under is the raw data is too often accepted at face value. More and more data has to be understood that the source has a vested interest in influencing opinions via that data. Each of the 5 CFA’s I am personally familiar with repeatedly and without hesitation accept at face value government or institution data under the rationale, we can only use what we’re given. To me that is a cop out. It is their job to advise their clients of the real story. To accept NAR statistics for instance at face value side-steps any value they could impart to their clientele. This is likely the same with most economists as well. The individuals that add value, challenge the data in terms of it’s thoroughness, accuracy and it’s relevance. The ability to do this does not necessarily require a designation.

  7. mark mchugh commented on Aug 20

    Right on, Jim.

    Remember, IBD’s “% of investment advisors bullish/bearish” is a contrary indicator. One thing I’ve noticed in life, incompetents are usually quick to point at their credentials.

    Wisdom, truth and honesty transcend “credentials”.

  8. Jeff M. commented on Aug 20

    @CFA PM: I agree that the CFA is a rigorous, lengthy exam (I’ve been recruiting CFA’s for over 5 years now), however, that or any designation, certification, or educational pedigree does not make one immune to the shilling and “groupthink” that pervades Wall St, especially the bigger players.

  9. Mark commented on Aug 20

    Boy, the ads on your feed are really scummy. Makes you look bad – if you can go on CNBC then I would hope you could get better quality.

  10. simon commented on Aug 20

    The revolution is that, at least so far, anyone with a decent internet connection can canvas the views of anyone conceited or concerned enough to publish them.

    No need to have a wide network of well informed friends, access to a major library, your own intelligence network, the internet accesses the largest network of diligent organic super computers in the world. Bloggers and those who read them.

  11. SB commented on Aug 20

    CFA is like the lawyers examination which is a #$%&$/&

  12. a CFA PM commented on Aug 20


    I agree, I know some CFAs that ARE the groupthink. But I know plenty that aren’t. My bigger concern is that the designation gets lumped together with a lot of lesser designations. Of course, my motive in defending the designation is hardly objective! My bigger concern when talking about CFAs is that the odds that your average individual investor is going to have one as an personal financial advisor are pretty slim. I was a broker for a couple of years before I got my MBA (CFA came later) and those idiots hardly deserved a title above “used car salesmen of the month”. But a few of them were CFPs, which meant little other than they had sat in a few classes. The CFAs I know are pretty thoughtful people- not perfect, not immune to mistakes or groupthink, but they are professional in their approach. Now, I’m again biased because most of the ones I know are on the buyside for biggish institutional firms with value orientations. But hey, I’m on a blog late-ish at night, so what do I know?

    Stuart- even the CFAs that don’t read blogs and are the aforementioned groupthink don’t believe the NAR spin at this point. You must hang out with the wrong CFAs! And no, it doesn’t require a designation, but some training definitely helps you get to the point where you can quickly pick up a 10-k, read the footnotes, and find what is underneath the pretty pictures in front of the annual report. You may not need a designation, but you need some training from smart people, whether that comes from Tanta or the CFA curriculum may not matter depending on your focus…

  13. Roger Bigod commented on Aug 20

    Old hands with experience in the wilds say you can tell blogger feces by the munched up press credentials. And pieces of analyst reports with claw marks.

  14. la grande poussée commented on Aug 20

    Tools, licenses,certifications – don’t make the man – the man makes the man! Tools, licenses and certifications – are used to keep the “bottom” out of a profession. But even some people get around that – consider the requirements for President – and then look at The President. There are some excellent professionals out there – their names are kept close and passed around to only the dearest!

  15. Mike in NOLa commented on Aug 20

    Nothing substitutes for critical thinking. It’s hard work, which is why so little of it is done. Much easier to ignore that man behind the curtain.

    Take a look at the asset allocations on the Advisor Perspectives website and you will see that even “ultra-high net worth investors” (I can picture the yachts, private clubs, brandy and cigars?) can get extremely bad advice from Certified Professionals.

  16. Barley commented on Aug 20

    “but its really about critical reading and independent thinking”

    Its about towing the line and being independant by being the same.

    I cant tell you the deadwood that I have had to step over (not on) in mainstreet.

    The fact is some are smarter most, not so much.

    Thank the good person upstairs for allowing so much waste shoved into a B school grinder so that all represents finely chewed pork.

  17. mo commented on Aug 20

    Thanks for posting the original article.

    I happen to be one of the advisors quoted in the article.

    CFA PM – I am a CFP. I certainly respect the rigourous process CFA’s must go through and in all likelihood you’re much smarter than I am. But CFP’s do a bit more than take a few classes.

    I work with clients on matters other than investing, so the “few classes” I took are relevant to the work I do. I’m not interested in trading barbs about designations, but I don’t appreciate the gross generalizations.

    I suspect I may hear from others who believe that, as a CFP, I’m probably not the best person to manage client money. (I believe I witnessed such a discussion here once before.) I’m not ashamed to admit that most of my clients are nowhere near the asset levels required of most “wealth managers” or CFA’s. Their choices are me, or a retail broker with a big advertising budget (Dennis Hopper anyone?).

    A good bit of my time is spent helping people get out of the crappy products they’ve been sold. The stories I could tell…..

    Now – do I admit to people that I’ve been quoted as someone who uses blogs to make investment decisions?

  18. Greg commented on Aug 21

    Three and a half years ago, someone asked me a question.
    He said, “If you knew for a fact your house price was going to drop 30%, would you do anything?”
    He asked, “What would you do?”
    I had a few lame not-well-thought-out answers, but then I started thinking.

    I looked into what was happening. I looked for a year and talked to my wife about it.

    We listed our house and sold it two years ago. Now we rent.

    I’ve gotten better at finding my own news.

  19. ben commented on Aug 21

    CFA PM:

    Already been said, but bears repeating, you have generalized the CFP and I think you have no clue what it is or how you get it. You do not get it done with a few classes, and I’m almost certain the pass rate for the two day final exam, taken after six modules are completed and only to be used after at least 3 years of service in the industry, is in the 30% range. CFP (Certified Financial Planner) and CFA are not a comparison as a CFP covers broad topics such as insurance, estate, and tax planning, which are not top of mind for the typical CFA who’s main focus is only INVESTMENT. You also reference broker’s that were CFP’s, a real CFP would never say that they were just a broker, broker’s are not financial planners, they sell investments to clients, that is it.

    Mo: You made this point but would do well to do your own homework. Ameriprise uses Hopper in ads for the company, Ameriprise has more CFP’s than any other firm in the US as I last saw data, so I’m not sure what you are implying here other than that you may have had to pull some people out of the VUL’s that are sold at AMP all the time!.

    More to the point the reason CFA, CFP, CLU, ChFC, MSFS etc. are not recognized and are in fact hated by people as implied by Jim Haygood is that there is no uniform set of actions and standards upheld by any body AFTER (or before) the designation is acquired. Jim wants his burgers made the same way each time he orders one, clearly here you can see that there is still confusion about what people with these designations even do because you get a different experience with each one. This confusion is coming from someone who works in the industry so who would expect your average person out there to get it.

    If you want to make the argument about performance my guess would be that some CFP’s beat CFA’s performance and some CFA’s beat CFP’s performance, and some people with no designation and no training, beat them both with no clear winner in any of the three groups.

  20. a CFA PM commented on Aug 21

    Ben and Mo,

    You’re right- in my first comment, in my haste I did not clearly distinguish that when I wrote CFPs and other more-papery designations, I meant to separate those two categories a bit. In my second comment, I generalized too much although it certainly did seem that a couple of fellow brokers got the designation pretty easily. If anything happened to me, I would make sure that my wife saw a fee-only CFP to do a more holistic approach for planning (covering, as you note, insurance and other aspects), although I would still not recommend a CFP for the investment part.

    The original comments, by Jim and m3, aggravated me in that they seemed to not understand the difference between a CFA and an advisor, and this being the Internets, I brought my shotgun instead of a rifle.

  21. mo commented on Aug 21

    Ben makes a good point regarding the number of CFP’s sprinkled about the Ameriprise’s of the world. It is one of the weaknesses of the CFP mark, which the CFP board has tried to address without much success.

    VUL’s – absolutely! I recently worked with a couple whose financial “advisor” recommended they stop contributing to their 401(k) and redirect the savings to a VUL with 5% – 6% upfront loads. This was one of the big insurance companies.

    The theme of Barry’s original post applies in this area. Healthy skepticism is a requirement in almost everything we do these days. It is exhausting.

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