Monday, July 24, 2017

Guru Books? Beware!

Should you look for investment advice in a book? Probably not.

A reader writes, asking whether I know of a good book on how to invest your money.   I am not sure how to respond to that.  I think he is still searching for the "sure thing" or the quick, easy money.  I get a lot of inquiries from people who see my blog but never really read it and understand it, and they want to know how to make a lot of money in a short period of time.

Sorry, wrong blog.   And the ones promising you that information will cause you untold heartache.

The majority of the money you end up with in retirement will be the money you set aside - the money you save.   The best basic "investment" advice is to put as much aside as possible.   The idea that you can invest a buck and turn it into a million bucks is just not feasible or probable.   You have to save heroic amounts of money.

But, everyone wants shortcuts.  They don't exist.   If they did, no one would tell you about them in a book.  People think they can "invest" a few hundred or a few thousand and become millionaires, as if a fully-funded retirement is something you can buy for not a lot of money.   It just ain't so.

This is basic common sense - logical thinking versus emotional thinking.

I've perused a few of these investment "gurus" and found them lacking.   Suze "Sooze" Orman, for example, started out saying what I have said all along - spend less, save more, diversify your portfolio, and wait.  Time is on your side.  Good Advice.

Then she became a spokesperson for Buick and Sea Ray boats, and then got a TV show where she "approved!" people to buy shit.   And it all fell apart.  She went for the money because, I think, she realized that people desperately want to believe the emotional theory - that you can "have it all now" and somehow leverage investments.   No one wants to hear about the drudgery of cutting expenses and counting pennies.   No one.

And you can't blame her for seeking personal gain.   The powers-that-be want you to spend money on a leased car, or a new boat, or a cell phone plan, or cable television.   They don't want you accumulating wealth and becoming independently wealthy.

Oh sure, they want to you pretend invest by buying stock in an IPO that friends of theirs are running.   The shouting guy wants you to BUY! and SELL! on his command, like you are a Pavlovian dog.   You will go broke this way.

I have been approached - twice now - by a "reality" TeeVee show that wanted to have "stingy" people on their program.  They wanted kooky people who annoyed their families with their stinginess.   You know, saving dryer lint to knit a sweater - that sort of thing.   Of course, they wanted to make saving money and cutting spending look like ridiculous things to do.

Gee, I wonder why?   "We'll be right back to 'Crazy Stingy People' right after these messages for leasing new cars, refinancing your house to pay off credit card debt, and a fun new miles rewards credit card!  Stay tuned!"

Oh, right, that.   The TeeVee, which I rail against, is full of horrific messages.  And most of them are along the lines of "we're all victims here, living paycheck to paycheck!  The only way to get ahead is by extreme couponing or buying your Abercrombie shirt on sale!   If you just shop enough on Amazon, you'll be wealthy!"

In other words, just give up on saving and spend it all now.   And I get that from a lot of readers who think I am crazy (why do they keep reading, then?) and that you can "score" with a car lease, and you should mortgage yourself up to the hilt and then invest in dot-com stocks.

I had a friend who did that - he tried to kill himself later on.

I saw a book from Dave Ramsey once in a supermarket.   I was reading it and thought, "Well, this guy gets it!"  And like the Sooze, he had  some good advice, save your money, pay down debt, invest in rational things.   It all sounded so good until I hit chapter 3 and he started talking about how much to tithe to a church.   He said 10% of pre-tax income was a "baseline" and that selected "gifts" on top of that were expected.

I put the book back on the shelf.   I learned later that he gives seminars at churches, who pay him to tell parishioners to tithe to their church and not the evil Gods of Mastercard and Visa.   My advice is more to the point - tithe to no one but your own self.   And no, this is not "selfish" it is a matter of survival.   Moreover, we don't need more victims in the world, so you do me a favor by taking care of yourself, as much as you do yourself a favor.  If you get your finances in order, you are one less person I have to support with my tax money.  Let me thank you in advance.

You see, there is no "trick" to investing or getting ahead.   It is basic logic.   You can't spend your way to success.  When you decide you need a fancy car and a fancy kitchen and an oversized house, you are bankrupting your future.  There is no way out of this other than to shed the material and use that money to provide for your future.

"But Bob, isn't there a way I can still have a new iPhone 8, granite countertops, a new leased Acura, and still make money in the stock market?   What if I buy all these new IPO stocks, surely I can get rich and have all my toys, too!"

You haven't listened to a damn thing I have said, have you?

Getting ahead requires sacrifice, not indulgence.   You can have a Jet-Ski or $8,000 more in your IRA.   You can't have both.   You have to learn to do without, and that is the hardest thing to do.   And no one wants to hear this, hence it doesn't appear in investment books or seminars or on the TeeVee.

The idea that there are "secrets" to making money is just idiotic.   And again (and I have repeated this so often, I sound like a broken record) if there were such secrets, no one would ever tell them, as then they would no longer be secrets and no longer be effective.

"But Bob!" a reader writes, "Maybe he wants to tell others these secrets to help his fellow man!"

No, people really think this way.  Some days, I feel I should just give up.

A Hedge Fund manager recently promoted an underling to run his fund, paying him $250 Million dollars.  Why did he do this?  Because he felt this 34-year old had the secret to making money.   If he felt he could get this information from a $39.95 seminar or book, he certainly wouldn't be paying him all that money.   And the hotshot kid ain't selling his "secrets" if indeed he has any, in some stupid book.

People want to believe in the tooth fairy.   And if you want to believe, that's fine.   But don't expect me to validate belief-based investing.  It is emotional thinking, not logical.

There is no big secret to wealth.   Spend less, save more, put money aside in a plurality of rational things, avoid hyped and promoted investments, invest for the long-haul.   You will do OK in the long run.

That has always been my rational message.   If you are looking for something else, you are barking up the wrong tree!

But then again, I guess if the TeeVee people offered me a million bucks to tell people they're "Approved" to buy a Jet-Ski, I would probably go for the money.

So, fuck it.  Buy nothing but IPO stocks!   Lease a new Acura!   Buy that mini-mansion - you'll get a huge tax deduction!   Leverage yourself with as much debt as you can handle, because the more debt you have, the wealthier you are!   Tax deductions are the key to success!   Buy more - the more stuff you buy "on sale" the more money you SAVE!  It all makes sense now!  What the fuck was I thinking?

Mea culpa!  The American way of debt is the only way to live!

The sarcasm light is ON.