My wife happened to mention hearing a financial guru on the radio a little while back. I am always interested in knowing what financial gurus are saying (and thinking maybe it was Ritholtz or Rosenberg or Levkovich or someone else I personally know). I asked her who it was.

“Dave Ramsey,” she said.

“Dave who?” was my reply.

So I asked around – colleagues, friends in the business, etc. etc. Couldn’t get a bid. I turned to The Google and in short order realized that Dave Ramsey is the male version of Suze Orman. He seems to be a self-promoter with little actual experience or knowledge of financial markets or economics. But what really struck me was the condescending, patronizing tone he directs toward his callers. This a site refers to him as a “Christian financial guru,” yet he doesn’t seem to preach in very Christ-like manner.

I could write a thesis about all that’s wrong with this ilk. But rather than take the 30,000 feet view (that’s BR’s province), let’s get granular:

Should I Invest In Gold?

Once again, investors are reacting to the uncertainty in the stock market by investing in gold. Since the third quarter of 2010, the price of gold has jumped 40%, peaking at just over $1,900 an ounce. The “experts” are touting gold as the only “safe” investment in a volatile market.

So is now the time to buy gold?

No way!

Think about it: Why would you buy something at its all-time high?

Before we move on to the idiocy of the final sentence, let’s consider another aspect of what’s going on here.

Later in that same post:

Gold Stash is a quality company that will gladly buy any of your unused gold and silver. They do business the right way, going above and beyond. Dave wouldn’t endorse them if they did any less. With Gold Stash, you can take advantage of the high gold prices in a safe and responsible way.

So, not only is Mr. Ramsey advising against gold under nearly all circumstances, he’s recommending selling it to a company he “endorses,” who coinicentally happens to be an advertiser?

Oct. 13, 2009: “He never has, and he never will [advise buying gold]. Companies like GoldStash.com offer an outlet for you to make some money on your unwanted or unneeded jewelry. Dave will only endorse companies that he trusts, and Gold Stash is reputable, honest and absolutely trustworthy.” Gold price then: About $1,050/oz.).

Who is Gold Stash? Hmm. Well, there’s a tab that allows us to see who “Dave Recommends.” There’s Gold Stash. Funny thing is that at the bottom of that drop down is a link for us to “View all Advertisers.”

 

 

Gold Stash is an advertiser of his, and Dave wholeheartedly endorses them (and only them, apparently) and, coincidentally, is always – 100 percent of the time – bearish gold. Dave is so concerned about your financial well-being that he’s going to let those suckers at Gold Stash take the hit on your soon-to-be-worthless gold. What a guy.

Then there is the mortgage firm. Out of the thousands of companies that can underwrite or broker a mortgage, Dave recommends just one. Churchill Mortgage. Why is Churchill Mortgage the only mortgage company Dave recommends? What are the financial arrangements here? Same for Zander Insurance. Is there no possibility whatsoever that a competitor of one of these firms could offer a superior product, perhaps at a better price?

It seems that Ramsey doesn’t do much to separate his editorial views from his advertising. Indeed, I am having a hard time finding a line between to the two.

Why is there apparently no disclosure about these conflicts?

If you work under the purview of the SEC or FINRA, you can’t use more than 10 toilet paper squares in the men’s room without getting six levels of compliance approval lest management think you are trying to boost the price of Kimberly Clark (NYSE:KMB). Yet here in guru land, we see potentially audacious conflicts that simply go by without comment. And this information is being disseminated freely to folks who are arguably fairly unsophisticated. WTF?

But let’s get back to Dave’s aversion to “buy[ing] something at its all-time high” comment, which is simply mind-blowing in its sheer stupidity:

• There are hundreds – probably thousands – of stocks about which that could have been (and no doubt was) said over the years that went on to increase exponentially. Apple, anyone?

• Art collectors routinely pay “all-time high” prices for works of art. Happens at just about every major auction. What does Dave know that these stupid collectors don’t? Ditto classic cars. Ditto comic books. Ditto baseball cards. Ditto stamps and coins, and all manner of other collectibles. And on, and on, and on.

• Every major sporting franchise: Baseball, Football, Basketball all sell at continuously higher all-time prices. Professional soccer Manchester United went for nearly $2 billion, and 3 other soccer teams sold for over $1 billion — all record highs.

• What do you think the NY Yankees, Los Angeles Lakers, Dallas Cowboys would sell for today? Higher or lower than their previous sale, which were all time record high prices?

• I paid the then-all-time-high price for my residence 15 years ago. It peaked in 2007, declined when the bubble burst, and has gradually begun to stabilize and recover. At this point it’s probably a bit better than a double.

• There are countless examples wherein buying at the high was exactly the right thing to do. But, bigger picture, I know of no successful investor – not one – who would condone using such a rule. It is antithetical to a sound and prudent investment policy – what about mutual funds Mr. Ramsey “endorses” indirectly via his network of “Endorsed Local Providers” (ELP)? What happens when they’re at all-time highs? (By the way, and very importantly, what are the arrangements between Mr. Ramsey and his ELP’s – and where are those arrangements disclosed?)

Not buying something — anything — solely because it’s at an “all-time high” is, perhaps, the worst investing advice anyone could ever give (or receive) and evidences a total ignorance of investing fundamentals.

Think about BR’s favorite example — the 1966-1082 secular bear market: The Dow hit 1000 in 1966, and didn’t get over it until 1982. Every major index soon after hit their all time highs. If you followed Ramsey’s advice, you would have missed a nearly 1400% move since then.

Additionally, I see Mr. Ramsey was just recently taken to task over his claims that:

-The long term return of the stock market is 12 percent per annum, and

-You’re an idiot if you can’t achieve that 12 percent return

Of course, with the market near all-time highs, continuing to achieve those 12 percent returns – or invest in the market at all – could pose a bit of a conundrum, given Mr. Ramsey’s staunch opposition to buying anything at its high. In fact, I would not be surprised to see Mr. Ramsey turn bearish on equities — perhaps after he inks a deal with the Prudent Bear fund.

Otherwise, avoiding assets at all time highs means you miss every major secular bull market.

 

 

UPDATE: March 14, 2013
Dave Ramsey responds to the blog post here

 

See also:
Dave Ramsey’s 12% Solution “So why does Mr. Ramsey use such high figures? He did not make himself available to explain.”

A Warning About That Guy Who is Beating the Market

Category: Analysts, Really, really bad calls, Think Tank, UnGuru

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

42 Responses to “Dave Ramsey Does Not Understand “All Time Highs””

  1. wally says:

    There are two kinds of people: those who listen to talk radio and those who do not.

  2. crutcher says:

    That 1966-1082 period of investing must have been pretty mind bending…

  3. Maj Tom says:

    If you follow Dave for any period of time, he tells people to get debt free, don’t pay for your kids college (unless it doesn’t impact your finances), don’t go into debt to buy a car, and pay off your house. These are all great things for the paycheck to paycheck mentality of most of his listeners. Those that take his advice to become debt free offer real stories of long term discipline, sometimes years worth, of scraping by to pay off huge credit card debts and mortgage debt. I have listened to his show and watched friends cut their credit cards up because of him. What he is doing is effecting what Ben Bernanke et al can not. Promoting savings first, then investment, all without incurring new debt. I quickly recognized his self promoting ELP game, the mortgage and gold shenanigans, but it’s no different than CNBC promoting only stocks. Everyone looks out for themselves and Dave selling his books and his methods through these MLM type entities are no different. But watch out, here in the midwest – many people I know take his advice and there is a Dave Ramsey effect to the populace. People are shedding debt, which is a good thing. I have never bought his book, don’t listen to his show much, and don’t promote his wares, but his overarching instruction of pay off your debts rings true to many.

  4. Mike in Nola says:

    I listen occasionally while out in the car and never noticed the talk about gold. I suppose when he starts pushing products, I tune out.

    He’s actually does a service for a lot of people when he sticks to the subject of financial discipline and paying down debt as quickly as reasonable. His push for several years was “debt free,” which isn’t a bad idea these days. It’s amazing listening to some of the financial predicaments you hear from his callers: people with houses they will never pay off, car payments they can’t afford, etc.. To the extent he gives advice that gets people out of debt, he does do a public service.

  5. bulldung says:

    I read extensively in Finance and trade a little, invest a lot.Dave’s advice is not for people like me or your readers.It is for the person who is drowning in debt and and a credit funded affluence. His message is great for most Americans. He gives a disclaimer that his show is for entertainment value only.Like all radio he makes money by selling ads, I give him a break as he makes his position clear.Given all that, the best financial decision I have made was prompted by listening to his show, involved closing a position in a regional bank late 2007 for 350% gain that if held went to 0.Bought the farm, literally on that one.Kudos to Dave, let your wife keep listening and the rest of the country also. PS I am not a shill for Dave and I am a PM investor Ag and Au

  6. whatdoiknow says:

    I like Dave Ramsey, generally. Debt-free is a good thing.

    But Invictus has a point here. I visited the web link presented.

    This looks (maybe accidentally) slimy. Telling people not to buy gold is OK… it’s an opinion. But in the same breath telling them to sell their gold to an advertiser on his site…. nuh uh.

    Clean it up Dave… from a fellow professing Christian. Mea Culpa advised.

  7. John Adamson says:

    Life improves dramatically for people when they use the Four Magic Words:

    “I can’t afford it.”

  8. investorinpa says:

    Invictus,

    I think you are picking out a small, insignificant portion of Dave Ramsay’s “Guru talk”. Let’s use the 80/20 rule for a second…80% of what Ramsey talks about is getting out of debt, paying down bills, getting efficient with your spending and saving, etc. 20% of what he talks about is stuff that he is pitching such as the GoldStash, etc.

    To be fair, I think you should make a commentary about the majority of Dave’s stuff. Its actually pretty good, steady advice for the majority of Americans who aren’t in the markets and don’t have the benefit of a financial adviser.

  9. capitalistic says:

    Nobody can become wealthy without going into “debt”. The question is, how much are you earning above your cost of “debt” ?

  10. PK says:

    “…Dave Ramsey is the male version of Suze Orman.” – nice.

    I did the math on Ramsey’s 12% comment versus an idealized (no transaction fees, no taxes, no management fees, dividends reinvested monthly) version of the S&P 500: http://dqydj.net/dave-ramseys-investment-advice/

    Important parts?

    The S&P 500 returned 12% over 40 years in 5.56% of 1,224 trailing 40 year periods (0% inflation adjusted). Real/Nominal averages were 9.27% / 6.42% from Jan-1871 through Dec-2012.

    Also, the fund he pointed to as an example of 12%+ returns has a front-end load and, like you saw above with the other advertising, is DR-Approved.

  11. The Window Washer says:

    “To be fair, I think you should make a commentary about the majority of Dave’s stuff. ”

    How did the dinner go?
    Pretty good eccept for the food posioning.

  12. BigD173 says:

    This is probably the most nit-picky post I have ever seen from Invictus, and that is saying something.

    Dave Ramsey’s overriding theme is this: Stay out of debt; and if you are already in debt, get out of it as quickly as possible. That simple message is sound advice for the great majority of people – -and surely for almost everyone who listens to Ramsey’s show.

    What does he tell people about selling their gold and silver? From his website:

    “Now is a great time to capitalize on the inflated prices and sell your unused gold and silver. Open up your old jewelry box and pull out those pieces you will never wear again. Use that money for your emergency fund, dumping debt, or investing in a good mutual fund.”

    That is perfectly consistent with his overall theme.

    By the way, didn’t George Soros and several hedge funds sell a substantial portion of their gold holdings and mining stocks recently?

    Invictus: Uh, at least Soros and several hedge fund managers bought the gold/miners in the first place. It is the height of investment strategy idiocy to say “I will never buy (or sell) Asset Class X or Asset Y. Barry has been over this a million times – the job of those who give financial advice, which Ramsey clearly does, is assess the landscape and determine the best course of action. Predicating your investment advice/strategy/positioning based on income derived from one of your advertisers is beyond shilling.

  13. willid3 says:

    it has some benefit in a country where understanding financial choices is very low (always has been not a new development). with the low average income in the US, you dont see more Americans who live pay check to pay check. that investing, saving isn’t really an option.

  14. key-bit says:

    Thank you Invictus. I understand he helps people to get debt free, but I seriously doubt anyone that claims to be a “Christian” financial advisor. A person’s religion should not have anything to do with having a fiduciary duty to your clients and helping people save and invest money. Evidently Christian does not mean fiduciary.

  15. BennyProfane says:

    @key-bit

    ” A person’s religion should not have anything to do with having a fiduciary duty to your clients and helping people save and invest money. Evidently Christian does not mean fiduciary.”

    Actually, Christian literature over two millennium is filled with contempt for the “money changers”. He is just carrying on that tradition, which, in the end, is good.

  16. streeteye says:

    He recommends mutual funds because they ‘always beat’ the S&P. Wut? Makes Ben Stein look like a genius.

    http://www.daveramsey.com/index.cfm?event=askdave/&intContentItemId=6335

    “Think of how stupid the average person is, and realize half of them are stupider than that.” George Carlin

  17. key-bit says:

    lol. Google financial guru and the only paid ad is davemramsey.com.

  18. ilsm says:

    “A man is as rich as the things he can do without”.

    Thoreau had a degree in divinity.

  19. 873450 says:

    “The one thing America needs right now is hope,” Ramsey said. “All we’re hearing in the news is how bad things are, and no one is talking about hope for the future. The truth is, fear is running rampant in America today, and people are making bad decisions based on that fear.”

    Ramsey said he almost bought into the fear himself. But then he prayed.

    “I talked to my dad and the fear left me,” he said, referring to God. “Fear is not a fruit of the Spirit.”

    —–

    He’s the son of God – no other credentials required.

  20. t3rse says:

    Your first commenter hit the nail on the head: Dave Ramsey fits in the classification of “talk radio” for which some people have tremendous affinity. I think a lot of his message is sound; the people who listen to him need the shrill attitude toward debt in order to loath it enough to avoid becoming slaves to it. But there are other things that don’t work for me, a person who generally dislikes the format and tone of talk radio:

    1. As mentioned, the shoddy relationships of advertisers and “Dave Ramsey approved” recommendations which stretch to local businesses.

    2. Calling people “dumb” along with feigned “outrage” as an act that the frustrated talk radio listener latches onto.

    3. Conflating his position in giving financial advice with a religious value system. As a Christian myself I totally hear the dog whistle in certain phrases and pieces of advice.

    So I can’t listen to him too much though I know that most of the people who listen and benefit aren’t at a point where they are working on an asset allocation strategy for their portfolio, they are “regular folks” who take his advice on avoiding debt, having an emergency fund, and planning for retirement in some way. I’d say there’s room for that in the world, and at least he doesn’t peddle pessimism porn like many of the other talk radio personalities.

  21. barbacoa666 says:

    I agree with the posters above who believe you aren’t giving Dave his due. His listeners are moderate and low income, unsophisticated investors. His advice to them is get out of debt, save money for a rainy day, and invest in solid, lower risk, unsophistcated vehicles. That’s probably exactly what they need to do.

    To facilitate getting out of debt, Ramsey advocates selling stuff to pay off outstanding bills. For many people, that will include selling old jewelry. I assume Goldstash.com is on his list because he has verified fair treatment of people who sell scrap gold through them. Maybe they will get a hundred dollars more than selling to their local scrap gold buyer.

  22. charlie says:

    “Hope” is not a strategy.

  23. david_12321 says:

    What Major Tom says and several others said. Ramsey proved one of the better person to listen to for financial advice over the last decade or so. He may always screw up important economic news and that ilk but he is golden for helping a person reduce debt (personal finance). On the other hand he does have a strong personality and can be an overbearing freak at times.

    Side question: do you really think -your- advertisers or the bloomberg advertisers are better than that gold thief Ramsey took as an advertiser? What brokers do bloomberg promote? In terms of advertisers, is talk radio worse than cnbc or bloomberg?

    Truth: I have -everything- ad blocked so I don’t really know who or what your advertisers are. Sorry. I guess that shows my vote.

  24. BigD173 says:

    Invictus,

    Yor comments in reply to my comment about George Soros, gold, and the gold miners reflect a fundamental misundertanding of what Dave Ramsey is all about.

    Dave Ramsey does not give “investment advice” in the traditional sense. He gives what might be termed common sense financial advice — the comparison to Suze Orman was apt. The people who call in to his show are not exactly financially sophisticated — one of the most common questions from callers is whether they should refinance their mortgages, and they haven’t a clue as to how to figure it out. Ramsey walks someone through the formula all the time.

    Many of these people are deeply in debt: they are behind on student loans, car payments, home mortgages, credit card bills, etc, etc. He counsels them on their options and tries to help them come up with a plan to deal with their fnancial mess. It’s a sure bet George Soros and the hedge fund managers don’t need Dave Ramsey’s help.

    Investing in gold and/or gold stocks is not an option for the vast majority of these callers. And although he probably picks some extreme cases to put on the air, I’d wager that on the whole the Dave ramsey listening audience is facing some financial challenges as well.

    What I am clumsily trying to say is that, as near as I can tell, investing in gold and/or gold miners is not a realistic option for Dave Ramsey’s followers. His advice — sell that gold and silver jewelry you will never wear again and use the proceeds to pay your bills — is sound advice for his audience. To seize on his comments about gold, taken out of the context of his overall mission, just seems terribly unfair to me.

    As you clearly haven’t listened to Dave Ramsey for any period of time, I suppose you deserve a pass.

    As it is

  25. hawks5999 says:

    I first heard Dave Ramsey on air in 1999. Financially, I was completely unsophisticated (probably still am) but he offered good advice and motivation that helped me to get, and stay, debt free. I disagree with him on a lot of his investment advice, especially post-dotcom bubble and the global financial crisis. Especially wrt to gold.

    But I will say that in 1999 he was promoting Zander Insurance and Churchill Mortgage. I imagine that he sticks with them because they have advertised with him from very near the beginning of his show. No doubt the principals in those firms are good friends of his. Goldstash seems to be a newer advertiser and indeed looks like a conflicted endorsement.

    As others have said, you aren’t his audience. Likely, your readers aren’t either. I know I only rarely catch him from time to time and find that he has not much to offer once you’ve gotten out of debt and are fairly stabilized. You probably have better targets toward which to direct your criticism.

  26. Iamthe50percent says:

    Getting rid of debt in this near zero interest rate milieu is stupid. Now is the time to re-finance and borrow to the hilt at the longest term you can get. Borrow on your house, if you have any equity left, at 3.75% and buy solid conservative stocks such as AT&T and Royal Dutch Shell paying 5+% dividends. Later, when the economy heats up, you will thank me.

  27. danm says:

    For the apologizers…

    I understand the need for a financial trainer, and the current meme or need for getting out of debt… but could you at least pick someone with ethics?

    Don’t you understand that by disregarding the conflicts of interest, that you are setting many people up for many more scandals?

  28. NoKidding says:

    Iamthe50percent,

    Dave’s listeners are indebted as far as the minimum payment will take them, and “near zero interest” is not in their toolbox. Such “Borrow on your house” advice did/will lose them the house. You are not his target audience.

    In the actual broadcast, the callers are the entertainment. Anyone who successfully escaped a blue collar LMC background can listen and alternate between “no way you can not be that dumb” and “I can’t believe I was also that dumb”. After a while the show loses its appeal and you move on.

    I assumed he was not worthy of note on this type of site or for the target audience; I was surprised so many other commentators were acquainted. It somewhat exposes who Ritholz’s readers actually are. The same who listen to your charlitain?

  29. slimsam says:

    So a guy that is BEARISH on gold, and advises his listeners to SELL it, is somehow deceptive??

    And trusting a company so much that you say YES to allowing them as an advertiser.. is somehow slimy? He should rather allow advertisers that he doesn’t believe in??

    Most commenters here are snobby. When the top guys say ‘Dave Ramsey’ is a numbskull, all the other lemmings fall in line with the same “I’m better than he is” snobbish behavior.

    Doesn’t matter if you’re the 1%, or the 99%, most people are 100% the same.

    Invictus: Did you actually read my post?

  30. TennesseeCPA says:

    Dave Ramsey is very popular in some circles and I agree that his main get-out-of-debt message is timely and well applied to his listeners. For folks paying off debt, his voice offers confidence that they’re doing the right thing – much like Jim Cramer for long-only stock pickers. He paints with a broad brush and because he was burned once with real estate debt, he continues to remind his listeners that debt is a snake and can bite. Who knows?

    Maybe after paying down debt, some of his people can rise to become regular readers of this fine daily tome, but I bet some of the folks that bit on the Madoff swindle were pretty sophisticated. Maybe effective principles of personal finance aren’t so complicated after all. Control debt, spend less than you make, if you think it’s different this time – you’re probably wrong, put a little aside for a rainy day, if you can’t explain the deal to a fourth grader – you need to pass, all that stuff.

  31. Investradamus says:

    I’m pretty much in the same boat as the others here, in that I think you are being way too nit-picky and ignoring his overall message that he gives his target audience, which are people up to their eyeballs in debt.

    Also, just for informational purposes, when he talks about 12% annual return, he often points to this fund:
    https://www.americanfunds.com/funds/details/ica/a.html

    A large cap blend which has returned 12.05% annually since its inception in 1934. Also, the average annual return for the S&P from 1926-2012 is near 12% as well, so he’s not exactly incorrect when he states as much.

    Invictus: I don’t mention his “overall message” anywhere. Nor do I think I’m being nit-picky – there are serious conflicts as well as very questionable investment advice. The comments to this post in particular follow Barry’s comment advisory to the letter: “Also, be sure to create straw men and argue against things I have neither said nor even implied.”

  32. MathTeach says:

    I’m a former actuary, current high school math teacher. My school has a series of financial literacy material made by Ramsey. As a teacher, its crap (a video of some of his seminars, no tailoring to high schoolers). As an actuary, its oversimplifyied and dangerous. The videos were made in 2007, he loves talking about how safe real estate is, and how stocks have never lost money over a 10 year period. I like to pause the video, and show my students what has happened to those markets since then.

    Most insidious, though, is his classification of stocks as a “safe” asset class, with no discussion of risk. Not only does he assume 12% (!), but he pretends that you earn that each and every year. I have the financial background to clarify things for students, but I worry about the average high school teacher who can’t add those details.

    I would guess that most of his listeners who do get into stock investing do so with no expectations of losses, and jump ship at the first major correction, staying shy for a long time.

  33. joe2 says:

    Dave Ramsey says all kinds of things that he doesn’t understand. That said, he’s hardly the only one saying don’t buy gold. If you want a more cogent explanation to go after, consider the case made by Warren Buffett in his 2011 Letter to Shareholders.

    I’m serious. I’d like to hear your rebuttal to Buffett’s argument. I’m sure you’ve read it, but just in case:

    http://berkshirehathaway.com/letters/2011ltr.pdf

    The gold part starts on pg 18.

    Invictus: The point isn’t that Ramsey is saying “don’t buy gold.” The point is that he says to NEVER buy gold and, beyond that, to SELL IT TO ONE OF HIS ADVERTISERS. Do you not think there’s a problem there?

  34. PK says:

    Investradamus, as far as I can tell – the best case nominal trailing return (geometric average is what I care about here) for that period is right under 10% for the best case 1926-2010 return, not close to 12% as stated on his site. Now, you can nitpick the calculator I wrote to do it, since there was no “S&P 500″ before 1957, and anything before that is a blend of multiple S&P indices (I use the Shiller data)… but 2% is a huge amount over 84 years.

    In addition, the fund returned 12.05%, but an investor wouldn’t have. There is a front end sales load of 5.75%, and using fund inflows and outflows you can estimate what an average investor would have returned in the fund (Here’s Morningstar’s page for AIVSX: http://performance.morningstar.com/fund/performance-return.action?p=investor_returns_page&t=AIVSX&region=USA&culture=en-us ). Those numbers only go back 15 years, but you can see that the fund has outperformed an investor by ~ .7 percentage points annually. Add that to the sales load and you still got good returns, but nowhere near the 12.04% quoted.

    It’s not that Ramsey is evil, per se. It’s just that he is sophisticated enough to understand that 12% is a ‘great’ return, and should know better than to ask people to plan on 12% returns. If you invested $100 monthly in a transaction & management fee free, tax free idealized dividend invested S&P 500 fund monthly from Jan-1973 until Jan-2013, you’d have $636,758.95, not $1,176,000. Okay great – you have more money than the average American… but you’re half-of-not-a-lot-of-money (Bay Area readers might recognize the phrase!) short of 12% returns.

    I’d rather Ramsey changed his message a bit – 9% a year, invest $200 a month or something.

  35. joe2 says:

    Not sure what you’re getting at. You do know Ramsey means don’t buy gold as an investment. Gold Stash buys old jewelry you have lying around but will never wear. It’s yard sale kind of stuff, not a safe full of gold bullion.

    Do you disagree with the “Don’t Buy Gold” advice? If that’s the case, we’d like to hear your take on a more reasoned argument for the same advice (from Buffett).

    Invictus: I thought I was pretty clear in my post; perhaps I was not. For someone who purports to give investment advice to A) Advise against doing something 100 percent of the time and B) Have an advertiser who directly benefits from that position is an egregious conflict of interest. This has nothing to do with what I (or Warren Buffett) currently think of gold – it has to do with the FACT that Ramsey will NEVER advocate for gold and will ALWAYS advocate for selling it to one of his advertisers. Does no one have a problem with that?

  36. joe2 says:

    You’re still missing it. The products he’s recommending that you don’t buy (an Investment in Gold) is different than what his sponsor buys (tiny amounts of household jewelery that happens to contain gold).

    For example – if I say don’t invest in Pizza and then have an ad for a 12″ peperoni, is that a conflict? They’re both called pizza, but one is something I buy for dinner, and one is something I hope will go up in value.

    The Gold Stash things is just part of his get out of debt schtick. You sell some old jewelery and pay off your credit card. It has nothing to do with gold as an investment.

    ~~~

    BR: “Don’t buy gold . . . but you can sell some to our sponsor.” You really can’t see the conflict there? Dude, you’ve gotta be kidding me

  37. “…Most insidious, though, is his classification of stocks as a “safe” asset class, with no discussion of risk. Not only does he assume 12% (!), but he pretends that you earn that each and every year. I have the financial background to clarify things for students, but I worry about the average high school teacher who can’t add those details…”

    MathTeach,

    no doubt, and ‘Good on You’..

    from the little that I’ve heard from that guy (Ramsey), on the Radio, I haven’t mention “Covered-Call Writes”..

    which, to me, is one the few ways that anyone could suspect to achieve the “12%”-number He speaks of..

    You may care to cover, with your Class..

    http://www.optionseducation.org/strategies_advanced_concepts/strategies/covered_call.html/

    http://search.yippy.com/search?query=OIC+Covered+Call+Writing&tb=sitesearch-all&v%3Aproject=clusty

    ‘Pick a Stock’, that Can go Down in Price..

    http://finviz.com/quote.ashx?t=INTC

    one could Sell the March21.00 Call, for ~0.45/sh.

    http://finance.yahoo.com/q/op?s=INTC&m=2013-03

    that’s ~a Percent and a Half in Premium, less Intrinsic Value, for a ~Month..

    no worry, either, of ‘Selling the Dividend’.. Ex-Dividend Date: 05-Feb-13

    and it goes on like that..
    ~~

    though, past all that, what amazes me, regarding, both, Ramsey and Orman, is that “its crap”.

    the Ignorance that they vector should be seen as a High-Crime, yet, they’re continually lauded by those, the MSM, who have their Paychecks funded by ‘Wall St.’ (the Large Advertisers)..

    but, you know, there’s no Conflict, there, either..

    at the EOD, “To each, Their own”..it’ll have to be ‘Enough’..

  38. FNG says:

    Really Invictus? So I read your post and all the comments and then I read your post again. While you certainly make a solid point regarding his lack of professional investment knowledge and win that argument your other arguments are less strong. For example your disdain for his comment, “Why would you buy something at its all-time high?” is foolish. That particular sentence spoken in a particular moment can be very accurate. Conversely that sentence spoken at another time can be seen as foolish and short sighted. Why such condemnation towards the man? As your readers have pointed out the majority of his shtick is “debt reduction” hardly worthy of such scorn from you and BR. And don’t start with the advertising comment as your whole industry is full of that bullshit. Hell I bet even BR has figured out how to monetize the redirects and clicks from his “recommended reads.”

    Furthermore you should reread your opening paragraphs because it could be misconstrued as you having a particular religious/ethnic bias towards the man. I would hate to think that you and BR are guilty of that crap. I mean seriously dude…I loath you for your political bias, but I respect your intelligence. You start resorting to cheap shots in your writing, well then you’re no better than the rest of the clowns and I will tune you out. Which would make me sad as I enjoy reading your shit (occasionally) and then yelling at you “Fuck you Invictus you fucking fuck!” through my computer screen.

    Invictus: So, let’s break it down a bit:

    1) As an investor or adviser, whose job it is to manage money, when is it appropriate to make a blanket statement about literally never owning an asset class or particular asset? Be specific, and cite those “particular moment(s).” Has your “favorite” investor said “I would never own x and, by the way, if YOU own x you should sell it to my advertiser”?
    2) I did not mention “the majority of his shtick” anywhere. It appears nowhere in my post. So, from my perspective, it’s not part of the discussion. It could be the best message ever told – he’s still deeply conflicted.
    3) It’s hardly a cheap shot to point out the egregious conflict of interest here.
    4) Sorry to hear you love to hate me – I’m not all that bad.

  39. td says:

    It is true that Ramsey’s “get out of debt” mantra isn’t a bad idea but he has no special sauce that requires you to listen to his show, buy his books, or patronize his advertisers. His plan for getting out of debt is the same as your plan for getting out of debt. If you need this guy to point that out for you then debt is the least of your problems.

  40. Farmwf says:

    To say that Dave has no particular expertise in investing is a true statement and an otherwise endorsement in the positive for me. What he does have expertise in is going broke followed by getting out of debt and then rich. I’ll take his advice any day over some fly by night self proclaimed investing guru with opinions on the markets. As far as I’m concerned Dave is wise enough to help thousands with their hopelessness and despair; what is your claim to helping humanity? Yes he endorses certain companies. So what? He does claim to be a capitalist (that’s a relief). As it turns out Zander insurance does get ahold of the best prices on term life insurance. That works for me since I’m in the market for just that product. Gold? I’m a wheat farmer so I know a commodity when I see one. I don’t invest in wheat; why would I invest in gold? And in your article you mention all the investments one must buy at the top of the market – sports teams? Are you serious? Oh and Apple? Are you serious again? You must not be tuning in to all the news about Apple lately. Stocks don’t always go infinitely UP you know. Even I know that much.

    Invictus: Well, congratulations on being the first commenter to really anger me. I try to “help humanity” in as many ways as I possibly can, which are none of your business, and the very last person I am or ever will be accountable on that front would be you. One of the ways I try to “help humanity” is to educate people, as I do here from time-to-time. So:

    1) Dave Ramsey IS a “self proclaimed investing guru with opinions on the markets.”
    2) I guess the point was lost on you that Dave’s a bit conflicted when he says, “Don’t ever buy gold, and by the way, sell it to my sponsor.” Apparently not a problem for you.
    3) Just sports teams? Did you miss the graf in which I mentioned artwork, classic cars, stamps, comics, other collectibles?

    Finally, I guess one good turn deserves another: Since you seem to have divined that my contributions to humanity are somewhat lacking, I’m sure you won’t mind if I assume you’re one of those farmers who sponges off government subsidies and handouts year-in and year-out. Fair enough?

  41. Financial Empowerment says:

    It is obvious that Dave Ramsey’s advice is for the “financially unsophisticated.” There are many different kinds of people who want different things in life. Some people want to be rich at all costs or they are miserable. Some desire riches, but if it doesn’t happen they are okay with it. Others just want to enjoy life and be happy, so becoming rich through financial knowledge is not their desire. These are the people who benefit the most from Dave’s advice. They don’t care to learn how to build a great portfolio or invest during “zero interest rate” times to build wealth. Instead, they need someone like Dave who can teach them to dump their debt and invest enough to have a “comfortable retirement” so that they can enjoy life and be happy. Forget stocks and real estate, they just want to feed their families and keep their lights on. If Dave Ramsey’s advice seems ridiculous to you, then his advice is not for you because you’re probably in either the first or second group of people that I described above.

  42. a2ricedgti says:

    In my opinion Dave’s message is pretty appropriate, fair, and useful for the portion of America that has a net worth below $0 (with many exceptions). There are a LOT of folks out there who benefit from his “emotional” method of paying off debt (pay loans off smallest to largest to get a feeling of accomplishment) versus a logical/financial method (pay off highest interest loan first). Once you get your net worth above zero his advice goes downhill. For example, when he talks about his investing advice he allocates evenly between 4 types of mutual funds and tells people not to include bonds in their portfolio. He usually states some oversimplified reason or another for not having bonds in the mix but the obvious reason is he says things like “the debtor is slave to the lender” every show and buying bonds is buying others’ debt…

    And for the complaint about him recommending specific companies…does TBP make any attempt to clarify its advertisers are above board AT ALL? Probably not, which is the norm on the internet. Right below the Quote of the Day for me is an advert offering a “reverse mortgage guide.” Is it all that bad for him to establish a business relationship with somebody he likes, say he “endorses” them and get paid for it? Nothing about him implies he is non-profit or unbiased. People need to do their own research…