My name is Mark Goodfield. Welcome to The Blunt Bean Counter ™, a blog that shares my thoughts on income taxes, finance and the psychology of money. I am a Chartered Professional Accountant and a partner with a National Accounting Firm in Toronto. This blog is meant for everyone, but in particular for high net worth individuals and owners of private corporations. The views and opinions expressed in this blog are written solely in my personal capacity and cannot be attributed to the accounting firm with which I am affiliated. My posts are blunt, opinionated and even have a twist of humor/sarcasm. You've been warned.

Wednesday, December 7, 2011

Do you Believe what you Read?

After inflicting the technical rules of a divisive butterfly transaction upon my readers on Monday, I figured I should take the required level of intellectual engagement down a notch today. Thus, my post today should be a little easier to get through.

When I was a young chartered accountant, still wet behind the ears, I wrote an article for a local newspaper on the U.S. income tax filing requirements for Canadians holding U.S. real estate. Somehow that paper made its way to Phoenix (I assume a snowbird took it with them and gave it to a friend) and I received a long distance telephone call in which the caller said “I hear you are the U.S tax expert in Canada.” At that point of my career, I was astounded that anyone would think I was an expert, but the power of the written word said otherwise.

That call was long forgotten until I had a similar experience just a few weeks ago. I wrote a blog on the NBA strike discussing the fixed-pie concept and how it related to the issues in the NBA. A few days later I received an email request from overseas asking if I would agree to be interviewed as a basketball expert by one of the largest radio sports networks in the world (as an aside, I milked this sports expert angle with my friends for days, since we always argue who knows more about sports). Anyways, to my dismay, the network later decided I was not truly a NBA expert and interviewed a U.S. sportswriter in my stead, but again the power of the written word was proven. For many people there appears to be no litmus test, if you are published in any manner be it a newspaper or blog, you are an expert.

Think about the possible consequences of such thinking, especially on the Internet. A couple weeks ago my wife and I purchased sushi grade Ahi tuna at a high end fish store. At the end of the night we still had some tuna remaining. Since the tuna is raw, we knew it had a limited shelf life, possibly not more than the same day. What was my first instinct? Of course, it was to browse the web to see if I could find an answer to my question. I was not comfortable with the qualifications of the people providing answers so I waited until the next day to call the seafood store (they said I could eat it the next day and since I did not get food poisoning, I assume they knew what they were talking about). If I had found the answer on a reputable site, like Health Canada’s website, I am not sure if I would have followed up with the store.

I know many people use the Internet to get information about medical issues and sports injuries. I see no problem with going online to get an understanding of an issue, but it is scary to think that some people assume all the information on the Internet is correct, let alone they use the Internet to make a medical diagnosis. It could literally be hazardous to their health.

Michael James recently wrote an interesting blog called The Best Kept Secret in Investing in which he states “the fact remains that the average person believes in the idea of financial geniuses whose advice they need for insights into the future of stock markets.” This insight is partially on my topic, but his next comment is directly on topic, when he says “When people find out that I write a financial blog, a typical reaction is to ask me about what will happen in the market or with interest rates.”

The presumption that Michael is a financial whiz, who knows the direction of interest rates because he writes a financial blog, is ludicrous. As it happens, Michael is a very astute financial blogger, but there are financial bloggers out there that probably work at the local grocery store, live with their mom and have $10 bucks to their name, yet have a blog called Millionaire Dollar Advice from a Grocery Magnate.

Anyways, since my readers have an extremely high level of sophistication, I know they are always dubious about everything I say :). But in all seriousness, I find it scary that people may make decisions based on what they read without knowing the qualifications of the author.

The blogs posted on The Blunt Bean Counter provide information of a general nature. These posts should not be considered specific advice; as each reader's personal financial situation is unique and fact specific. Please contact a professional advisor prior to implementing or acting upon any of the information contained in one of the blogs.

10 comments:

  1. The lesson should really be never to rely on any one source for important decisions. People should consult many sources and come to their own conclusions.

    This is assuming they're able to discern the wheat from the chaff. I've unfortunately seen too many cases of people being shown the correct information but rejecting it and adopting BS instead.

    For example, on a recent radio call-in show, they had an immunology expert talking about how important vaccines were, and how safe they were. But one caller preferred to listen to advice from a well known but misguided actress.

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  2. Anon, your point about never relying on any one source sometimes even goes for advice from those we consider specialists in any field; not necessarily because they are wrong (although I can remember a Neurologist I was once referred to and I knew he was wrong the moment his diagnosis came out of his mouth)but because sometimes the answer is not black and white, whether the advice is medical, legal or about Ahi tuna.

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  3. I agree with you that people trust certain sources too much. On the specific subject of interest rates, not only am I not an expert, but I don't believe that experts exists in the sense that most people mean. Beyond the predictive value of the yield curve, I don't believe anyone has useful insight into the future of interest rates. Even those who set interest rates cannot predict the forces that will make them act one way or the other in the future.

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  4. So Michael, where do you see interest rates going in 2012 :)

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  5. Up, down, or the same. So far my accuracy with that prediction has been 100% :-)

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  6. Too bad the "sports expert" interview didn't go through. :)

    Couldn't agree more about the power of print. Once I published my RESP book, all of a sudden I started getting media requests for interviews which has continued to this day.

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  7. Hey Mike, yes too bad, I have a great look for radio :).

    In your case you were or became an expert on RESPs and carved out a great niche, thus you are an expert in your area and have the qualifications. Any interesting thought is what if you wrote the book and it was a really a weak book. Would the power of print have overcome your technical weakness or would it have caught up with you?

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  8. It hasn't caught up to me yet! ;)

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  9. may i weigh in on this debate. I have an opinion. We have just watched the news and have seen Tory government minister Kent withdraw from Kyoto accord. He said it would cost us plenty to remain. Then Elizabeth May got almost no press (hod to go to CBC website only) when she said it was all spin and dont believe the hype - its our big oil Calgary riding PM.
    Who do you believe?
    I used to believe the government. I used to think Health Canada should publish a Canada Food Guide but the very existence of a 'dairy ' category is to strengthen our agricultural economy as we now know that cow's milk is not really that nec for your body's overall health. So you see you cant trust anything really
    THE BLOGGER you can hold accountable to some extent - leave comments on blog or call out on Twitter - good luck going after another larger media source. I call out @ctvnews every week and never get a response
    The guy who bags groceries can be humiliated and lives in fear of that I suspect. most do
    You can call me out. I play fast and loose on some of my blogs but remain true on Dumpdiggers and Smojoe.com

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  10. Rob, nice rant.

    Funny, a couple weeks ago I would have wondered what you were talking about in regard to the Canada Food Guide, but being the intellectual I am, I learned from watching an episode of the Good Wife, that the US food chart is as much about promoting one food lobby's agenda as it is about the actual science and health behind a food group. Very scary.

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