Do you use Yelp!?  For the uninformed, Yelp is a reviewing website.  Go to Yelp on your computer or on your phone.  Type in anything in any city or town, and up pops a review or several reviews about it.  A lot of people use it for restaurants where they haven’t yet been.  Type in the name of the restaurant and there will be several reviews.  Alternatively, if you are new to a town and don’t know where to eat, just type in “Best Restaurants” in the town where you are, and up will pop several reviews of various restaurants.  Very handy for travelers.  The reviews can be very specific:  “The cedar plank salmon is to die for!”  Presto!  The cedar plank salmon becomes the best seller for that restaurant.

Yelp is not just for restaurants.  Traveling to Italy and need a haircut?  Yelp can tell you the best salon in Siena.  Reviews are stars plus comments.  5 star is the best.  Star reviews are added up and averaged.  Pick a reviewer and read their specific comments, if you want.  Yelp is a creature of the internet age and the desire for immediate satisfaction:  I want to read a review of this service or establishment and I want to read it now!  Yelp accomplishes this.

Maybe you have written a review on Yelp.  The Yelp home website highly encourages new users to write reviews.  Some Yelp reviewers develop followings, just as some Amazon reviewers develop followings, for being particularly insightful or well-written.

Yelp for Investing

Yelp doesn’t have reviews of individual stocks or portfolios.  What is the equivalent of Yelp for investors?  There are many in the greater financial media.  For individual stocks, you have analyst reports by brokerage houses or by firms like Value Line.  Internet age options include sites such as Seeking Alpha or any number of blogger forums such as Tumblr, where ordinary folks pen their thoughts on individual stocks.  As for portfolio allocation – % stocks vs. % bonds vs. % other assets in your portfolio – there are a number of sources that you can Google and find.  Out there on the Web, there is no shortage of people’s opinions about anything you want to invest in.  Or, tune in to CNBC.


Do you fully rely on Yelp?  Should you?  Or should you use Yelp as one piece of information that may or may not be helpful for you in making your own decision?  I think you know the correct answer to that question, and how I feel about it.  Yelp reviews are worth what you pay for them.  That’s probably not true – they are worth something but don’t bet the farm on what some Yelp reviewer thinks.

Similarly, for investing, stock analyst reports, blog posts, CNBC stories, and word of mouth can be helpful.  These sources aren’t necessarily free – you get analyst reports from your broker, to whom you pay commissions, and Value Line and Morningstar are pay services (at various levels).  Some people like to make decisions by reading or listening to different arguments or points of view and then synthesizing their own opinions and make their own decisions based on their take on other people’s takes.  The question is, how much should you rely on other people’s opinions about various investments?


One difference between Yelp and the various sources of opinions about investments is that the investment world is fluid with respect to prices.  Investments really all boil down to price.  The stock market is open 5 days per week and prices of stocks can move quickly.  What may be a good investment at $40/share may not be such a good investment at $60.  That’s one reason that stock analyst reports usually have a top end price target, and the analyst may re-look at the stock if and when the stock hits that target.  In contrast, Yelpers do discuss prices – Yelpers, on the whole, are pretty thrifty, in my experience – but the service that the vendors provide is relatively static.  The $30 cedar plank salmon will probably still be the same $30 entree a month from now and even a year from now.


I am a Yelp skeptic.  I don’t know who these people are who write these reviews.  I like to make my own decisions.  If it is a restaurant, I will try it once.  If I like it, I will go there again.  If not, I won’t.  If it is a bigger decision, I want references to speak with me personally.  My wife and I used Yelp to find a contractor for some major work on our house.  The Yelp reviews were helpful, but we chose the contractor based on previous jobs he had done and references from those people.  Similarly, with investing, I make my own decisions and I use my own indicators.  Even if you use other peoples’ opinions about whether an investment is good or bad (at a certain price), you should still dig deeper and do your own analysis about the investment and its future prospects.  That doesn’t necessarily mean you should dig up the company’s 10K and analyze its financial statements, but you should at some level make up your own mind about the future of this potential investment.  If you dive in and invest in it, then see how it plays out over time vs. what you thought might happen when you bought it.  If things play out as you thought you would, then keep it.  If not, sell.  Make your own decisions, and take responsibility for your own future financial well-being.


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