I am just about ready to go on a crusade against Carmen Wong Ulrich of CNBC’s On The Money.  Her show last night was criminal in the bad advice it shoveled out to listeners.  I am not going to link there because you SHOULD NOT WATCH THIS SHOW (that is if you can tolerate her nails-on-blackboard voice for more than ten minutes).  If you have been listening to her since September, she has NEVER told her viewers how to be defensive in this market.

It’s truly hilarious, if it weren’t so sad: She starts out saying “We’ve lost 20% this year, and a decade’s worth of gains.”  So what’s their advice?  Keep putting money into the market!!

If you have stock mutual funds in your investment account and have been listening to her since September and taken her advice to stay in the market and continue to invest, YOUR 401(K) IS DOWN AN ADDITIONAL 25% OR MORE.    I already have a problem with investing in 401(K) products, they are not designed for people who don’t know what they are doing, and can be very dangerous – as so many are unfortunately finding out right now.

If you had done the OPPOSITE of what she said, and got your money out of stock mutual funds, and instead put your money into “conservative” investments – government bonds for example – you would be up anywhere from 1% to 5%.  You would effectively be up 30% because YOU DIDN’T LOSE that 25% and in fact MADE money!

Which position would you rather be in?  Why are you listening to this person?

Remember – she works for CNBC.  This is the channel that continually trumpets the market bottoms; ask “when is the market going to turn”; trying to convince people that it’s a “good time to buy” and the market is “on sale”.   Jon Stewart put it perfectly. You should really really watch that video.  Then shut off the tee vee.

Her show’s “experts” talked about long term investing, putting aside what can wait for long term gains, and saving what you need short term.  They describe how to take into stride the bear and bull markets.  Except for one thing:  This is far different than typical swings in the marketplace. This is not just a “bear” market.  This is a RECESSION, and it could become a DEPRESSION.  None of these so-called “advisors” are telling you how to invest in a depression…  because they don’t know!

If you listen to Wong Ulrich, and follow her advice, you are selling out your investments to the professionals.  When the market goes down, someone has to buy when someone sells.  When professionals sell, can you guess who is still buying at these prices?  And who is continuing to buy on the way down?  That’s right, it’s YOU – you are financing the exodus from the market by the professionals.

If you are trying to figure out what to do with the mutual funds in your 401(K), if you are watching your investment account shrivel up and die, Wong Ulrich is a PERFECT example of what is wrong with the talking heads on television who supposedly are “helping” you figure out whether to get out of mutual funds.

I wish I could contact the poor souls who called in to her show yesterday.  There were two in particular:  J who is only 29 and S who is 44.  I hope to God they did NOT take her advice (and WHY the hell are they calling her in the first place to learn what to do!!????).

J at 29 had moved his money into a conservative account until things get better.  He is taking the 3% he can get there, and waiting for the market to get better.  The “expert” she had on her show, “K.T.”, another advice catastrophe, told J that “You’re too young to be in a guaranteed account” – What the hell does that mean?  That he should lose money because he’s “young”?  That he can’t move his money in a year when the market looks up?  That he needs to lose even more money so he can be there when it starts to move up?

I’ll ask again what I ALWAYS ask – Why should you lose more money, for another year? Two? Three?  Why not SAVE what you have now?  There is this amazing buy-and-hold myth that the investments in your 401(K) shouldn’t be touched. Why?  If that were the case, they would prevent people from ever reallocating.   But you can make changes for a reason – to save your money!

J had it right:  He has reallocated his investment into something that is making money!  I hope he IGNORES HER ADVICE, and the advice of her fellow idiot, K.T.

K.T. should be thrown in jail as a danger to anyone trying to save what tattered investment accounts they still have left.   His firm is touted by Barron’s Magazine.  So. What.  Listen to the “advice” he gives to J:  “OK, so you’re losing money but do you want security today, or security tomorrow?”   What he’s telling this poor guy to accept is NO security today, and LESS security tomorrow!  That’s his professional advice!!  These people should be kicked off tee vee as dangers to the public!  He says: “The last day of the bear market is the first day of the bull market.”  Pithy, but what the hell does it mean?  Good thing he has little pithy things to say as you continue to lose your hard earned money.  Carmen responds:  ” And you want to be there when it turns!”  Well what would stop you from moving your money into the stock market when it truly has turned?   Nothing, actually, other than feeling confident that it’s time to move into stocks – and not still uncertain because you’ve been burned by talking heads who  know nothing about how you should really invest, choosing instead to spout “conventional” – meaning wrong – advice.

How about security today AND security tomorrow? How about protecting your investments, your hard work, your sacrifice?

Funny, Wong never asks her guest, “How much cash is YOUR company holding right now?  What percentage of your accounts are in LONG stocks? and what are your 12-month and YTD returns?”  Hmmm??

This rant is WAY longer than one post.  Stay tuned to hear the dangerous advice she gave S, a 44 year old man who’s lost 40% of his account already…

And I’ll explain what options you have, to help you keep your money safe. Sort of.

Update: Due to pressure from the guest on the show, we’ve changed his initials. The advice still stinks. Read this post about Self-Directed Discount Brokers, and click the link to Why I Fired My Broker from the Washington Post. Remember – just because we are in another bubble, does not mean this advice is sound, solid, and reliable for the long term. We are still off 20-30% from the highs of 2007. Many other experts believe we are in another bubble that is going to burst eventually. Use your judgment. Learn exactly WHY the stock market is up since March (i.e., the banks have been infused with your tax dollars, the S&P is overweight with financials, etc.). Learn, and determine for yourself whether this is sustainable, and where your money is safest – don’t rely on “conventional wisdom” and “buy and hold”, including the posts on this site. Don’t throw away a percentage of your return potential by spending it on “experts”, paying fees and charges that are unnecessary. Do your own trading in a self-directed account, otherwise don’t expect to win in the markets, they are stacked against the small so-called “investor” who doesn’t want to know anything about the market but expects to be rich in 20 years. Too many people have already learned the hard way that this doesn’t work – don’t be one of them.

I can’t believe I’m still hearing it:  Someone on CNBC just this morning said, Oh, don’t take your money out now, you’ve lost too much!!  Yeah, great, wait for Dow 5000.  There are still plenty of financial experts saying that’s possible before it’s all over.

Guess what? The tee vee “experts” were saying that in November ’08 too, so if you listened - to CNN or CNBC or FOX or XYZ  - tell me, where are you now?

I’ll say it again: in a volatile market, why not get out of mutual funds, at least with part of your money, and put it somewhere you can make a little, and wait for things to turn? I would rather make 2% in a savings account for a year than lose another 10% in a stock fund.

Some ideas:

- For investment accounts: Get out of the dang index funds – they include too many companies that are at risk.  If you aren’t willing to learn to invest stock so that you can confidently buy individual stocks or ETFs, then put your money in a CD.   If your financial adviser is still losing you money, don’t be afraid to move your account.  Anyone advising you to stay put is going to lose you more money.  IMHO.

- For a retirement account: If you get a company  match, meet it with your 401(K) contributions, but NO MORE.  Then take that money and invest in insured money market funds or “inflation fighter” funds – avoid the index funds!  They are for later, probably not this year, but maybe next, not until you are confident the market is again moving in the right direction.

- If you have a 401(K) right now, you are likely down 30-40%.  But don’t take it all out of your retirement account – you’ll get slammed yet again with fees and penalties.  Reallocate within your 401k to whatever funds are closest to cash, Treasuries or A rated bonds – ask your plan administrator.  (NOTE:  This is not 100% safe either however in a credit freeze.)

- If you lose or leave your job, immediatly switch your retirement account to a 401k rollover – as well as funds you haven’t rolled over from previous jobs – roll them into self directed IRA accounts, using a discount brokerage.  DO NOT ROLL OVER TO YOUR NEW COMPANY – or your investment options will be severely limited to mostly stock index funds!  In a self-directed fund, you can invest in ETFs for commodities, metals, shorts, and a wide variety of other funds. We like Scottrade as well as TradeKing for to discount brokers.  (Not affiliate links! We just like them!)

- For non investment money, get your hands on as much cash as you can, and put it into an insured money  market fund. Hold off doing anything until you (1) spend time to learn to invest stock so that “what to do” is not a crap shoot, (2) understand why your 401K was so risky to begin with, and (3) find good ideas about where to look for solid returns, including experts who have a track record you can believe.

Now you’ll have to start to learn to invest money.  There are places to make money, maybe not in a 401k but if you also open a Roth IRA or other account, you can make up for that outside your job. And if you get laid off, you can roll the money into your self-directed account.

There are places to be making money now, but you have to feel comfortable you know what you’re doing, and be comfortable with a degree of risk that we haven’t been trained to accept. But the rewards in this market, and for the next few years, will only come with more risks.  If you aren’t comfortable with that, then you need to stay safe in cash or similar vehicles.

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Right now, you want to be in CASH. Saving cash, stashing cash.  i’ve moved my cash from a large national bank to a smaller, local bank with ZERO exposure to anything Wall Street and a higher reliability rating.  You can find out how your bank stacks up at Bankrate’s Safe & Sound Ratings. More bank closings are coming though, some say numbering in the hundreds.

Now that the FDIC is insuring deposits up to $250,000 (temporarily, through December 31, 2009), it’s feeling a little safer out there, but still – could the Feds handle a run on banks?  If you’re concerned about safety, keeping your cash in a savings account that pays .025% isn’t all that much better than keeping it under your mattress.  And who wants to be standing in line when they close the doors?

Some financial talking heads like Jim Cramer are saying keep anything you need for the next five years in CASH.  My suggestion is, keep anything you bring in in the next two years in cash too!  Unless you like gambling, what would be the point of putting your money into the market right now?  The market hasn’t hit bottom yet, and having cash when it does look like it’s finally pulling up is the best position to be in.

We’ll be posting ways to find as much cash as you can as fast as you can, by tweaking your budget, saving, and making more money.

• Calculating Your Bank’s Health