Before you take financial advice from anyone, examine her background, including professional work experience and education credentials. This is true whether you’re getting advice from an advisor, writer, talk-show host, or TV financial reporter. If you can’t easily find such information, that’s usually a red flag. People with something to hide or a lack of something redeeming to say about themselves usually don’t promote their background. Of course, just because someone seems to have a relatively impressive-sounding background doesn’t mean that he has your best interests in mind or has honestly presented his qualifications. Forbes magazine journalist William P. Barrett presented a sobering review of financial author Suze Orman’s stated credentials and qualifications: Besides books and other royalties, Orman’s earned income has come mainly from selling insurance — which gets much more attention in her book than do stocks or bonds… . The jacket of her video says she has “18 years of experience at major Wall Street institutions.” In fact, she has 7. When the Forbes piece came out, Orman’s publicist tried to discredit it and made it sound as if the magazine had falsely criticized Orman. In response, the San Francisco Chronicle, which is the nearest major newspaper to Orman’s hometown, picked up on the Forbes piece and ran a story of its own — written by Mark Veverka in his “Street Smarts” column — which substantiated the Forbes story. Veverka went through the Forbes piece point by point and gave Orman’s company and the public relations firm numerous opportunities to provide information contrary to the piece, but they did not. Here’s some of what Veverka recounts from his contact with them: If you want your side told, you have to return reporters’ telephone calls. But alas, no callback. … Orman’s publicist said a written response to the Forbes piece and the “Street Smarts” column would be sent by facsimile to the Chronicle… . . However, no fax was ever sent. They blew me off. Twice. In what was becoming an extraordinary effort to be fair, I placed more telephone calls over several days to Orman Financial and the publicist, asking for either an interview with Orman or an official response. If Orman didn’t fudge about her years on Wall Street or didn’t let her commodity-trading advisor license lapse, surely we could straighten all of this out, right? Still, no answer. Nada … I called yet again. Finally, literally on deadline, a woman who identified herself as Orman’s “consultant” called me to talk “off the record” about the column. What she ended up doing was bashing the Forbes piece and my column but not for publication. More importantly, she offered no official retort to allegations made by veteran Forbes writer William Barrett. I have to say, it was an incredibly unprofessional attempt at spinning. And I’ve been spun by the worst of them. You can’t always accept stated credentials and qualifications at face value, because some people lie (witness the billions lost to hedge-fund Ponzi-scheme-man Bernie Madoff). You can’t sniff out liars by the way they look, their résumé, their gender, or their age. You can, however, increase your chances of being tipped off by being skeptical (and by regularly reading the “Guru Watch” section of Eric’s website at www.erictyson.com). You can see a number of hucksters for what they are by using common sense in reviewing some of their outrageous claims. Some sources of advice, such as Wade Cook’s investment seminars, lure you in by promising outrageous returns. The stock market has generated average annual returns of about 9 percent to 10 percent over the long term. However, Cook, a former taxi driver, promoted his seminars as an “alive, hands-on, do the deals, two-day intense course in making huge returns in the stock market. If you aren’t getting 20 percent per month, or 300 percent annualized returns on your investments, you need to be there.” (We guess we do, as does every investment manager and individual investor we know!) Cook’s get-rich-quick seminars, which cost more than $6,000, were so successful at attracting people that his company went public in the late 1990s and generated annual revenues of more than $100 million. Cook’s “techniques” included trading in and out of stocks and options after short holding periods of weeks, days, or even hours. His trading strategies can best be described as techniques that are based upon technical analysis — that is, charting a stock’s price movements and volume history, and then making predictions based on those charts.The perils of following an approach that advocates short-term trading with the allure of high profits are numerous: You’ll rack up enormous brokerage commissions. You won’t make big profits — quite the reverse. If you stick with this approach, you’ll underperform the market averages. You’ll make yourself a nervous wreck. This type of trading is gambling, not investing. Get sucked up in it, and you’ll lose more than money — you may also lose the love and respect of your family and friends. If Cook’s followers were able to indeed earn the 300 percent annual returns his seminars claimed to help you achieve, any investor starting with just $10,000 would vault to the top of the list of the world’s wealthiest people (ahead of Bill Gates and Warren Buffett) in just 11 years!