Financial media hurt reader nest eggs

Daniel Solin of DailyFinance.com writes Sunday that the personal finance media have a way of hurting readers saving for retirement.

Solin writes, “The reality was nicely expressed by William Bernstein in his excellent book, The Four Pillars of Investing: ‘Turn on CNBC at 9:31 a.m. any weekday morning and you’re faced with a lunatic asylum narrated by the Three Stooges. But stand back a bit and things become much calmer and ordered.’

“With this background in mind, I was eager to read a column on a fine financial site, Investopedia.com, titled 5 Investing Statements That Make You Sound Stupid, by Amy Fontinelle. At last, sound advice for investors.

“Not exactly. While some of the examples are sound (like only investing a small portion of your assets in speculative stocks, assuming you must gamble at all), others are not.

“Ms. Fontinelle counsels investors to ‘get great deals on stocks now since the market is tanking.’ Trying to time the market means taking a huge risk. In addition, there is no reason to buy individual stocks at any price. The expected return is about the same as the index to which it belongs, but the risk is far higher due to company-specific risk. Investors are better off buying the index.”

Read more here.