I read many articles every week, and came up with ways to filter out misleading articles. This is critical for me, so I can keep my investment decisions rational and unbiased. Using the wrong article to affect investment decisions can cost you real money. Here is a quick checklist to uncover many of the misleading articles:
- Focuses on recent history without offering a long-term perspective.
- Talks to your emotions, without accompanying with data or logic.
- Presents recent history in present tense to imply that it will continue the same way (“stocks/bonds/pesos/you-name-it are currently out of favor”).
- Focuses on a narrow asset class (e.g., large U.S. stocks, the S&P 500, Japanese stocks, the BRIC countries) when discussing stock investments in general, or diversified asset classes.
- Presents only partial returns (e.g., index returns without dividends).
- Provides opinions of well-known people to give credibility, without hard data or logic to back the claims.
- Depends on traditions to back the claims, without providing logic (e.g. shift allocation to bonds with age, regardless of the total picture).
- Provides specific advice without any comments qualifying who this applies to (e.g. referring to a retiree without discussing their withdrawal rate).
- Offers a prediction of the near-term future of an investment (stocks, bonds, gold, etc.) with high certainty.
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