Adams has devised his own 150-word basic financial plan for most people, which includes sensible advice like “buy a house if you want to live in a house and can afford one” and “keep six months of expenses in a money-market fund.” In his post about investment advice, he says that it’s fine to consult an investment advisor, as long as you don’t take their advice seriously.
The reason it is legal to open a palm reading shop is that the public understands it to be entertainment and not prediction. Investment advice should be the same situation: You can buy investment advice if you want it, but not until you sign a document acknowledging that science says no one has magical stock-picking skills.
You can argue the merits of what Adams says, and his readers do in the post’s comments, but Marketwatch decided on a different tactic. Reporter Priya Anand consulted both a palm reader and an investment adviser, asking the same questions and providing them with the same information. (Well, the investment adviser didn’t check the lines on her palm, but he could have.)
The market’s future: The palm reader psychically sensed that the stock market in general is not about to crash, so that’s good. The adviser said that market “corrections” are inevitable, but since the reporter is young, she shouldn’t care what will happen in the stock market in the short term anyway.
How to invest: The adviser recommended index funds rather than picking individual stocks. The palm reader told Anand that her palm lines indicate that she isn’t good at taking advice, so she should pick her own stocks.
Both professionals counseled Anand to save about 15% to 20% of her money, but the palm reader went for a lower amount because she could tell from her palm that her client was going to have children in the future who would take care of her. Now, that’s a service that an investment adviser can’t provide.