Beware Agendas in Your Financial Reading

Figures don't lie, but liars sure to figure - and filter, and slant, and just about anything else you can think of.

Someone sent me a link to this article in the Wall Street Journal of all places. It purports to analyze foreclosure data and comes up with a radically different answer than anyone else because of how they manipulate - and in my opinion, mischaracterize - the data.

All too often I get emails like this one

Greetings Dan,

My name is DELETED, I work for a company named DELETED based DELETED. We help businesses with a variety of online marketing functions. Thank you for taking the time to read this email.

I came across your blog and thought that it would be complimentary to one of our client sites within the mortgage and real estate sector. I wanted to inquire to see if you would be open to linking to my client, who is a well known entity within the mortgage and real estate industry.

We are looking to sponsor a blog post on your site that would concern something related to the mortgage industry and be informative in nature. We would be happy to provide monetary compensation, as well as unique mortgage/real estate content that you can use on your website. Or, if you prefer, you can write the post.

We do require that a link to our client be contained within the text of the post. The link would not be explicit, but rather an on-topic term embedded within the text that would link to our client's website. Again, the content would be provided by either you or myself as I have an extensive background in the mortgage sector.

If it's not obvious to you by now, I don't do these kind of posts, but many website owners see absolutely nothing wrong with it. I accept advertising - I just don't permit it to be perceived as anything but paid advertising, Other websites see no problem with accepting advertising disguised as analysis. Guess which approach provides more revenue, both to the advertiser and the medium they're paying.

"Shilling" as it is called, has roots going back at least a century, to hucksters who would pay someone to slip into the crowd and help them generate sales by pretending to be an ordinary member of that crowd. Given the nature of humanity, it probably goes back to Og the Caveman paying Ug the Caveman three dead rabbits to pretend that Og's hunting spears really would do a better job of killing everything from saber-tooth tigers to the tribal bully. It works better - and Ug gets more money - if Ug is known as a mighty hunter or a maker of hunting spears in his own right.

It is not, however, disinterested analysis. It is a sales pitch disguised as disinterested analysis. It dismays me that people don't understand that the internet has no filters on this practice, indeed, no quality controls of any sort more advanced than the owner of a particular website chooses to install. Every so often, I get a series of reminders that many people aren't nearly as skeptical as they should be.

A very few websites are like Consumer Reports, and accept no advertising of any kind, even paying full retail price for all the products they test. You can tell them (or at least it might be one of them) because it costs money to get their full unexpurgated reports. Others are at the other end of the spectrum, and will sell anything for a price while pretending to be disinterested analysts. I try to be more towards the Consumer Reports end of the spectrum - I accept but don't pursue advertising, I do not permit it to be perceived as anything other than advertising (and therefore, I don't get much of it), and any personal motivations I may have to shade the results of my analysis are right out there where everyone can see them. I also try to put numbers out where you can grab a calculator or spreadsheet and determine if I'm telling the truth and making valid calculations for yourself. It is for the reader to decide how successful and credible I am at my goal, which is educating consumers to the point where they can make intelligent well reasoned choices grounded in fact, while in the process generating enough personal clients who like the way I think to feed myself and my family at my chosen profession.

A shill has nothing in common with Consumer Reports, and nothing in common with my goals, beyond the desire to successfully make a living. Even Consumer Reports staff have a goal of feeding their families, although Consumer Reports is itself non-profit. If nobody was willing to pay for their tests, however, they couldn't keep their doors open very long. If nobody is willing to pay for my expertise and analysis, I have to find something else to do. What the internet shill is selling, however, is eyeballs and the illusion of credibility, not disinterested analysis.

I should also mention that whereas Consumer Reports' expertise is broad, it is not deep. I think they really do the best they are equipped for, but I have read the best they have to offer on the subject of real estate and mortgages. I read it it before I bought my first property, and recently went back when trimming my library (and as far as I can tell, they haven't improved their offerings on the subject since my first reading). The best I can say about it now is the same as then: occasionally mildly informative. If I had relied upon that rather than being able to fall back on a fair body of knowledge I already had, I would likely have done significantly less well than I did, which still had significant shortcomings. When it comes to real estate and loans, they just don't have the time or ability to educate themselves about the minimum necessary range of subjects to the necessary depth. These concepts of limits of knowledge apply to me, and to every other website and author out there. Sometimes we're just out of our depth or beyond our competence - and we may not always realize it. This is one reason why I don't write short articles, especially not when I'm straying outside the core subjects where I believe I've built some expertise and credibility of knowledge to an informed observer - I believe it's incumbent upon me to put the full argument out there, including assumptions, background, etcetera - so the reader can make an informed judgement as to whether or not I've got a real point. The reader can still kneejerk, but they're harming only themselves if the argument is valid. They can also argue the other way or some alternative viewpoint - that's the whole point of enabling comments, which I don't censor except for profanity and obvious spam - although I should note that you only have the evidence of what comments I have allowed, supported by my word for that.

And that's precisely my point - you have only the word of the author of any particular article you may find anywhere on the internet. It may be good, it may not. I try damned hard to make my analysis accurate and truthful and admit its assumptions, limitations, and exceptions. Sometimes I even discuss counter-arguments when I can or believe they are particularly important. But with the best intentions in the world, I can make mistakes. It is you the reader who have to make the final determination, in your own mind, as to how reliable what I say is and how useful it is to you. That takes evaluating evidence, and cross-checking with other sources and testing any points of disagreement with known facts to determine how well I have done and which of us is correct - if any of us is. If you were only buying a toaster, I doubt it would be worth the effort. But when you're talking about real-estate, mortgage, or the amounts involved in any kind of serious financial planning, the effort is damned well worth the payoff.

Caveat Emptor

Article updated here