As of 2009, there are more than 10,000 English-language finance and investment blogs on the web. More than 1,000 of these are updated daily and it is often hard to know which are worth tracking on a daily or weekly basis. While determining whether a blog is worth following there are four key benchmarks to review:
- The author's incentive
- Uniqueness of content
- The blog's sources
- The author's professional consistency.
These considerations help separate the trustworthy blogs from the unreliable websites. Let's examine these benchmarks in detail.
What's the Motive?
The first aspect to examine is the writer's vested interest. Owning a blog can offer an abundance of profitable opportunities such as hosting paid advertisements, complimentary invitations to events and discounts on various products. While many of these business agreements are ethical, some blogs may violate readers' trust by selling them on a product that benefits the author.
For example, suppose the author of a popular finance blog also is a partner at a third-party financial planning firm. If he uses the blog as a way of obtaining clients for his financial planning firm without disclosing his role within the company, his readers may be misled into thinking that he is independently recommending the company.
Some blog authors may go so far as to praise their own firms. Unfortunately, some readers might interpret such statements as unbiased endorsements of the firm. However, many blogs address this problem by transparently disclosing their incentives for promoting the company. An example of providing disclosure is "I am a partner at Third Party Financial Planners X, a firm that strives to be one of the best in the business. For a history of our returns please speak with a representative of the company." (Read about conflicts of interest from the perspective of a CEO in our article Pages From The Bad CEO Playbook.)
What's the Content?
Another benchmark for assessing whether a blog is worth following is whether the blog provides a unique service to the reader. This aspect is often relative to readers' needs. Some of the most popular blogs simply sort through the day's events and summarize the most relevant information to the blog topic. These blogs may provide only a portion of the article or report along with a link so readers can read the whole article. Other blogs draw readers because they provide their own unique commentary on news items, often relying on their expertise within the industry to add their own spin on the story.
Many readers use blogs as a way to track the industry and do not require any editorial supplement. However, these readers may be better served by using a service such as Google Reader, which collects the most popular articles on a specified topic and forwards the links to the subscriber. This type of service may be preferable because a blog probably cannot follow the industry as well as a search engine tool and may miss an important article. However, some readers prefer to use a blog because the author may have a keen insight into what articles are most relevant to the topic. (Take a look at our article Trading On News Releases to learn how using timely news can help your trading)
A blog that offers entirely unique content, such as definitions of industry terms, a video from a conference the author attended, or advice often provides the most value to readers. These blogs provide a reader with original content that they cannot access through other resources and tend to have the most subscribers as a result.
What Are the Author's Sources?
One of the most controversial issues about blogging is how or if the author cites sources. Many blogs use another website's content but do not cite the source, which would be considered plagiarism by journalistic and legal standards. Yet some blogging proponents argue that blogs do not have to adhere to such strict guidelines for citation because they are different from newspapers or books. While the citation requirements may be more lenient for blogs, most bloggers agree that authors should cite the source of their content in some way. A simple link can pass for citation, but the most careful bloggers often include a link and explanation of the use of the source, such as "The data shown here is from X Research Company and was displayed in its report entitled "Hedge Fund Statistics 2009", which can be purchased at the following link ..."
Blogs that cite their sources are often the most trusted and professional because they acknowledge when they rely on other people's work. Bloggers who do not disclose that they are using another person's work mislead the reader into assuming the blog author has compiled the data him- or herself. Blogs remain a gray area for citation, but by citing sources, a blogger strengthens his or her credibility among other bloggers - and readers.
Who Is This Guy?
The final aspect to consider when evaluating a blog is the professional consistency of the blog. If the blogger provides some information about his or her professional background, this is a good start. Do a little research to find out whether the blogger works in the industry or has any professional accreditations or knowledge. However, keep in mind that many good finance and investing blogs, particularly personal finance ones, are written by everyday Joes.
In addition, if one article from the blog is highly professional and insightful, this may not be true for all the blog articles. A financial blog author focused on investing may also write about a variety of topics from family matters to the latest phone gadget. Upon first visit, a reader may see one of the investment articles and decide to subscribe to the blog, assuming future articles will be similar. Then, the subscriber is bombarded with posts about the author's new dog, bad day at work or other irrelevant things that a reader looking for investment insight probably isn't interested in.
The best way to avoid these kinds of blogs is to search older posts from the blog. Most blogs have an archive of posts that show what kind of content the blog tends to provide. This gives the reader a sense of the blog's objectives, interests and professionalism. After viewing the archives, a reader can make a more educated decision on subscribing to the blog. (You may also want to find out if the authors have any professional experience or accreditation. See The Alphabet Soup Of Financial Certifications to learn about a few designations)
The Bottom Line
By evaluating a financial or investment blog according to these four benchmarks, readers can subscribe to only the blogs that fit their interests and needs.