A risky business

Investing needs to keep pace with current news and economy conditions. Thus in addition to media, often investors would go to seminars, listen to iPod/iTune, or even call in to talk to financial advisers. Questions can be very specific to certain investment they have and seek very clear answers from the advisers. Action on the advice or not is unknown but the message does deliver to other audiences. However, sometimes or most of times message isn't well returned. There is no reason to blame only the host for this. But it is still very interesting to see how these two sides react.

Here is one example for iTune. One caller left a message to the host stating that he called in the program a while ago when company XYZ was at  $70ish/sh. He wanted to know if he should sell it because he bought it at $40ish. The host recommended that he could keep it as a long term investment as the finance was strong. But now it is less than $20/sh. What can he do? Obviously, the advice was dead wrong. This sort of conversation may have happened thousands of times for the host. He simply explained plain fact that why XYZ is at $20 now and no reason to sell it for deep loss. No argument. No apologies either. But why he didn't apologize? There may be a few reasons such as there is no solid evidence that the trade occurred. Maybe some hoax. Also, without actually committed to the caller, he had no responsibility at all. Still, listeners may believe the caller.

This may be a vague case as vague relationship between them. But in some other cases, the host doesn't seem convincing. Here is another example. There was a seminar held by JP Morgan. The presenter tried to reason bond funds are over-priced and deem for correction when the FED raises interest rates. At the same time, junk bonds may deserve better opportunity. He listed different yield curves before and after the 2008 crisis to show how crazy the situation was. It seems convincing but suddenly he made a quick turn and said he diversified his managing portfolio by investing in a less liquid real estate investment. Immediately, the hard proved better opportunity seemed not valid because otherwise why need to diversify? There seems a credibility issue.

Many such cases reflect that money managing business is very risky, in personal reputation sense. Of course, we still will go to such events to absorb information, but with analytical mind.