Monday, January 27, 2014

Never Take Financial Advice From A Discussion Group!

The Internet is a powerful thing, and it is changing our society, how we behave, and even how we think.  It is changing us the way Television did in the 1950's.   Suddenly, it seemed to us back then that buying stuff was a great idea, and low, low consumer financing was the answer to how to get it.  The television sold us that idea, with loud, blaring advertisements.   The Internet, at first, seemed a respite from the hucksterism of television, as raw data could be accumulated and processed by individuals.   But it didn't take long before the marketing overlords found a way to dupe us all - in more intimate ways than ever before.

I was waiting for my "free" oil change the other day, and noticed that nearly all the other plebes there had their smart phones or pads or whatever, and were furiously typing or touching them.   It was fascinating to me, as it illustrated how the Internet - and the smart phone - have literally changed us and changed our behaviors.   If you don't believe this, you're not paying attention.

And a big part of this today is what people call "social networking" - as if Facebook was the first one to figure this out.

But in the last couple of decades, this sort of group-think has evolved online, to the slick, well-oiled marketing machine it is today.

I recounted time and again, my first interaction with the Internet in the early 1980's.   Nerdy "Computer Science" majors spent hours on buzzing LA-36 DECwriters (a primitive 110-baud dot-matrix terminal that used reams and reams of wide green-and-white computer paper) discussing Star Trek on Internet "Discussion Groups".

These primitive groups, which used an ASCII terminal interface, allowed people to post messages and get into discussions - and flame wars.   The whole concept of emoticons, flame wars, trolls, and even SPAM evolved from this primitive online experience.

But in that era, there was sort of a self-policing of the forums.  "Netiquette" we called it.  If someone trolled or spammed or flamed, they were called out on it.

Then, an amazing thing happened.   People figured out there were really no rules to "Netiquette" - not any enforceable ones, anyway.   And if you wanted to SPAM and make a lot of money, you could - and no one could really do anything about it.  In short order, the Internet discussion "newsgroups" (e.g., alt.discussion.startrek et al.) went the way of the dinosaurs, as they got flooded with SPAM to the point where they were basically unreadable.

Primitive sponsored online "forums" based on websites started to predominate from there.  These forums, usually sponsored, were also moderated, so that SPAM and flame wars could be kept to a minimum.

But a funny thing happened - the group-think that characterized the newsgroups took on a whole new life in forums.   It turns out, when you go to a discussion group about sewing, for example, everyone is going to tell you how great it is to sew your own dress.   No one is going to point out that by the time you buy a sewing machine, fabric, needles and threads, buttons, and patterns, you've spent far more than you would have, buying a dress at Marshall's - considering how cheaply clothing is made overseas these days.

The group-think is, "What we are doing is right" and everyone reinforces the group-think.   Voices which question the logic or the underpinnings of the group-think are shouted down.   It is not a very good source of critical and independent information.

But wait, it got worse.    People figured out quickly that these sorts of forums were a good source of business.   You run a car parts company, and Joe Blow calls you and says, "I read good things about you on!  I'd like to order some parts from you!"   And pretty soon, the guy selling the parts figures he can get even more business if he fakes up some postings on a number of sites, saying what a great business he is running.

And from there, the Internet went downhill.

Today, we have review sites galore, and they are all spammed and shilled.  Companies hire professional trolls, shills, and spammers, to groom their image on the Internet.  Heck, one company,, even brags about doing this.

And people make a living as Internet Trolls.   Harriet Klausner apparently reviews more than six books a day (!!!) on Amazon and other sites, all with four or more stars.   Apparently, she gets paid to write reviews, or free books or something.   And that's just one lady.

Social Media sites work the same way - with people spamming or shilling for products, either intentionally or unintentionally.

So, you go to a site that is discussing Boxer Dogs.   There will be two kinds of postings on there.   The first are from fellow dog owners, who reinforce the idea that owning a Boxer Dog is the greatest thing on Earth.   The second are postings from companies selling puppies or dog accessories, who pose as "just ordinary Joe's" and say what great companies these are.   No one posts contradictory data.

Well, sometimes they do.   But the system is even clever enough to drown out that.   You see, the professional online groomers will try to get negative data deleted.  In some instances, they have been known to threaten individual people and browbeat them into removing postings, reviews, or websites.   If that fails, they try to toll the person, to make them sound unreasonable and outrageous, so that their opinion appears to be wacky.

It is a remarkably frightening and effective machine.

I used to post on car message boards, until I realized that (a) I was being an unwitting cheerleader for various commercial interests, and that (b) the data I got from these message boards was really not useful. 

Most of these sort of forums are designed to sell things.  In the case of car forums, it is aftermarket parts.   So you see an "innocent" message from a supposed "real user" that says, "I just bought a new Chevrolet, what should I upgrade first?"

And of course, like clockwork, another "real user" responds with a list of "must-have" items, listed by brand name, perhaps helpfully with the link to the company selling these often useless upgrades.

What got me thinking about this were some comments on an RV site.  One of the posters (who may have been a shill) noted that I wrote an aritcle pointing out the pitfalls of full-time RVing.  It costs a lot more to do than people think - and can cost more than living in a house, even.  Doing the math on this is essential before you jump off the deep end.   But of course, my ideas were shouted down as "unnecessarily pessimistic."

Really?  Setting up an RVing budget and figuring out the impact to your net worth are crazy ideas.   But selling your house and spending the entire proceeds on a motor vehicle is "just common sense."   You see the crazy world we live in

As I noted before, Affinity Marketing basically OWNS the RV industry.  They own the largest chain of parts stores, the largest chain of RV dealers, all of the RV magazines (Good Sam, Trailer Life, Motorhome), the largest RV club, the largest RV resort chain, and both RV directories (Goodalls and Good Sam).

It's a Good Sam world - we just live in it.

Seriously, if you want to run an RV park, manufacture RV's, buy an RV, sell an RV, repair an RV, or go camping in your RV, chances are, you cannot do this without giving some money to Affinity Marketing.   It is scary how much of a monopoly they have in the marketplace.

(Disclaimer, not only am I a member of the Good Sam Club, I am a Charter Lifetime Member which sounds very NRA, doesn't it?   Back when I joined, however, it was not as omniscient as it is today).

And in all their magazines and on their website, the idea is sold that (a) you should buy a very expensive RV, preferably from them, (b) you should go to their Camping World Store and buy thousands of dollars in accessories to "fix up" the RV, and (c) selling your home and living in your RV makes economic sense.

Now, granted, you can understand why Affinity Marketing sells these ideas - when you bite on these ideas, they make a lot of money.  So the idea of spending $200,000 on an RV is said to "make sense" even if it is about what your house cost.

Yes, there are people dumb enough to think that an advertisement is a good source of impartial information (or worse yet, an infomerical or time-share presentation!).   They don't need a lot of nudging to hand over their life's savings so they can drive around in a bus for a few years.  People are idiots - look around you.

But the discussion group (or social media site or review site) is a little more under the radar than a blatant advertisement.  An ad in the Good Sam magazine for a "power pack" for your motorhome is just that - an ad.   They are making a sales pitch to you, and you should know it.   But the Internet is far more subtle.   You may be fooled into believing that the "helpful advice" presented there is actually from real people, and not hired "internet groomers". 

And sadly, even a few of the "real people" are just people dumb enough to lend their name and credibility to selling someone else's commercial goods.  This latter group are usually the people who were SOLD the bill of goods, and want to validate that their decision was worthwhile.   We all want to think we are financial geniuses and made the right choices.  No one wants to think, "Gee, maybe I would have needed that money for assisted living, down the road!" - because planning for eventualities and unexpected events, is part of basic financial planning.   Living paycheck-to-paycheck (or pension-check to pension-check) with no plan "B" is never a sound idea.

The point is, take advice on the Internet with a grain of salt - even mine.   However, I have no agenda to get you to SPEND, do I?  And I have not monetized this blog to make money.  Nor do I have sponsors to cater to - and products to sell.  So consider the motives of the person presenting their ideas.

You have to learn to think for yourself, and come to your own conclusions.   Asking other people to validate decisions that you already want to make ("Should I have this ice cream cone?") is an exercise in self-deceit.  A calculator is a better choice than a discussion group, if you are making what is, essentially, a mathematical decision.

Do the math - don't ask others if what you want to do makes sense.  Chances are, their situation is far different than yours  - or they have made a horrible mistake, but have yet to realize it.   Frequent Flyer Miles Credit cards seem like a swell idea to the guy who just got one.   It takes about a decade to get into trouble with them - and the guy struggling to pay off $50,000 in credit card debt, doesn't post on the Flyer Mile discussion group page (or if he did, he'd be shouted down as a kook).

You are being marketed to, in this day and age, from the moment you wake up to the moment you hit the pillow (Someday, I'll figure out a way to put ads in people's dreams, and be a Billionaire!).  From the day you are born to the day you die, you are being sold on one thing or another.   Just ignore that nonsense, get out your trusty calculator, and do the math on your own life - and come to your own conclusions.