Let’s say you’ve quit your job to be a financial blogger, more specifically, a blogger that mainly writes about how to make money in stocks. Or maybe you’re planning on quitting your job to be an investing blogger. Please reconsider! With a 15%+ correction in the Dow Jones within three days, things are looking dicey.
We’ve seen a proliferation of stock market bloggers who’ve never worked in the industry and who’ve only seen an up market since they started within the past five years, give advice to thousands of readers. Some might not even have any formal college education. This is a very precarious situation for readers and blogger alike.
If you are an investing blogger, you’re going to face difficult times if you don’t diversify your content because people will just stop visiting your site if all you’re talking about is your latest stock purchase that is going down. When you’re losing money in the stock market, the last thing people want to do is talk about the stock market!
Further, a lot of people start wondering whether investing with a robo advisor is safe. Everybody starts to doubt everything when they are losing money!
DISCUSSION WITH AN INVESTING BLOGGER
An investing blogger reached out to me with some confessions and concerns. He quit his job to blog full-time last year. Here’s a summary of what he said.
Sam, I’ve run out of things to write about. Every month I highlight my portfolio’s performance, and finally, I’m no longer able to mask the poor performance with savings contributions. Even if my portfolio was down or underperforming, I’d be able to contribute $3,000 – $6,000 to the portfolio to make it seem that I was still doing a good job. My readers are pretty unsophisticated, so they don’t realize what I’m doing.
With this latest stock market correction, I’m finally going to see red because my portfolio is down more than $6,000! I’m tempted to just lie and say that I was up again since they don’t know how much I really have. I just show them what I want them to think I have with my final total portfolio value in my post. But if this stock market correction continues, I’m afraid I’m going to lose a lot of credibility.
I’ve never worked a finance related job in my life. I also don’t have anything to show for my wealth because I screwed up in my 20s and spent all I had. I never even finished college. The way I’m making money is to teach other people how to build a dividend portfolio. But the dividends from my own dividend portfolio can’t even cover a third of my annual living expenses. It’s the advertising revenue I get from writing about investing that pays the bills.
I’m even teaching people how to day trade. You and I know that day trading is a zero sum game, and most people lose a lot of money. But, I can’t pull back now and tell everybody “just kidding” about day trading and following my investment advice right? My readers would find that fishy.
I’m really at a loss if the market continues to go down. Maybe I shouldn’t have quit my job.
There’s a saying by Warren Buffet that you only know who’s swimming naked when the tide goes out. If there is sustained volatility or downward movement in the stock market, a lot of investing-related blogs will disappear. No longer will whatever they say be taken as gospel. Readers will start to scrutinize what is actually being written.
We all know that most blogs don’t last over a year. But if you’re depending on your blog revenue to survive, then you better last for as long as possible.
RECOMMENDATION FOR SURVIVAL
In a bull market, it’s hard to do wrong. Whatever you buy will probably go up over the year, making you look like a hero. But once the hemorrhaging begins, you better at least outperform the market on the way down, or else what good are you? Teaching people how to just be frugal gets old after a while.
Recommendation For The Investing Blogger
The #1 thing you must do as a blogger is build a comprehensive portfolio of investing articles that go beyond just the stock market or individual stocks. Look to expand into real estate, entrepreneurship, fixed income, peer-to-peer lending, venture debt, structured notes, and alternative investments in order to demonstrate your investing repertoire. FLEX YOUR KNOWLEDGE MUSCLES so that your readers know you aren’t so one dimensional.
Talking about the next blue chip dividend stock everybody has heard of is not going to get anybody excited as the markets collapse. Instead, consider writing about the end game of investing, which is to have a better retirement and a better life overall. Build the community beyond just the basic money making opportunities.
With a diversified portfolio of investing related content, you not only showcase your range of investing knowledge, you also diversify your content to attract different types of readers from search engines. It’s always Yin Yang in the investing world. If some asset is going down, another asset is going up. Find that diversity. If you don’t have the skills to write about new investment opportunities, hire a freelancer who knows what s/he is talking about if you have to.
The next thing you should do is be honest about your experience. “Hang a lantern on it,” as they say. If you don’t have a large portfolio, say so. If you don’t have any professional investing related experience, talk about it. BE YOUR HARSHEST CRITIC so that nothing someone else says hasn’t been said by you already.
The more upfront you can be with your readers, the stronger the likelihood they won’t desert you if the markets turn sour.
Recommendation For The Investing Blog Reader
If you’re a reader of a financial blog, question everything because your money is at stake. Question whether the writer has the experience. Ask how their portfolio did before and after the financial crisis in 2009. Have they been through many cycles, or did they start investing in 2010?
Ask them what platform they are using to make trades and how much are the spending on each trade. If they are buying a new $1,000 position but spending $10 on a trade, that’s just nuts. Hopefully they’ll show you how to build a portfolio of stocks for cheap. Do they actually share screenshots of the actual amount they have? When the market is down 5% for the month, do they still claim to be up?
There is a lot of hokey pokey stuff going on in the investing space. Everybody likes to talk about their winners, but never their losers. It’s human nature. I saw this with individuals, and institutional fund managers during my time on Wall Street. Learn to think for yourself.
A lot of professional bloggers make money through products they recommend, including myself. Make sure they disclose in their About page, or in their Disclaimer about their financial relationships. Furthermore, find out whether they are an Authority Affiliate who knows the company, uses the product, and has even worked with management before. If there is no depth in their product reviews or product mentions, then you need to be wary.
A NOTE TO ALL BLOGGERS
Everybody should consider writing articles that may be of interest to readers in a sustained downturn. You’ll be able to build an authentic community who will stick things out with you when things finally recover. Readers have long memories, even though most don’t spend a penny on your content. They’ll remember the times you helped them through a difficult financial period and be your evangelist forever.
Updated for 2017. We’re 8 years into a bull market. Make sure you are properly diversified with your investments.
The stock market correction is going to definitely expose a lot of these one dimensional investing bloggers. A lot of their followers will get scared and flee, just like their investments.
The majority of Americans really have no idea about investing. Seeing investing bloggers pop to teach others when all they’ve had was a bull market is scary.
I like how the investing blogger was afraid of losing credibility yet was extremely tempted to “just lie” and make numbers up to pad his portfolio. I am not sure he understands the meaning of the word “credibility.”
I guess that is the risk of running a narrowly focused blog whose main subject matter is exposed to such volatility. As with investing and other things in life, diversification (in this case diversification of blog topics) is generally a good thing.
That’s the beauty of the internet. We can all say whatever we want as it’s our site. But eventually, stuff catches up to us based on the quality of our content.
Diversify those articles!
Active investing just seems so stressful to me. I’m glad I’ve gone the passive indexing route. I just started a personal finance blog so I’m no expert, but I think the best blogs focus more on the reader rather than whatever the blogger is up to. It’s good to be personal, but if too many posts are “status updates”, it can be nauseating.
Ah yes, you feel the nausea as well. But, readers do love voyeurism. The real test is the August portfolio/net worth updates. If a blogger is saying s/he still is up after a 10-15% correction, you’ve got to start wondering.
There’s definitely the likelihood that a downturn will squeeze many bloggers out. Even good times do. Blogging takes a lot of discipline and most people wear out over time if their heart isn’t into it, if they aren’t able to develop a readership base, or if their priorities change.
Volatility freaks a lot of people out and it makes sense for an investing blogger to adjust their content during market corrections. Diversity is a wise choice.
In the military, we call this smoking the enemy out. If there are charlatans out there who are teaching people how to make money in the stock market with no credentials, then they must be put down. There are too many clueless people in American who just follow people off a financial cliff!
The blogger you quote doesn’t seem to have much respect for his readers.
He does. Readers love him, as they are just like him. He’s been doing good so far with his portfolio and so have his readers b/c the market has just been going up until recently.
But like all bloggers, we suffer a certain amount of insecurity that one day this good thing might disappear. Hence, the importance of content diversity.
There’s certainly lots of smoke and mirrors out there! Thanks for highlighting.
Interesting article and I agree so many things you have mentioned. People should start seeing a correction as an opportunity rather than a signal to flee the market.
It is necessary for bloggers to take charge of situations around them by writing unique and relevant content.
These content will over time, build your authority and show that you’re the real deal so long as your readers believe in you.