Rudi On TV: When Inexperienced, Seek Professional Advice

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As most of you would know, most Thursdays I appear on Sky Business' program Lunch Money to comment on market developments and occasionally take live questions from viewers. During today's session I received a phone call from an older lady who sounded very insecure about whether she should buy shares in Commonwealth Bank ((CBA)), or in BHP Billiton ((BHP)), or in a third stock of which she could not remember the name.

As the caller sounded highly insecure, I decided the best decision was to not answer her question. Instead, I advised her to seek professional advice, followed by the partially tongue-in-cheek remark that inexperienced people should not buy shares simply because someone on TV mentions a few names.

To my surprise, today's event has triggered a negative response from viewer John, who sent me an ironic "J'accuse" via email, essentially questioning my integrity as a daily observer and analyst of financial markets from my position as Editor of the highly respected news and data service that is FNArena.

Below has been my response to John. I thought it best to share it with everyone who equally might be confused or has questions about my action today.
 

John,

Thanks for your email.

With all respect, you seem to have missed a few important points.

1. I have been vocally, and otherwise, extremely negative on mining services providers for quite a long time now. On numerous occasions I have used the term "non investment grade". Once upon a time, Campbell Bros was a high quality company with solid fundamentals and steady dividend payouts. So was Monadelphous. I stopped mentioning these companies against a positive background before the industry dynamics turned sour and share prices fell as low as they have since. Facts change. Were Qantas' share price to rally tomorrow, would you hold that against me too (since I have been negative on this stock and on the industry as a whole since forever and ever?)

2. I do believe investors should not simply buy a stock just because someone on TV, or on the Internet, or on radio, or in other media happens to mention it. Successful investing relies on a strategy and on deliberate, educated decisions made inside the context of well-defined goals, means, ambitions and limits. I do not appear on Sky Business to provide stock tips, but to comment, to share (my insights), to explain and to educate, and to promote the service I founded more than a decade ago.

3. You obviously missed the fact that the lady who called sounded very insecure and couldn't even remember the third stock she was interested in. My advice to her was to seek professional advice, instead of simply buying two stocks because someone on TV mentions them. I stand by that response. On my assessment, admittedly made on the spot, this lady hardly knew what is involved in buying equities. She stands to lose (part of) her money, if not more, unless she seeks advice from someone who can determine what she should be doing in terms of an investment approach and strategy that suits her. Even if she has some pocket money that she wants to use to play around in the share market, I still am not the voice she should be listening to (she sure did give a different impression).

4. I do appreciate your sense of humour and you probably would expect that I was very well aware of the irony for making that statement, but again, I stand by it. When I mention a stock, or answer a question on live TV, I never have any insight into what funds, portfolio, knowledge, strategy etc is involved. This is why you will never hear me say Buy this or that. This is also why there's a clear disclaimer at the beginning of the program. I share my personal insights and market observations and expect that savvy investors take note within the context of strategies that are already in place.

5. While I do share your negative view about too many people working inside the financial industry for all the wrong reasons, and the current government doesn't seem intent on making any changes to this, I also know there are plenty of people in the industry that try to do a good job, who look after their client's interests and who do make it a life quest to remain up-to-date with new developments and every day changes, to the best of their abilities.

6. Interpret as you like. I know I said the right thing and if I have prevented one inexperienced lady to simply "give it a go" (with all the luck she needs for pulling it off), and instead have made her think about better ways to take care of her retirement, than I made a difference today. I will do exactly the same thing tomorrow, also knowing that today there would have been a number of people who are now thinking about what I said, and not necessarily in the negative sense as you have interpreted it. People who do not know what they're doing should not be in the share market. You should know this as much as anyone else.

7. Today was far from the first time that I have expressed my view as outlined above on TV, and it sure won't be the last time either.

8. Have a good laugh, John. It's a healthy thing. You should do it more often. I know I do.

Best Regards,

Rudi Filapek-Vandyck

Editor

FNArena

(proudly independent and staying the course of honest quality, with a healthy sense of realism and humour, making a difference, every day)

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