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Review: Clash Of The Financial Pundits

May 30 2014, 12:14pm CDT | by

There is no shortage of market opinion out there.  Between CNBC, Fox Business and Bloomberg, there are 72 hours per day of non-stop financial chatter on television, and we haven’t said anything...

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8 weeks ago

Review: Clash Of The Financial Pundits

May 30 2014, 12:14pm CDT | by

There is no shortage of market opinion out there.  Between CNBC, Fox Business and Bloomberg, there are 72 hours per day of non-stop financial chatter on television, and we haven’t said anything about the market segments of general news stations like CNN or the cacophony of voices on the internet.

null  And that is where Josh Brown and Jeff Macke step in, bringing us Clash of the Financial Pundits, the “first-ever book written to tackle this most daunting component of investing: our guide to help you become a more informed consumer of financial news and conjecture.”

A book about financial punditry written by financial pundits might at first sound a little self-serving.  But Brown and Macke do a fine job of explaining to readers how the sausage is made in the financial media, and Clash is an eye-opening collection of interviews with some of the leading personalities that have shaped the industry.  The interviews with Jim Rogers, Jim Cramer and Barry Ritholtz would alone make Clash a book worth reading.

A little background is necessary here.  To start, what exactly is a pundit?  A pundit is a subject-matter expert who frequently gives their opinions to the public—what you might pejoratively call a “talking head.”

“Expert” can be something of a subjective term, and a lot of the advice that is shared over the airwaves can do more harm than good.   So, how do you separate an insightful pundit from the noise?

Brown and Macke offer some suggestions for questions to ask:

  1. Who is the expert, and what firm or organization does he represent?
  2. What does her professional affiliation mean in terms of the opinions she’s sharing?
  3. Does he have the same time frame or investment objectives that I do?
  4. How many ideas is she generating each day or week? How much thought is going into each one?
  5. What are the consequences for him if he is wrong?  [Note: This is major bugbear of mine.  A person giving advice should have skin in the game.  If they recommend a stock, they should own it themselves.]
  6.  How does the opinion I’ve just heard relate to my own portfolio or investing goals?  Is there any real relevance?
  7. Why am I reading or listening to this in the first place?  Intellectual curiosity? Entertainment? Or do I have an actual need to employ this sort of information?
  8. Is there a publically available archive of this person’s pervious opinions and forecasts? Have they been mostly accurate or mostly wrong?  What were the driving factors behind the accuracies or the great calls? Luck? Skill? Good timing? Strong research? Some combination of these elements?

Perhaps the greatest insight from the book—and one you should always remember when watching a very convincing speaker—is that “The practiced pundit is making appearances and dropping quotes for the benefit of a firm or a career—not necessarily for your benefit.”

Never forget that point.  Financial punditry is not charity.  Every person you see expressing an opinion on TV, radio or in print has a motive, whether it be furthering a career, espousing a political ideology, or simply boosting their own ego.

I’ll leave you with two related points.  Brown and Macke suggest—and I agree with them wholeheartedly—that null  Given enough time, the market will prove us all wrong.  Be wary of anyone who seems excessively cocksure.  Their arrogance is either a mask for underlying insecurity or it is due to a lack of experience.

John Maynard Keynes—a man with no shortage of strong opinions—one said that “When the facts change, I change my mind.”  He was on to something.  You shouldn’t take advice from a pundit who refuses to acknowledge when they are wrong—or to acknowledge the possibility that they could be wrong.

Secondly, in getting a following, confidence is more important than being correct. In times of uncertainly, people crave black-or-white answers; shades of gray are unsettling As Brown and Macke write, “We want to be told exactly what’s going to happen and what to do about it.”

You’ll have to fight your basic human instincts here, but be careful not to be swayed by the pundit with the most enthusiasm in their voice.  Listen to their arguments, weigh them, and make your own decision.

Clash of the Financial Pundits is a must read for anyone who enjoys financial media.  My compliments for Brown and Macke on a book that needed to be written.

Charles Lewis Sizemore, CFA, is the editor of Macro Trend Investor and chief investment officer of the investment firm Sizemore Capital Management. Click here  to receive his FREE weekly e-letter covering top market insights, trends, and the best stocks and ETFs to profit from today’s best global value plays. 

 
Update
10

7 weeks ago

RM47mil KWSG contributions still unclaimed

Jun 9 2014 7:54am CDT | Source: Business Times Malaysia

KUALA LUMPUR: About RM47 million of contributions in the Teachers Provident Fund (KWSG) still remain unclaimed, the De ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
9

7 weeks ago

Gold shop lost almost RM1mil

Jun 9 2014 3:50am CDT | Source: Business Times Malaysia

KANGAR: A gold shop owner lost almost RM1 million after after the safe on in his shop was broken into ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
8

7 weeks ago

Motion to debate MAS losses in Dewan Rakyat rejected

Jun 9 2014 3:39am CDT | Source: Business Times Malaysia

KUALA LUMPUR: AN emergency motion to debate the losses incurred by Malaysia Airlines last year, amounting to RM1.2 billion was rejected by the Dewan Rakyat ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
7

7 weeks ago

MH370 Tragedy: Hisham: RM27.6 mil spent on 1st phase of SAR

Jun 9 2014 2:11am CDT | Source: Business Times Malaysia

KUALA LUMPUR: Malaysia spent some RM27.6 million in its first phase of the search operations for missing Malaysia Airline flight MH370, said Acting Transport Minister, Datuk Seri Hishammuddin Hussein. ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
6

7 weeks ago

9.1m litres of diesel seized in a month

Jun 8 2014 1:11am CDT | Source: Business Times Malaysia

PUTRAJAYA: The Domestic Trade, Cooperatives, and Consumerism ministry has seized some 9.1 million litres of diesel and property worth RM58 million since mounting ‘Operasi Diesel Selatan’ in th ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
5

7 weeks ago

Girl, 9, awarded RM2.78m compensation for medical negligence

Jun 6 2014 4:56am CDT | Source: Business Times Malaysia

KUALA LUMPUR: A nine-year-old girl who suffered brain damage during her birth at a government hospital was awarded over RM2.78 million in compensatio ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
4

7 weeks ago

Malaysia's total trade in April up 12pc

Jun 5 2014 11:52pm CDT | Source: Business Times Malaysia

KUALA LUMPUR: Malaysia's total trade in April 2014 rose by 12 per cent from a year ago to RM123.86 billion due to growing trading activities, International Trade and Industry Minister Datuk Seri Mustapa Mohamed said. ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
3

8 weeks ago

Works Ministry to spend RM20m for upgrading works at 50 accident black spots

Jun 4 2014 11:35pm CDT | Source: Business Times Malaysia

JOHOR BARU: The Works Ministry will implement upgrading works at 50 accident prone locations in the country that have been identified this year involving an a ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
2

8 weeks ago

Najib launches loan scheme for Ramadan traders

Jun 4 2014 10:24pm CDT | Source: Business Times Malaysia

PUTRAJAYA: Prime Minister Datuk Seri Najib Razak today launches RM45 million Ramadan Ba ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
1

8 weeks ago

Residents bring up objection against Kidex to Suhakam

Jun 4 2014 4:49am CDT | Source: Business Times Malaysia

PETALING JAYA: A group of 20 Petaling Jaya residents held a meeting with the Human Rights Commission of Malaysia (Suhakam) over their objection against the proposed RM2.2 billion Kinrara Damansara ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 

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