Expert Picks - Are You Trusting Them?

Tuesday night sealed the deal - the Boston Celtics have won their 17th NBA title. If you missed game 6, Boston put on an absolute clinic. They led from start to finish, out-rebounded the Lakers, out-played NBA MVP Kobe Bryant, and flat out out-hustled the Lakers. They put on a show leading by as many as 42 points, and finally winning by 39. They absolutely destroyed the Lakers. It was no contest. What does this have to do with personal finance?

ESPN, pretty well undisputed as the leader in sports coverage, generously offered 'Expert Picks' throughout the playoffs, allowing "experts" to way in as to who would win each series and how many games it would take them. During the playoffs, I would keep tabs on the various series and who was 'picked to win', but didn't keep track of who was wrong or right. As the finals began, I took notice of who ESPN's "experts" picked as the winner:

9 out of 10 picked the Lakers in the finals, two of which even had them disposing of the Celtics in 5 games. These were easily the top two teams in the league - Lakers #1 in offense, Celtics #1 in defense. I was really surprised to not see more of split. 60-40? 70-30? No. 90-10.

As we now know, 9 out of 10 experts were dead wrong. Mr. Legler was at least close in picking the C's in 7.

"Now this is all just fun and games, right?"
"The only way to make money off of this is gambling, which is dumb."

The second statement is correct. But this is more than just fun and games. This is their livelihood. These guys are professional journalists, some former pro players. Arguably, people who know basketball, and have their credibility and at least bragging rights on the line. 9 out of 10 were wrong.

So how do you make personal finance decisions? Are you trusting someone because they seem to know their stuff? This little exercise shows why it's dumb to take a hot stock tip, even from an "expert". It's dumb to do anything financially just because somebody said so, no matter how smart they seem. You'll always do much better by learning about the topic at hand, getting several opinions and perspectives, and making an educated decision yourself. Trusting your gut is a good idea too, It'll tell you when things don't feel right. Take the "expert's picks" with a grain of salt.


Twinsmom said...

Trust the experts? It depends on who the expert it! With your sports analogy, as a lifelong Ohio State Buckeye fan, I learned a long time ago to take everything with a grain of salt, and that holds true for financial advice too. If something just doesn't sit right, it's best to back off, think about why you have that feeling and investigate it some more. Especially with finance, each situation is so unique, you have to be sure you are doing what is right for YOU, not just doing what some "expert" says to do.

Blog Widget by LinkWithin