Don't Quit Your Day Job... but Don't Trust DQYDJ

admin Sunday January 7, 2018

In 2016, Don't Quit Your Day Job... asked Start with us: how do you know you can trust DQYDJ?

In October 2017, I searched for historical data on ROI to convince my mother to be less conservative in her investment. The most interesting tool I found was DQYDJ's S&P 500 Historical Return Calculator.

When I presented the data to my mother, I realized the data did not make sense. I apologized, stopped, then looked at the data again with much focus. Eventually, I understood what the results mean. In fact, the statistics are even more useful than my initial understanding. But unfortunately, nothing in the tables nor in the accompanying text invalidates my initial interpretation.

I then showed the calculator to a brilliant friend who knows personal finance at least as well as I do, and asked him to explain his understanding of the results, without directing his answer. His interpretation was the same as the one I made initially. Undoubtedly, the calculator is misleading. And badly misleading. If the -6% 10-year minimum return is understood as the return of the worst year from 2008 to 2018, it is very far from the reality, which is -38% (2008). Making financial decisions based on this bad interpretation could easily lead to bankruptcy.

So I scrolled through the comments at the bottom of the page and found none reporting this issue. I was about to write one when I realized that the page did not allow new comments. In fact, it seems impossible to comment most DQYDJ pages.

So I went to the Contact Us page, which offered a form to send a message. I informed DQYDJ of their issue with comments through that form. Months later, the calculator remains misleading, and DQYDJ did not even reply to my message. And guess what - DQYDJ has been posting numerous new articles meanwhile.

I am sure that DQYDJ is actually trying to help its readers. This issue is clearly unintended. Unfortunately, finance is not a simple topic, and trying to help someone with finances can easily have the opposite effect in the end. DQYDJ's calculator is not wrong. If DQYDJ was targeted at economists, I would not be denouncing. But DQYDJ claims its audience includes beginners, and its calculator has the "Personal Finance" tag.

Investing its resources in creating new material while failing to give minimal care for existing material is an inexcusable management issue, and for that, my answer to DQYDJ's question is unfortunately that DQYDJ cannot be trusted.