Wednesday, February 4, 2009

Financial Blogs: Can You Really Trust Them?

Many ordinary people run financial blogs. They are not investment firms, and may not always provide unbiased information. Consulting blogs can give investors the benefit of unbiased insights and experiences. After reading the, "Follow My Money" article (p.160 in the text), find an online financial blog, and summarize 2 issues they discussed. Analyze them for bias, and possible political party affliation. Cite your source or use the author's quote that demonstrates viewpoint.


  1. One of the financial blogs I looked at was's Apple 2.0. The issue that the blog posted was: Why are there so many iPhone games? Studies show that 32.4% of iPhone owners have downloaded at least one game, in comparison to the 3.8% of the average cell phone owner. One issue that this blog discussed, was the price of the iPhone games in comparison to other game systems. Other issues that were discussed were the quality of the iPhone games; the average of games available, and their sales. Apple is explaining that the games on the iPhone are the applications that are selling the best. This is the reason why there are so many of them for sale. Over twenty-two percent of the applications available from Apple, are games. Their demand and popularity has pushed Apple to develop and sell more game applications. Showing that the average person depends more on quality than quantity. The economy is already bad enough, yet people still feel the need to go and buy accessories for their electronics. Right now, Apple is making a bit of money compared to the other businesses, they launched the iPhone six months before the economic crisis hit the nation. The iPhone is still selling, not as it should be but, good enough to survive the recession. Quality is everything, in the business world. A consumer is more likely to purchase an expensive product if it looks nice, even if it does not last long. These days shoes can reach skyrocketing prices of over two hundred dollars, and yet people still buy them. This is not just about iPhone games, it is also about the fact that we as a nation, only care about the appearances of items. People choose to buy games for the iPhone because they feel that the graphics are better. “Combined with the sophisticated iPhone hardware platform, with hardware accelerated 3D graphics and a decently powerful CPU,” McLean writes, “Apple’s App Store games even give dedicated hand-held gaming devices a run for their money.” The iPhone is a combination of a cell phone, G.P.S, MP3 player, game system, camera, and a number of numerous items. The fact that an item can be useful for other things, causes the consumer to want to purchase the product. Products sell better if they can be used for other things other than the reason that they were purchased for. For Example, cars have come a long way, in the olden days, cars were just used for getting around. Now most cars have built in cup-holders, televisions, G.P.S. systems, and even blue-tooth technology which makes it possible to talk to someone, hands-free. Just by saying the persons name inside the car, the car connects you to the person you want to speak with and you can begin to talk to them. Mankind has gotten so lazy over the years, that we want everything in the palm of our hand. For example, instead of riding bikes, we drive cars; walking to change the channel on the television set can now be done without leaving your seat. The urge of America thriving now has led us to want more and more, soon there will be nothing left to desire.

  2. I am going to summarize two issues discussed in Russell Bailyn's Financial Blog. First, he discussed the student loan crisis. Russell is biased to the lenders of the student loans, according to the article. He makes the lenders in this article sound like enemies to society, like it's a crime to pay these lenders. However, I agree with him and his statement because our economy and money issue is at its prime and everybody is struggling with money nowadays. To me, when it comes to education, it gets expensive. Especially in college, where most of the students are on loans with a low paying job. Another issue that Russell discussed was Independent vs. Wire House brokers. Russell says that it's easier to ditch your big firm and go off on your own. It seems like he's a little biased to the big firms because Russell makes the private businesses sound so much better than the big firm type businesses. "Advisors can choose an independent firm which offers products and services that complement their style of doing business. They can also focus on getting clients at their own pace and in their own way. Granted many advisors leave big firms and take large books of business with them, but an advisory practice may change and evolve over the years. It’s a breath of fresh air for most advisors when they stop trying to climb the corporate latter and start running their own business."

  3. Great Job Justin1!! Good ideas and good analysis.

  4. The financial blog that I chose is I am going to summarize two issues talked about in this blog. The first issue that I found interesting was that Boeing saw a huge drop in jet orders which means that less planes will fly in the near future. I picked this issue because it is the icing on the cake of how bad our economy is doing right now. Air travel has decreased dramatically lately.

    "The figures are pretty staggering. In January, the company only received order for 18 jetliners. When you compare this with January of last year, when the company had orders for 65 of its planes, you see a year over year decline of 72%".- Michael Fowlkes

    This quote proves that we are losing business in every category except for grocery. It also does not appear that the flying industry is going to improve. This article was unbaised, it was straight up facts. Another issue that I would like to discuss is how Bloomberg L.P. is laying off workers for the first time ever. This just shows that even a company that never layed off workers is forcing to because of this horrible economy but as it states it was not suprising because they cut workers from the company's radio and BloomBerg's radio was not a very good business.

    "The cuts, 100 in total, were in the company's radio and TV operations. They are not surprising. Both Bloomberg TV and radio station WBBR have been poorly managed for years. Many of CNBC's biggest stars, including Dylan Ratigan, started their careers at Bloomberg TV. They no doubt went to the General Electric Co. (NYSE:GE)-owned network for bigger money and bigger audiences. The reorganization that the New York Times refers to may include the end of non-English language programming. It also means getting rid off high-priced talent".- Jonathan Berr

    This article shows a little baised because he works for the company and he showed a little emotion on the lay-offs. These two articles proved to me that the economy is so bad that they are laying off or not getting products in businesses that were successful in the past and had no problems before. Someone has to fix this economy because it looks like it is just getting worse even with Obama.


  5. I choose Mish’s Global Economic Trend Analysis. The first topic I choose was the –Unprecedented Crisis in US, UK, Australia, and Europe. It is explained that our bad economy is affecting the entire world, not just us. He also focused on how companies, like Freddie Mac are still asking for more money and how they have mismanaged money that even with another 13 billion dollars, they will be out of money.
    The lasted post had two graphs that show employment rates in this “recession” compared to the one in 1990 and 2001. The graphs show that our recession has lasted the longest with the most jobs lost. The post also focuses on Speaker of the House, Nancy Pelosi’s comments on why the stimulus package needs to be passed. The author concludes that throwing another $8oo billion will not change the state of the economy.
    “So far Congress has thrown over $1 trillion dollars at the problem to no avail. Another $800 billion is not going to do anything but waste another $800 billion. This was the largest credit boom in history, and it will be the largest bust, no matter what the "stimulus".”
    The author seems to be bias against the stimulus package. He believes that a stimulus will fix the crises right now, but will not fix the economy in the long run.

  6. This blog talk about housing problems and how the government should handle it.
    Testimony on the Housing and Financial Markets
    After testifying yesterday at the House Budget Committee on the state of the economy and fiscal stimulus, this morning I testified before the Senate Budget Committee on another key aspect of the current economic downturn–the ongoing crisis in the housing and financial markets.

    Policymakers have responded to the turmoil with a set of unprecedented actions. Thus far, a systemic collapse of the financial system has not occurred, and conditions have improved noticeably in some financial markets. Nevertheless, according to some analysts, U.S. banks and thrift institutions could be facing more than $450 billion in additional estimated losses on their assets—on top of the approximately $500 billion that has already been recognized. The scale of those losses suggests that many financial institutions and markets will remain deeply troubled for some time, which will keep borrowing exceptionally costly for many borrowers and thereby dampen spending by households and businesses.

    Challenging conditions seem likely to persist for some time in the housing and mortgage markets as well. Housing sales remain weak, and construction activity continues to decline. With the housing market’s large glut of vacant properties, the prices of homes are likely to fall considerably further, pushing the value of more borrowers’ homes below the value of their outstanding mortgages. As more of those “underwater” borrowers experience losses of income during the current recession, rates of delinquency and foreclosure on residential mortgage loans are likely to rise further.

    In short, turmoil in the financial markets is likely to continue for some time, even with vigorous policy actions (and especially without them). A crucial and challenging question for policymakers is, What further actions can be taken to normalize the financial and housing markets so as to spur economic activity?

    There are many options, none of them are perfect, and an effective policy probably requires a multifaceted approach that uses a range of tools to address the different aspects of financial distress. The costs to federal taxpayers of actions to reduce mortgage foreclosures and improve financial conditions are highly uncertain and may be large, but the economic consequences of doing nothing may be even greater.

    My written testimony (link here) provides information on interventions implemented by the government to date and alternative strategies going forward.

    To deal with the faltering financial system, analysts have proposed several, possibly complementary, strategies:

    One is to inject additional equity into institutions, perhaps by continuing the Capital Purchase Program under the TARP. This approach was widely supported by economists, often on the grounds that it would give the banking system the capacity to absorb losses and continue making loans without requiring the government to decide how much to pay for particular troubled assets. However, the extent of losses and the fog of uncertainty about which institutions have suffered the losses may mean that further broad-based equity injections are not the most cost-effective way to proceed now.
    Another strategy is to deal with the troubled assets directly. This could be accomplished by the government buying assets, guaranteeing assets, or subsidizing the separation of assets into so-called “good banks” and “bad banks.” This approach could clarify the true condition of institutions’ balance sheets by removing the difficult-to-value assets, and allow bank managers to focus their attention on new lending rather than old problems. However, this approach would require the government to set a price for the assets on guarantees.
    Yet another strategy is for the government to increase its own lending to households and businesses. This could include developing new programs or expanding existing ones such as the Fed’s commitments to buy certain mortgage-backed securities and consumer-loan-backed securities. The basic idea is to provide public credit until the financial system is sufficiently healed to provide enough private credit. - 8k

  7. I looked at "City Girl's Financial Blog," it caught my eye and I was interested in reading about her financial issues. Two issues City Girl discussed buying a car and renting a house. She put a lot of thought into what she was spending her money on. "I also applied for the 2.9% financing, since I can put the cash into a savings account paying 5% (In my finance class, I think this is called a risk-free arbitrage opportunity). The financing should be no problem, but I have heard horror stories of people driving the car off the lot and having their app rejected two weeks later, after they've spent hundreds of dollars on insurance, maintenance, third-party supplies, etc."
    While deciding to buy or rent a house. If you rent a house, you have more options and you aren't tied down to that purchase although if you buy a house you become a proud homeowner. She is putting a lot of thought into her decision and will be watching the market very carefully. "Home prices have finally come down a bit. For the first time in Realtor's history, the national median home price has posted an annual decline. Coupled with the news of more inventory and tightening lending practices, this trend is going to cause quite a bit of confusion and panic."


    The blog I followed was City Girl's, where she discusses many aspects of the financial world including the simple things from buying a new car to housing. Upon thinking of living in Atlanta, she ponders upon the idea of using student loans to pay off housing loans (mortgage), "There is something that's just not right about using debt to pay off debt." Its a crazy world we live in, loans are paying off other loans, but the problem is that our final product is the thing we're trying to get rid of, loans. "As a student, I'll have virtually no income", she says, which is true because she can't pay for a mortgage on a house if she doesn't have any collateral. City Girl, is real and thinks about the crisises and what the world really is before jumping head first into a mess she can't handle. Upon buying a new car, she approaches it realistically, "I plan to keep this car for the next two decades," she says, while justifying her mindset for paying for the hot commotity of a car. She can already for see the future, and how she's going to use this 'big-ticket' item, and that's what counts. If its for the long run, its a good investment, in my personal opinion. She appears to be fairly liberal, because she addresses incredelous issues such as charging for seat assignments and giving employers 30 day notice, but really I can't tell all that much. Her opinion is revelant throughout because it is her blog, and her opinion on her life.

  9. In my opinion, there is no way someone can trust any blogs in general. All blogs seem to be personal opinion just as this is my own. Sure some may be written by reliable or well known sources but depending on what you need to know from the blog, I think that the facts and opinions may be difficult to separate. The idea that investors use blogs to find out customer insights is a good idea but also I think polls or surveys may be more useful.

    In a blog I found called "City Girl's blog", she discusses the experience of buying a car. She talks about the cost, (being $18,355) and discusses her choice of paying $200 dollars more for a certain color. She also discusses the financing option she applied for, (2.9%) and stories of people buying and driving a car off the lot and later finding out they were rejected for their financing application.
    I think this blog is not very intellectual, seeing as she is more concerned over the color of her new, girly car, rather then the best option for her budget. I think this is definitely one of those blogs that investors do not use for feedback because she seems more concerned with appearance rather then efficiency and cost.

  10. I do not think you can fully trust any form of media 100%, including blogs. I believe if you really want to know how things are going, or what the status on the war in Iraq, you need to sit down and sift through all the biased reports and come to a conclusion of you own. On this particular site, people seem to just write about their own topics, rather than responding and commenting on other's blogs. In the blogs we read at, the blogs seemed fair and unbiased, but we noticed that the authors sometimes throw in a biased comment, hidden in the paragraph.

    In the newest blog titled, "IRS says it was ripped off by Stanford too," it may appear at first that the blog my be biased, but it actually provides evidence for the IRS's side of the story. There seems to be no political party affiliation in this blog either, which makes it look more reliable.

  11. When I first typed in “financial blog” into Google, the website “” was the first website that popped up. has several financial-related articles, ranging from “Does Your Business have a Continuity Plan?” to “Car Insurance Comparison: Know What to Compare”. A majority of the blogs have been written by Kevin Rose. These blogs do not appear to have any political party affiliation. The first blog talks about “A business continuity method allows for everyone in your business to know what to do when something goes wrong. You can have a plan that is specific for specific situations or ones that will cover any situation. For example, any situation in which you cannot work in your normal place of work would follow one plan.” In the blog about car insurance, Kevin Rose mentions “A bit of comparison shopping may just result in you finding the cheapest insurance you have ever had. Look at all of your options, consider what the insurance means to you and don't be afraid to ask for discounts.”