Watch CBSN Live

7 Habits of Highly Effective Financial Gurus

Sure, I know that financial experts consistently fail to pick winning stocks or time the market or long-term interest rates. And sure, I'm well aware that I don't possess any predictive skill that makes me better than those claiming to be gurus. But that doesn't mean I haven't entertained a fantasy or two of being one of the famous stock pickers you see on CNBC.

Though it might sound immodest, if I were to become a financial guru, I'd be the best. Why? Because I've studied the best, and from my observations have compiled a list of the seven things that would make me one of the most sought after financial geniuses.

Here's how I would pull ahead of the guru pack and render talking heads, like Mad Money's Jim Cramer, yesterday's news. Perhaps your guru is using some or all of these techniques to get you to believe he is smarter than the market

#1 Come across very sure of myself
Unlike the poor weather forecasters and sportscasters who have to answer for their picks almost immediately, I'll have the luxury of making my forecasts knowing that no one will remember what I actually said, and that there are no organizations that track my picks. Without accountability, I can afford to be cocky. And I'll be sure to not do anything stupid like appear on Jon Stewart's show.

Note: image from
Turn the page to see how I would forecast.

#2 Give numbers and dates, but never both at the same time

I call this the "It Could Happen" technique, where I can say anything is under or over valued as long as I don't make the critical error of straying into the specific. You'll never catch me saying the Dow will hit 15,000 by the end of this year. I'll be vague with a capital "V" so that even the rare person tracking my brilliant predictions won't be able to prove me wrong.

Note: image from
Turn the page to see my bragging technique.

#3 Brag about my winners
Also called the "Pay No Attention to the Man Behind the Curtain" technique, where I trumpet my winners to the rooftops and sweep my losers under the nearest carpet. Statistically, if I make enough picks, some will have to be right.

Note: image from
Turn the page to see my emotional appeal.

#4 Appeal to my follower's emotions
This is the "Trust Me" technique, and is one of my favorites. Dripping with sincerity, I will convince my viewers that I always put my investors' interests first. And I'll do that not only because it's really easy to say, but also because it will inspire trust in my selfless advice. I mean, how can you not trust somebody who claims to put your interests first? For maximum trust, maybe I'll even go by the name "Honest Al."
Behavioral finance shows that we are hard-wired to make the wrong decisions, so I'll pander to those emotions with assurances that I'll know when to get in or out of the market or individual stocks. I'll promise both outstanding performance and lower risk; even though I know I'll deliver just the opposite.

Note: image from
Turn the page to see my can't miss forecasting technique.

#5 Forecast the past
Forecasting is really hard - especially when you are talking about the future. To make it easier, I'll forecast the past.

Can't be a guru without the "Monday Morning Quarterback" technique. Like technique #4, I will appeal to that in people which causes us to be drawn to winners and avoid losers, such as running toward an up market and away from a down market. Fear and Greed are powerful motivators, and I'll play on both. I'll urge people to buy stocks after they have gone up and sell after they have gone down. Further, I'll explain why they performed as they have and extrapolate into the future, even though it doesn't actually work. Sure I know that this means I'll be systematically recommending buying high and selling low, but I'll look brilliant!

Note: image from,
Turn the page to see my market besting performance.

#6 Tell my followers I'm beating the market
Everyone claims they are beating the market so I'll have to say the same. Not a problem, it's not like I'm a mutual fund that has to report the sad facts. I'll just take a little creative license with the data and present some misleading evidence, such as comparing my results to the wrong index, unadjusted for dividends, of course. I'm counting on people believing what they want to believe.

Note: image from

Turn the page to see what I'd call myself.

#7 Call myself a "Contrarian"
Being a contrarian is in. No matter what I predict, I can put a spin on it to make me look even more contrarian than all the other contrarians.

I'll have a staff comprised of one chimp proficient at throwing darts at the financial pages, and another at flipping coins. Research has shown they are actually better than the pros because they are not impacted by human emotion.

Note: image from
Turn the page to see the new exciting Allan Roth celebrity!

Allan Roth - Stock Guru of Gurus
I can already picture myself sharing financial wisdom on all of the television networks, and perhaps my own reality show. I'll be stranger than Cramer, though I'll call it innovative, and translate investment advice from my pet dolphin by using bionic ears since dolphin chatter is at a different frequency, of course.

It's not really exploitation to take investors' money as long as I make them feel really good about it.

Back to Reality!
Though this fantasy has been really fun, I have to face the fact that I'll never be on TV showing people how to get rich quick. That's because what actually works isn't all that exciting. My goal in real life of never being confused with Cramer is safe.

Whether your financial guru is on television or is managing your money, take a look as to whether he is employing some of these same habits. They are often meant to separate you from your money.

Note: I first wrote a version of this piece in the Colorado Springs Business Journal.

More on MoneyWatch
In Defense of Cramer - Why We Need CNBC's Mad Money
The Great Depression Ahead? Don't Be Too Sure
Are You Logical? Answer These 5 Questions to Find Out
Are You an Investor or a Moth?
View CBS News In
CBS News App Open
Chrome Safari Continue