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Investment guru Sheldon Jacobs shares advice on covering the stock market

Sheldon Jacobs

Sheldon Jacobs knew he wouldn’t make it as a traditional business reporter, so he built a career providing expert investment advice to the general public. In 1974, he launched a monthly mutual-fund newsletter, The No-Load Fund Investor, and wrote his way to the top. 

Jacobs said there were several other publications specializing in no-loads when he started the newsletter, but outside competition didn’t stop him. He grew the venture into the top  financial newsletter for risk-adjusted performance in the United States for a 15 year span, which ended in June 2006.

Recently, Jacobs shifted his focus. He now strives to offer the most rewarding advice that will make a lifelong difference in his readers’ wealth. With this goal in mind, he published his 25th book, “Investing without Wall Street” in April.

We asked the investment guru to share advice for business journalists on how to more effectively cover the investment industry.

1) What stock market and investing stories are unreported by the media?

Clearly the most important omission is the lack of sell advice.  There is good reason for this. Any reader can buy but selling is mostly limited to the much smaller number of people who already own the security. Sell advice rare in print, and virtually non-existent in broadcast. Newsletters are the exception.

The media seldom covers itself. That’s a serious omission. I tried to remedy this in my book “Investing without Wall Street” since you can do this in a book where there is essentially no reader recourse such as letters to the editors’ columns. You would have a harder time doing it in a periodical where the publications you might want to write about are competitors.

Much of the media attempts to cater to a diverse group of readers. This makes it hard for them to offer specific advice for a single segment of the audience, but there are occasions when they should try. At the very least, explain who is the intended target for the information or advice.

Many reporters fail to make clear the special expertise of the person being interviewed. Many professionals promote themselves as generalists, but usually their expertise is much narrower. For example, some are expert at security selection; others at market timing, economics, or fundamental strategies. One thing you will find out is that the persons being interviewed will almost never respond to a question by saying, “I don’t know.” That’s because if these “experts” do, they often find themselves out of the story. Even worse, their opinions may never be solicited again. You, as a reporter, need to become skilled at knowing who doesn’t know and what they don’t know.

2) What experiences with investing and the stock market led you to write, “Investing without Wall Street”?

“Investing without Wall Street” is the culmination of my 40-year financial career. I wrote the first book ever on investing in no-load mutual funds in 1974. That led to a 25-year career as a newsletter editor and publisher. During the halcyon bull markets of the 1980s and 1990s investors focused mainly on reward; very little attention was paid to risk. While my newsletter was always on the conservative side compared to my competitors, I, like the rest of the media, necessarily catered to that growth seeking audience.

But we now have been in a secular bear market since 2000—and it may continue for many years.  Investors now need good advice on managing both risk and reward. “Investing without Wall Street” focuses on this new need.

With retirement, I recognized the need to simplify investing to the greatest extent possibly while still achieving above average returns. So I wrote “Investing without Wall Street” to show non-expert investors that they could succeed in the market without having to spend hours and hours of study. It is quite different from my previous writings

Larger version of 5 questions with logo3) What do you think an investment reporter should focus on while work the beat? 

News that is actionable. News that personally affects the reader.

4) How do you write about investing and the stock market in a way that is easily understood by the general public?

I write and rewrite each and every sentence several times. I then read aloud what I have written to make sure it sounds all right.

5) What resources should business reporters utilize to their enhance stock market coverage?

Uniquely, my book has two chapters on the media. I think the most important thing for all investors to do, whether they are reporters, laymen or investment professionals, is to be thoroughly conversant with the financial media.

I think newspapers are the most important medium to read because they are published daily making them the most timely. In many instances they actually cover investing more completely than targeted media published weekly or monthly. I recommend reporters read The Wall Street Journal, Barron’s and the Sunday and special reports of The New York Times. Among magazines I believe Money, Smart Money, Kiplinger’s and Forbes are must-reads. Bloomberg BusinessWeek and Fortune are also helpful. Also familiarize yourself with business radio and TV and the Internet.

Don’t ignore newsletters. They are the only medium that consistently offers portfolio advice continually updated. If you happen to get on a comp list for a newsletter, skim it to see if there is any helpful information you can use. Newsletters are very good at offering unbiased securities recommendations. Make an effort to personally know several newsletter editors. They are very good sources of information and opinion, and are usually willing to share it with you. All they ask is that they be quoted by name.

Sheldon Jacobs is the founder of one of the nation’s top investment newsletters, The No-Load Investor, as well as the author of 25 books. When we sat down with him recently for this 5 Questions feature, he had a lot of great basic tips for anyone covering investment and finance. Here are the outtakes from that bigger interview: Business beat coverage advice from an expert.

About the Author

Cale is a 2012 Reynolds Center intern. He is a junior at the Walter Cronkite School of Journalism and Mass Communication at Arizona State University, and is specializing in multimedia business journalism. He is also a summer intern with the Phoenix Business Journal and has previously reported for the Cronkite News Service, The Arizona Republic and The State Press.

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