Financial blogs are expanding in significance. The number is increasing and so is the readership. This is a trend that is early in its development, so there is fluidity in the definition of the group and the role of blogs versus mainstream media.
At "A Dash" we are writing a book, one page at a time. The audience for the book will be the individual investor, most of whom have not yet returned to the stock market. As they do, they will naturally consider various financial websites, including the most popular blogs.
How will these new readers navigate this crowded and growing space? We hope to develop a readers' guide to various sites, describing what to expect from each.
In our first article on this subject we examined what we called an "outside" perspective. This viewpoint seemed rather unusual, confusing the "pseudo blogs" of mainstream sites with the creative efforts of independent writers. It also attributed higher standards to material written by journalists, even when they lacked specific expertise and were writing multiple daily updates.
A Good Discussion
There were a number of perceptive comments to the original article, emphasizing several major themes. We wish to highlight three specific responses.
The Blogging Meritocracy. At the Daily Options Report Adam Warner points out that writing as a journalist does not provide any assurance of additional insight, and maybe not greater accuracy. He writes, in part, as follows:
This whole "journalists are great and truthful and credible" and bloggers are "dangerous" is really just generalized blather. A better approach is to look at both as a meritocracy. Some journalists do great work and are always worth a read or a listen. Some are not. Same with bloggers. They need to earn your trust. But if they have passed that hurdle, there's no particular reason a blogger is less qualified than some certified mainstream reporter.
This is an excellent point. We read Adam's work precisely because we cannot find anything like it in the MSM. Regular journalists either lack his experience, especially with options, or are unwilling to engage crucial issues in a specific (and entertaining) fashion. It is no coincidence that this involves a fair-minded analysis of the actual arguments and recommendations of others. Readers should check out the entire article.
The Journalism Credential. Commenter Zach, responding to our original article, brings a unique perspective -- that of a journalist who is sophisticated in evaluating the current crop of blogs. Zach points out that journalists have biases, as do bloggers. He makes good distinctions between regular articles and similar entries disguised as blogs. Importantly, he points out that when journalists work faster, fact-checking is not as careful. Like Adam Warner, Zach is willing to name names, discussing the specific work of Jim Jubak as an example. Like us, Zach enjoys reading Jubak's work, but he points out some risks for individual investors. (We hope that Zach will send us an email. Perhaps he will further elaborate some of these themes, although the original comment does a very nice job.)
The Individual Responsibility. The Learning Curve, places responsibility on the reader to understand the source and to read critically. Muckdog always cuts to the chase, highlighting key issues in a sensible and readily understood fashion. He writes as follows:
My thoughts on financial blogs? Info-tainment. I believe everyone has to find their own way through the financial maze. I don't think anyone is going to get rich following hot stock tips from a blog. I tend to read blogs that are more general and high-level. How I apply (or don't apply) those concepts or thoughts depends on my interpretation and style. And if the blog throws in some humor and wit, it quickly becomes a favorite.
All three of our example commenters place responsibility on the reader. We agree, especially with the comments warning against looking for "hot tips." But there is a problem.
It is fine to admonish readers to "do their homework", but is this advice really practical? Most readers lack the time and skills to do their own fact checking. They lack the methodological training to evaluate research studies and economic analysis. They are easily swayed by the optical illusion of deceptively crafted charts and analogies to some carefully selected past time period.
Collectively, the financial blogging community should help in this process. Authors should make clear their credentials, even if remaining anonymous. They should assist readers in determining how their expertise relates to the subject at hand.
It should also be the role of some financial blogs to help the reader with the task of critical thinking and analysis. This means that bloggers must be willing to engage one another in an honorable fashion. It is easier for a thoughtful reader to spot potential biases in the open light of fair debate than if left completely to his own devices.