GuruWatch

Having seen Tom Peters live, I had to laugh while reading a recent USA Today interview with the management guru. Apparently, there’s been some brouhaha between Peters and Fast Company Magazine — who, at an earlier point in my life, I thought were almost one and the same.

The magazine quoted Peters as saying he had falsified some background information for his magnum opus, In Search of Excellence.

Q: In 2001, Fast Companymagazine quoted you saying that you had falsified the underlying data for Excellence. You said you were a victim of an aggressive headline. What is the truth?

A: They were trying to sell magazines. The thing I will admit to is that, depending on how you tweak the financials, you can get different answers. Is the surge (in Iraq) working or not? You can make an ironclad case that it is and that it isn’t. We didn’t falsify in any shape or form, but you can choose to analyze data differently. If one is not grown up enough to realize that, it’s a sad state of affairs.

In other words, you can play around with numbers all you want to get whatever result fits your agenda. Bullshit: the hallmark of a successful guru.

Golbguru from Money, Matter and More Musings wonders if David Bach’s math is misleading. The author’s simplification of leverage glosses over the finer points, and Golbguru explains how Bach ignores payments on the mortgage one must make. this should be considered part of the cost of investment if you’re talking about a property in which you live. If you’re renting the property to tenants, that cost can be offset by rental income.

A quick calculation using a generic mortgage calculator shows that by the end of five years, a $200,000 mortgage (at a reasonable 6% rate of interest) would cost about $58,000 in interest alone (plus some amount of principal is paid back too … Shouldn’t such costs be taken into account before making claims about doubling money?

More problems with Bach’s logic:

What if you put down only $25,000 instead of $50,000? With his calculation that would give a 200% rate or return. For $10,000 down payment that would be a 500% rate of return. Man..isn’t buying a house really profitable?! At this rate, Bach could easily tell you that if you don’t put anything down you get $50,000 on a $0 investment…

The doubling money argument totally ignores any kind of interest rates (his logic is applicable only when you borrow money at 0% interest rate and don’t make any payments for five years… For someone who is trying to explain potential gains using leverage, this isn’t a good sign. Profitable financial leverage cannot be explained without explaining the difference between the rate imposed on borrowed money and the rate of return that you get when you invest the borrowed money.

Are these arguments legitimate? David Bach in this section of The Automatic Millionaire is trying to sell the idea of homeownership, which has paid off for many people in the last decade or so.

Leverage is a very important concept and is a way to achieve a better return on investment, but this applies best to properties purchased with the intent of leasing to tenants. When you’re making the mortgage payments and paying for home repairs, your property is cash-flow negative and should not be considered a wealth-building investment. You’re hoping that any value appreciation offsets your negative cash flow, which is a losing proposition.

Look, I may be the furthest you can get from a Suze Orman supporter. But all this talk in the financial blogsophere about Suze Orman being gay has got to stop! Grow up! There are more important financial decisions and learnings out there than lingering on this news development.

Which brings to mind this thought - “Who you choose to get financial advice from, should not be based on race, gender, or sexual preference, but through competence, if not through experience”. Being closed-minded about who can inspire you to make sound investment / financial decisions is simply being both ignorant and arrogant. Even myself who find Suze abrasive and annoying in her methodology can find time to acknowledge some of the good that she’s done. People, this isn’t grade school anymore!

Robert Kiyosaki, author of Rich Dad, Poor Dad, wrote a new column for Yahoo! Finance about the growing possibility of deflation. For the next couple of years, Kiyosaki recommends keeping debt ratios in check, keeping cash on hand, and owning some gold and silver.

I think it’s always a good idea to keep some of your wealth in liquid assets so if you are not semi-liquid you might want to reconsider.

The sign that deflation may become a concern? Debt. Lots and lots of national debt. Why did we borrow trillions, yes TRILLIONS, of dollars? War, tax cut refund checks, and more war. Economists say inflation is under control, but that according to Kiyosaki this should raise concerns about deflation.

I guess it’s time to duck and cover. Want to know more? Read the full article.

Dave Ramsey is a guru with a loyal throng of fans. Either you love him or you hate him. JLP from AllFinancialMatters made his opinion known, although his post didn’t say much. Any attack on Ramsey, no matter how brief, attracts vitriliolic comments from both lovers and haters. Here are a few of those comments.

• People who charge an arm and a leg for financial organization tools drive me nuts… So maybe you do have to spend money to save money, but why not go for something less extortionate?
• Seems like Ramsey is looking after his own “personal” finance.
• That stuff is pretty valuable information for people not knowing how to get out from under financial pressure.
• Not to sound like his biggest fan or anything but the stuff that you get is pretty good.
• it’s a rock-solid program that the most overwhelmed can understand. i give him kudos for making the tidal wave of personal finance a bite-by-bite program that affords those who don’t have the wherewithal to make something positive from their mess.
• Good call. Save your money and pay off your debt [rather than buy Ramsey’s products].

A Penny Saved is impressed with Ramsey’s book, and he is inspired:

[The book is] sound and isnt a get rich quick or eliminate your debt in 30 days kind of program. It’s a life long commitment to living a sound financial life. I’m fairly sure that we will have begun our own Total Money Makeover soon.

Now, Dave Ramsey often invokes God in his message. But one religious individual shows some of Ramsey’s reasoning conflicts with some biblical teachings. Ariah explains why he (she?) ditched Dave Ramsey (and once again, the cultists are back en force to eagerly defend. You’re better off ignoring most of the 100+ comments, but this is from Ariah’s post:

The thing that bothers me is the second half of the “live like no one else.” statement. The idea is that once you’ve paid off your debt and saved your money you can spend it on what you want to. Now most folks want to hear that and so they are happy to listen and hear what Dave has to say. I have trouble cause my Bible (and I’m pretty sure it’s the same one) seems to say we are to be sacrificial in our lives, regardless of how well we’ve saved, etc. And that we should be good stewards, and wise consumers no matter what income/debt we have.

Here is the piece of bad advice that Ramsey gave that set Ariah over the edge:

A lady called in yesterday with a question. It was quite simple, her husband and her are debt free. The question was which is better: their current minivan or trading it for an SUV of equal value?… Dave’s Response: This is a silly question that you should not fret over… She’s being a “tight-wad…”

Ariah explained that the difference lies in the better gas mileage of the current minivan, and the Bible requires its adherents to be wise stewards.

Suze Orman, a regular person of interest here on GuruWatch is at it again? At what you might ask? Even while her brash personality and personal financial advice is debatable, there are not many who will argue that she is a savvy business woman who knows how to market herself. You can even see that she clearly thought through the colors to be used on her latest book cover. In short, she definitely knows how to make money …. for herself at least!

Suze Orman has partnered with TD Ameritrade to offer brokerage account bonuses to women who read and follow Orman’s advice from her latest self-help book “Women & Money: Owning the Power to Control Your Destiny“. In the book, Orman outlines a simple five-step, the “Save Yourself Plan”, intended to help women find long-term financial security. TD Ameritrade is helping tp promote Orman’s book by offering a $100 bonus to clients who follow the Save Yourself Plan, open a new brokerage account during the month of March and make monthly direct deposits of $50 or more for one year.

Forgive my eternal cynicism. But the “save yourself plan”? I’m still undecided as to whether that name is meant to motivate women by instilling fear or to uplift their spirit.

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Cap from StopBuyingCrap.com is assembling a list of gurus he hates and a few he doesn’t hate. Check out what he has to say about Trump and Kiyosaki.

The real reason why Kiyosaki is on this list though, is because of his irresponsible recommendations and suggestions on achieving financial independence. Many other personal finance bloggers have frequently mention his ill-considered financial advice as a Yahoo Finance columnist, which mostly consist of the same advices mentioned above.

Read Cap’s full analysis of Donald Trump, Robert Kiyosaki, Dave Ramsey, and others.

GolbGuru from Money, Matter, and More Musings ran the numbers and pointed out a major flaw with Dave Ramsey’s Drive Free, Retire Rich philosophy.

Dave Ramsey says:

You want a brand new sports car that would normally cost you $475 a month. The car you are driving now is worth $1,500.

If you take that $475 and pay yourself instead of paying the dealer, you’ll have $4750 in just ten months. Add that to the $1,500 you can get for your current car, and you can pay cash for a used $6250 car. That’s a major upgrade in car in just 10 months-without owing the bank a dime!

But let’s keep going. If you kept saving at that rate, you’d have another $4750 in another ten months. Chances are, less than a year later, you could sell your $6250 car for about what you paid for it. This means that you can step up again-with-cash-into an excellent $11,000 used car just twenty months from today! Not Bad!

GolbGuru rebuts:

Yeah..not bad…but not feasible either! Especially, this part: “Chances are, less than a year later, you could sell your $6250 car for about what you paid for it.”

Check out GolbGuru’s numbers here.

Suze Orman will be speaking at The Bushnell in Hartford, Connecticut on Wednesday, January 24 at 7:30 pm. Tickets cost between $30 and $55 or you can pay a little more, $125, to be a VIP for the evening and meet Suze. The basic seats can be purchased online, but the VIP tickets must be purchased by calling the box office.

This speaking engagement is right in front of the February 27 release of Suze’s new book, Women & Money: Owning the Power to Control Your Destiny. After the release, Suze will be embarking on a book signing tour, so look for her soon in your town… if you’re interested.

Remember that comedy routine from Jeff Foxworthy? You know, the one that starts with “you know you’re a redneck if ….”? I’m not that creative to create an entire list, but we can certainly start one about so-called financial gurus and keep adding to it, right? Let’s jump right into it!

You know you’re a Guru if …
You have your own learning annex seminar. The learning annex boasts speaker line-ups such as Donald Trump, Rich Dad Robert Kiyosaki, Suze Orman, and yes Jim Cramer of CNBC’s Mad Money fame. In this video from this past weekend’s seminar, you’ll see Jim recommend 5 stocks. In classic guru fashion, this is how he announced his recommendations:

“We want to win and there are winnings to be had […] I need everyone in this audience to buy one share of these 5 stocks I’m about to mention. 1 share! 1 share will do it!”

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