Little Rishi

Stop listening to Suze Orman. The personal finance guru favors super-simple mantras -- even when they're wrong -- and psychological explanations for all your money problems. Maybe it's time to stop trusting her.

But it is not Suze's hypocrisy or even her intellectual laziness that really bothers me; no, that would be something Suze "loves" called "dollar cost averaging," which involves buying the same stock over and over again as it falls.

"It's a great opportunity for you when the value of the shares drops," claims Suze in the inaptly named "The Road to Wealth," "because you can buy shares at 'bargain' prices and average down your cost per share."

Oh, where to begin? Maybe with the obvious: Since when does throwing good money after bad make you rich? It doesn't.

Yes, Orman lards her books with no small amount of Oprah-level pop-psychology -- but when she does so, she's generally right. It's easy for the analytically-skilled elite of the information economy to scoff at such things, but something as basic as spending less than you earn really is akin to eating fewer calories than you burn: conceptually easy, but very hard in practice, especially when the world seems to be conspiring against you at every step. And succeeding in such matters requires a level of psychological discipline, while failing in them often has psychological causes.

Scurlock mocks Orman's statement that "you will never achieve a sense of power over your life until you have power over your money," but it's a great way of harnessing the imperatives of the otherwise largely destructive self-help movement and putting them to good use. As for "the stock market is like a pot of soup" -- that's as good a way as any to explain diversification. You want she should go into details of capital structure and limited liability corporate entities?

Orman's audience is struggling with money woes. That's true pretty much by definition: someone who has these things all worked out is not going to read her books. But it's also true that most of Orman's readers and viewers aren't going to declare bankruptcy: there's a huge terrain of financial difficulty between bankruptcy and health. It's simply obtuse to imply, as Scurlock does, that because most bankruptcies are caused by catastrophic events, the people who don't suffer catastrophic events and who don't declare bankruptcy are probably fine, on a financial level. They're not. Many of these people are in desperate need of financial help, and Orman is providing a very valuable service which America's financial institutions have every incentive not to provide.