Last week the New York Times ran an installment of its Wealth Matters column entitled How Do I Know You’re Not Bernie Madoff? Literally, it’s an easy question to answer. (Because I’m not in prison.) But figuratively it’s an
important question for which everybody with money to invest should have an answer.
The column starts out with a brief interview with a private wealth manager with the impossibly appropriate name of Tony Guernsey. (A posh off-shore banking center?) And there’s a picture of the fellow. He looks exactly as Ralph Lauren would have him look: tortoise shell glasses, chalk stripe suit, and chin thoughtfully rested in right hand. In the foreground there is (I swear I’m not making this up) a small red flag.
Tony Guernsey has been in the wealth management business for four decades. But clients have started asking him a question that at first caught him off guard: How do I know I own what you tell me I own?
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One of several recurring sub-themes here at Bad Money Advice is that some givers of personal finance advice, particularly the mass market gurus, say things that can only be justified assuming an irrational audience incapable of acting in their own best interest.
So, for example, when Suze Orman tells her readers that they should absolutely never borrow from their 401k account to pay off a credit card balance, I give her a hard time for giving terrible advice based on the assumption that her audience has no willpower and will merely run up the credit card balance again.
But when I criticize the gurus for giving bad money advice that is, in fact, bad psychotherapy, I do not mean that everybody ought to be able to behave in a perfectly rational manner around money. Quite the opposite. We are all merely human, not uber-logical Vulcans. We act sub-optimally around money (and everything else) for a variety of emotional and behavioral reasons.
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It’s not turning car companies into government agencies that bothers me so much as turning the government into a car company. And not a car manufacturer, you understand. I mean a car dealer. The kind with the big lot on the edge of town covered in balloons and promoted incessantly by radio 
commercials with catchy jingles.
This trend kicked off in March when the president announced new car warranties backed by the government. That was on top of an assortment of other incentives then in place to get folks to come on down and kick the tires, such as a temporary deduction for state sales taxes and tax credits (a. k. a. rebates) for hybrids.
The latest gimmick under consideration by our national dealership is a version of the old "we’ll pay you $1000 for any trade" scheme. Working its way through Congress is a cash-for-clunkers promotion. Turn in any drivable car with mileage at least 10 MPG worse than what you are buying to replace it and Crazy Uncle Sam will pay you $4500. Hurry hurry hurry. At these prices these deals just won’t last.
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On Monday a guest post at I Will Teach You To Be Rich disclosed the secret formula to saving $71,000 in mortgage interest payments.
There are things I like about I Will Teach You To Be Rich. Ramit Sethi, its owner and usual author, is anti-Latte Factor and even more obsessed with 
Suze Orman than I am. And he’s often quite funny. But the blog also awfully gimmicky. And the scheme to save on your mortgage is a classic gimmick that’s been knocking around for years now and should probably just be put out to pasture already.
The very specific sounding $71,000 mentioned in the post’s title turns out to be an arbitrary estimate of what you could save in interest, assuming a particular rate and principal amount. The way you do this is through bi-weekly payments.
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One of the things I have learned writing this blog is that I have no power to predict which topics and posts are going to be popular. Sometimes I write what I think is an insightful and even controversial post and it gets five ho-hum comments and 
no links. Then I write what I think is a forgettable few paragraphs on a unimportant topic and next thing I know there are 30 impassioned comments and links to it all over the web.
My post last week on LifeLock’s legal woes fell into the surprisingly popular category. I thought it was a modestly interesting wrinkle on a rather unexciting topic. I didn’t understand what a hot button identity theft is for some, and what a great business it is for others.
Controversy and money is a combination I can’t stay away from, so I decided I needed to learn more about identity theft. It hasn’t been going that well. It seems the more I read the more confused the picture gets and even answers to some basic questions become more murky and ambiguous the more I dig.
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important question for which everybody with money to invest should have an answer.
Investing, Media | Frank Curmudgeon | 
June 16, 2009 12:01 pm | 
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