Danger! The Knowledgeable Expert Who Can Hurt You

December 18, 2012  |  

Danger! The Knowledgeable Expert Who Can Hurt You

You’ve probably seen them on TV or the Internet: experts who make convincing cases for buying or selling specific investments. They’re well dressed, articulate, and have good credentials. Everything says they are knowledgeable. And, technically speaking, they may be experts on their topics.

So, what’s the problem?

These people are not experts on you, your goals, or your financial situation. Indeed, they have no responsibility to know anything about you. This is the critical missing link.

An expert on TV or online has no idea how any specific investment complements or detracts from your overall portfolio or goals. It’s risky to add investments into your portfolio without this information. If you add enough investments based on random online or broadcast encounters, you will end up with an uncoordinated group of investments that are not suited to meeting your long-term goals.

You may wonder if you’re passing up the next big thing. But these experts are broadcasting their views in the Internet age. Their views are instantly seen by hundreds of thousands if not millions of investors. Under these conditions, a keen insight instantly becomes common knowledge and loses its value.

Unfortunately for investors, the advice that applies to most of you—diversify, watch your costs, and invest according to your goals—makes for boring television. Boring television doesn’t get ratings. As a result, you will continue to be barraged by irrelevant investment ideas. Buyer beware!

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About Chas Boinske

Charles P. Boinske, CFA, is a 30 year investment management veteran overseeing the strategic direction and portfolio management process for Independence Advisors, LLC. Have a question for Charles? CLICK HERE TO ASK CHARLES

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