Comment on MSN Top Stocks Blog

I left a comment on MSN Top Stocks Blog. I am reposting that comment on my blog so that everyone can read what I think about Suze Orman. Enjoy and leave a comment for me.

Stop picking on Suze Orman!

Posted Feb 11 2009, 02:09 PM by Kim Peterson
Filed under: Kim Peterson

Oh come on, going after Suze Orman? Columnist James Scurlock tells people to stop trusting the "bottle-blond former waitress."

The thing that bothers Scurlock the most is that Orman is a big cheerleader for "dollar cost averaging," which he says is the practice of buying the same stock over and over again as the price drops.

"Since when does throwing good money after bad make you rich? It doesn't." Scurlock criticizes. Dump her as your financial adviser, he says. She doesn't even like stocks for her own money -- less than 3% of her net worth is in stocks, with the majority in government-backed bonds.

Scurlock is off base. For one thing, dollar cost averaging (DCA) doesn't mean buying the same stock over and over as it falls. DCA is a moderate approach to investing where you spend a set amount of money at regular intervals. In other words, you invest the same amount whether a stock is going up or going down.

DCA isn't the most sophisticated investor practice, by any means. And it has been criticized for not cushioning risk as much as its proponents would like.

But consider this: Orman isn't reaching out to sophisticated investors. She's targeting people who want to straighten out their finances, or maybe start building a nest egg. People who have too much credit card debt. People who can't budget their household income.

She helps motivate the Oprah crowd to think smartly about their money. And there aren't many advisers doing that for an audience that desperately needs this kind of advice.

So, James Scurlock, if you can dig up a real reason to go after Orman, then go for it. But as far as I can tell, she is bringing some common sense to a subject where Americans routinely have none: personal finance.

I wish there were more like her out there.

My Comment:

James Scurlock, stop criticizing Suze. As a college student with real estate and business background, I have also advised people around me about personal finance and real estate. From my experience, I can tell you that Suze Orman is the best financial adviser out there. Scurlock criticized her for saying, "People who grew up without much money and later earn a comfortable living sometimes spend too much to make up for what they didn't get as children. . . . People who feel entitled to the good life or are unconsciously copying a mother or father who lived beyond her or his means. . . . If you feel the need to impress people with what you have rather than with who you are, you are at high risk for credit card abuse." Everyone knows this is true. I have seen so many people in this situation and I am telling you all that this is how we started the economic crisis. Scurlock, do you know how the meltdown of real estate market started? It started because we went beyond our means buying homes that we couldn't afford and treat our homes as our piggy bank.

He also criticizes Suze for having conservative investing approach. Let me tell you this: if we all have invested like Suze, there should be no one struggling with loss from the stock market.So, what is the outcome for moderate to high risk investing? You lost so much money that you are now worried about your retirement.

Criticizing Suze for investing in municipal bond? Oh, come on. She is at the highest tax bracket and it makes sense for her to invest heavily on municipal bonds since she doesn't pay any tax on munis. If I were her, I would do the same. Why take risk when you can get a decent return on munis? Because of her tax bracket, it makes no sense to invest in the stock market for short-term. For long-term, she would not risk her fortune and that's why she only invested a portion of her assets.

Criticizing her stock market advice? Give me a break. She worked for Merrill Lynch and she knows how to make money in the market. Do you know how hard it is to get into Merrill Lynch? Only the top students at elite business schools get hired. If she is that bad and Jim Cramer is the best stock market adviser, why did Jim Cramer tell people to buy Wachovia two days before it went bankrupt?

Criticizing Suze for not forecasting the downturn? Let me tell you about my story. I predicted the economic downturn in August 2005 and told people to sell all hard assets. At that time, I was criticized for unreliable forecast even from my parents. I had to suffer that criticism until 2006 and it was not pleasant. Even Suze knew it was happening, she could not say that in public because of the impact it would cause to our society.

I have to tell you Suze has inspired so many people in despair and teach us the importance of financial education. Her money management tips are outstanding and can be applied to anyone. She is the pioneer for making financial advice available to the general public and I always appreciate her for that. Now, STOP blaming Suze! I appreciate Kim Peterson for a wonderful post defending Suze. If you have any questions or concerns, please leave a comment on my blog at moneyneconomy.blogspot.com I will repost this on my blog.