List of Worst financial advice (what not to do):

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
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Coiled_Snake
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List of Worst financial advice (what not to do):

Post by Coiled_Snake »

I am new to this board and every day I am excited to share something new I learned here with my wife (and now my children are listening). My wife asked to make a list to put on the refrigerator <for guests to see...they seem to really like to read what we have up> of the "worst financial advice" according to Bogleheads. This is not sarcasm; she is serious but we need some help.

Suggestions? House, school, consumer debt on credit cards, financial adviser fees, whole life insurance, market timing ...
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Raymond
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Re: List of Worst financial advice (what not to do):

Post by Raymond »

Never cosign loans for anyone.

I don't care if it was your buddy who carried you on his back from Hamburger Hill under fire to the aid station, you don't cosign.

Give him the money as a gift if you can, but don't cosign.

(The above is only an example; I was a very young child in New York City in the late 1960s.)
"Ritter, Tod und Teufel"
music_man
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Re: List of Worst financial advice (what not to do):

Post by music_man »

Blindly listening to the bank and taking out loan for maximum they approve you for for house without evaluating your own expenses.
Busting Myths
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Re: List of Worst financial advice (what not to do):

Post by Busting Myths »

Tap into half of your cash reserves to pay for a $45k wedding and hope your taxable investments do not tank before you need the money for a down on a house payment. As read on a current Boglehead thread.
scrabbler1
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Re: List of Worst financial advice (what not to do):

Post by scrabbler1 »

Don't buy a time share. It's a money pit.
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Taylor Larimore
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Worst financial advice.

Post by Taylor Larimore »

Worst financial advice?
"You get what you pay for."
"If there's anything in the whole world of mutual funds that you can take to the bank, it's that expense ratios help you make a better decision. In every single time period and data point tested, low-cost funds beat high-cost funds." -- Russel Kinnel, director of mutual fund research for Morningstar
Best wishes.
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle
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dumbbunny
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Re: List of Worst financial advice (what not to do):

Post by dumbbunny »

Spend your wealth without tracking where it goes (and how it comes in).
:oops: I misunderstood the theme of the post.
Last edited by dumbbunny on Wed Jul 09, 2014 2:16 am, edited 1 time in total.
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LAlearning
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Re: List of Worst financial advice (what not to do):

Post by LAlearning »

Busting Myths wrote:Tap into half of your cash reserves to pay for a $45k wedding and hope your taxable investments do not tank before you need the money for a down on a house payment. As read on a current Boglehead thread.
+1
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Rexindex
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Re: List of Worst financial advice (what not to do):

Post by Rexindex »

Not sure if it is explicitly stated, but having a "trusted friend" in the investment business handling your money has to be about the worst.

I never cease to be amazed how people simply will not tolerate a conversation (I NEVER initiate it) about investing any other way than though their friend who handles all the funds.
:|

Another bad one is borrowing against your 401k, or even worse, tapping ira funds when in a cash pinch
“Attention is the rarest and purest form of generosity.” | — Simone Weil
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Toons
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Re: List of Worst financial advice (what not to do):

Post by Toons »

LAlearning wrote:
Busting Myths wrote:Tap into half of your cash reserves to pay for a $45k wedding and hope your taxable investments do not tank before you need the money for a down on a house payment. As read on a current Boglehead thread.
+1
+2 :happy
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee
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nisiprius
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Re: List of Worst financial advice (what not to do):

Post by nisiprius »

Mid 1970s: "Look at how much our 8-3/4% adjustable-rate mortgage could save you compared to a 9% fixed-rate mortgage."
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
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Zabar
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Re: List of Worst financial advice (what not to do):

Post by Zabar »

Worst advice: "Yes, you should buy that expensive car/handbag/jewelry/boat because you worked hard and you deserve it!"
music_man
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Re: List of Worst financial advice (what not to do):

Post by music_man »

"Who cares about the total cost, what's the monthly payment?"
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NAVigator
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Re: List of Worst financial advice (what not to do):

Post by NAVigator »

"Avoid peer pressure by having more than my neighbors do."
"I was born with nothing and I have most of it left."
sambb
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Re: List of Worst financial advice (what not to do):

Post by sambb »

1. "you work hard, so you deserve it" - a true BH will have buyer's remorse on this. Buy something because you love it, not you deserve it.
2. "the quote to remodel this room is firm" - yeah right, always increases once construction is started
3. anything dealing with not taking proper precautions to prevent an unwanted pregnancy
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GerryL
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Re: List of Worst financial advice (what not to do):

Post by GerryL »

Just the other day I was reading an article online with some good advice about investing (i.e., Boglehead ideas). It was looking good (passive and boring) until the writer added advice about subscribing to WSJ and signing up for a bunch of other "investment" publications. Can't remember where I saw that, but I think it was some place that required a subscription or Facebook sign-in so I couldn't respond to that "wisdom."
dhodson
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Re: List of Worst financial advice (what not to do):

Post by dhodson »

Mixing insurance with investing.
Woodshark
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Re: List of Worst financial advice (what not to do):

Post by Woodshark »

Here are several of the best examples of bad advice I can think of.......

"Don't worry about saving for retirement when you're young. Just wait till you're older and have more money. Then you can start investing"

"Lease a car. After the lease is over, turn it in and get a new one. That way you get a new car every three years and you don't have to worry about it breaking."

"The stock market is a scam and only works for rich folks. Keep your saving safe and put it in the bank and in CD's"
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prudent
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Re: List of Worst financial advice (what not to do):

Post by prudent »

"This service contract protects you from having to pay hundreds of dollars for repairs for just pennies a day"
(And they were just telling you how reliable the product is.)

You can express any amount of money in "pennies a day"!
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Coiled_Snake
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Re: List of Worst financial advice (what not to do):

Post by Coiled_Snake »

This is gold. Thank you so much.

sambb, your #3 caused drinks to be sprayed across the table. :o

This list is going to get laminated and prominently displayed.
chameleon
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Re: List of Worst financial advice (what not to do):

Post by chameleon »

"Holding a lot of gold is a good investment and will protect you against the invasion from the reptilians, north koreans, the banker cabal, marxists, etc..."

"These _insert current fad collectible item_ will be worth something someday!"

For the younger bogleheads:

"It's ok to get an expensive post grad degree in humanities that will put you in a high five or six figure debt but it's ok because your future salary should make up for it!"
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ClevrChico
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Re: List of Worst financial advice (what not to do):

Post by ClevrChico »

Being told by family to buy a car equal to my net worth because "I deserve it." By the time I got it home, the bumper was starting to come off. I returned it on Monday. A near miss.

Thank you Autobytel return policy.

Said car can now be purchased on Ebay (mint condition) for 1% of my net worth. Tempting. Do I deserve it?
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joe8d
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Re: List of Worst financial advice (what not to do):

Post by joe8d »

"It's ok to get an expensive post grad degree in humanities that will put you in a high five or six figure debt but it's ok because your future salary should make up for it!"
On NBC News tonight, it's WHAT you take (STEM) not where you went to school ( public/private )that determines your Employablity /Salary .
All the Best, | Joe
HurdyGurdy
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Re: List of Worst financial advice (what not to do):

Post by HurdyGurdy »

Not the worst, but it is the most irresistible:
Image
goodenoughinvestor
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Re: List of Worst financial advice (what not to do):

Post by goodenoughinvestor »

Consider your house an investment rather than a place to live because real estate always goes up!
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cheese_breath
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Re: List of Worst financial advice (what not to do):

Post by cheese_breath »

"Superior portfolio performance will more than pay my fees" ... Financial Advisor
The surest way to know the future is when it becomes the past.
RenoJay
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Re: List of Worst financial advice (what not to do):

Post by RenoJay »

I was at a dinner party at my next door neighbor's (he's worth about $20 million) and he said, "Diversification is stupid. I only invest in tech." (He made his money selling a business, not from investing.) :D
Grt2bOutdoors
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Re: List of Worst financial advice (what not to do):

Post by Grt2bOutdoors »

Lending money to friends and family because you know them and they are trustworthy. :oops:

You've graduated school, the car dealership sends you a congratulations postcard and a $500 coupon off the purchase of a new car - all because you deserve it!

Borrowing money on a home equity line of credit to invest in the stock market because over the long haul the market only goes up. :shock: They forgot the part about "the market can remain irrational longer than you can remain solvent, not to mention you could lose your home if you fail to make the payments on time".

Buying a fund like XYZ Growth fund because it was up 50% last year, so buying it at a high price is an even better opportunity for more gains. Chasing performance almost never leads to a good outcome.

Paying more means you are buying quality. :oops:
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
Mill
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Re: List of Worst financial advice (what not to do):

Post by Mill »

"land. theyre not making any more of it."
chameleon
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Re: List of Worst financial advice (what not to do):

Post by chameleon »

joe8d wrote:
"It's ok to get an expensive post grad degree in humanities that will put you in a high five or six figure debt but it's ok because your future salary should make up for it!"
On NBC News tonight, it's WHAT you take (STEM) not where you went to school ( public/private )that determines your Employablity /Salary .
Yep. The school loan industry is practically built on useless degrees. STEM is the only practical path to employment.

The poor minority version is:

"You have some athletic and music ability you should forgo all academic/career concerns and chase your passion in it!"

The number of professional athletes in the U.S.: Less than <20,000 professionals out of a population of 300 million people, this includes the NFL, NBA, tennis, golf, MLB, MLS, NHL.

The number of bankable musicians: <200
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ClevrChico
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Re: List of Worst financial advice (what not to do):

Post by ClevrChico »

Mill wrote:"land. theyre not making any more of it."
Ding!
montanagirl
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Re: List of Worst financial advice (what not to do):

Post by montanagirl »

"Buy as much house as you can afford!"

Not sure what the rationale was but I was too timid to do it anyway.
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Watty
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Re: List of Worst financial advice (what not to do):

Post by Watty »

"Sure, go ahead and buy a house together when you are not ready to get married. "

"Don't buy those TIPS that are yielding more than 2% above inflation."
dolphintraveler
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Re: List of Worst financial advice (what not to do):

Post by dolphintraveler »

"Even if you have the cash, always pay the minimum payment on your credit cards."
LongerPrimer
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Re: List of Worst financial advice (what not to do):

Post by LongerPrimer »

2 .Listening to other people's advice
1. Listening to your own advice.
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Re: List of Worst financial advice (what not to do):

Post by 123 »

I wouldn't worry about the sales load on a mutual fund. After all you're buying it to make money aren't you?
The closest helping hand is at the end of your own arm.
humanities
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Re: List of Worst financial advice (what not to do):

Post by humanities »

joe8d wrote:
"It's ok to get an expensive post grad degree in humanities that will put you in a high five or six figure debt but it's ok because your future salary should make up for it!"
On NBC News tonight, it's WHAT you take (STEM) not where you went to school ( public/private )that determines your Employablity /Salary .
This is a half-truth. The top-earning majors are indeed engineering majors. But some humanities and social science degrees have good earning potential, especially if you look at mid-career salaries, rather than at salaries right out of college, as this table shows:

http://www.payscale.com/college-salary- ... y-you-back

At mid-career, government and economics majors do very well indeed, better than software engineering, geology, chemistry, biochemistry, or mathematics majors. Classics majors and philosophy majors do slightly better at mid-career than biology majors; history majors and literature majors earn only a tad less. Incidentally, all of these humanities majors have higher mid-career earning potential than business (as an undergraduate major).

The point about going into debt for post-graduate humanities degrees is completely true--it makes no sense to go into debt to get a humanities Ph.D. Humanities Ph.D.degrees are often fully funded, though. The financial risk has less to do with debt and more to do with the terrible job market in academia.
ccieemeritus
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Re: List of Worst financial advice (what not to do):

Post by ccieemeritus »

Maxxing out my 401k contribution percentage, so it maxed out the total annual contribution around August. I left significant employer match on the table over several years.

Sadly that was my advice to myself. Fortunately not as impacting most other items on this thread.
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celia
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Re: List of Worst financial advice (what not to do):

Post by celia »

dolphintraveler wrote:"Even if you have the cash, always pay the minimum payment on your credit cards."
"And if you don't have the cash, just charge it."


"If the markets go down, you can sell and get out. Then when they go back up, you can buy back in."

"Start taking Social Security as soon as you're able, since it (or you) may not be there later."
A dollar in Roth is worth more than a dollar in a taxable account. A dollar in taxable is worth more than a dollar in a tax-deferred account.
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oldzey
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Re: List of Worst financial advice (what not to do):

Post by oldzey »

As a former chef for 20 years, here's my 2 cents:

Open your own independent restaurant.
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telemark
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Re: List of Worst financial advice (what not to do):

Post by telemark »

If you can't afford it, take out a loan. It's the American way.

Bonds are just a drag on your portfolio.
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vankleef
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Re: List of Worst financial advice (what not to do):

Post by vankleef »

darrellr wrote:Maxxing out my 401k contribution percentage, so it maxed out the total annual contribution around August. I left significant employer match on the table over several years.

Sadly that was my advice to myself. Fortunately not as impacting most other items on this thread.
Please explain how you missed out on the matching contributions. Thanks.
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bertilak
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Re: List of Worst financial advice (what not to do):

Post by bertilak »

cheese_breath wrote:"Superior portfolio performance will more than pay my fees" ... Financial Advisor
I've been given that advice in spades.

Along with it, these two:
  • "Buy this fund with a 6.5% front end load because once you are into the fund family you can switch around from fund to fund for free." It's like being in an exclusive club. Once you are "in" the load no longer matters.
  • On about a monthly basis: "Buy these stocks because our world-class research department recommends them."
That last is the one that pushed me into Bogleland. I could not get my "Wealth Manager" to articulate an overall plan or strategy his advice fit into. He didn't even seem to understand what I was asking for. Actually, I didn't make it to Bogleland right away. I simply jumped ship into deep waters and had to splash around on my own for a while before I washed up on the shores of Bogleland!
May neither drought nor rain nor blizzard disturb the joy juice in your gizzard. -- Squire Omar Barker (aka S.O.B.), the Cowboy Poet
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LAlearning
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Re: List of Worst financial advice (what not to do):

Post by LAlearning »

vankleef wrote:
darrellr wrote:Maxxing out my 401k contribution percentage, so it maxed out the total annual contribution around August. I left significant employer match on the table over several years.

Sadly that was my advice to myself. Fortunately not as impacting most other items on this thread.
Please explain how you missed out on the matching contributions. Thanks.
Some employer's only match per paycheck, not per year. So if you filled up your 401k early, you would not receive the full match.
I know nothing!
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cheese_breath
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Re: List of Worst financial advice (what not to do):

Post by cheese_breath »

bertilak wrote: .... I could not get my "Wealth Manager" to articulate an overall plan or strategy his advice fit into. He didn't even seem to understand what I was asking for. Actually, I didn't make it to Bogleland right away. I simply jumped ship into deep waters and had to splash around on my own for a while before I washed up on the shores of Bogleland!
At least you managed to avoid the other sharks.
The surest way to know the future is when it becomes the past.
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bertilak
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Re: List of Worst financial advice (what not to do):

Post by bertilak »

LAlearning wrote:Some employer's only match per paycheck, not per year. So if you filled up your 401k early, you would not receive the full match.
Quite true. My company's plan was clever enough to put that on autopilot so we would reach the full match before running out of room. Originally we had to manage that on our own. Many people did not understand the situation and missed out until that autopilot was instituted.
May neither drought nor rain nor blizzard disturb the joy juice in your gizzard. -- Squire Omar Barker (aka S.O.B.), the Cowboy Poet
Longtimelurker
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Re: List of Worst financial advice (what not to do):

Post by Longtimelurker »

"focus on the payment"
Stay the course. If you can't resist greed, and fear is proven to be 2x as strong, you are doomed as an investor.
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HardKnocker
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Re: List of Worst financial advice (what not to do):

Post by HardKnocker »

"Don't just stand there...do something!"

:happy
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Professor Emeritus
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Re: List of Worst financial advice (what not to do):

Post by Professor Emeritus »

chameleon wrote: STEM is the only practical path to employment.
OFGS India and China produce STEM graduates by the millions. Pure STEM work can be outsourced to low wage producers.

STEM combined with a pervasive knowledge of the target culture is what is valuable.
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bertilak
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Re: List of Worst financial advice (what not to do):

Post by bertilak »

cheese_breath wrote:
bertilak wrote: .... I could not get my "Wealth Manager" to articulate an overall plan or strategy his advice fit into. He didn't even seem to understand what I was asking for. Actually, I didn't make it to Bogleland right away. I simply jumped ship into deep waters and had to splash around on my own for a while before I washed up on the shores of Bogleland!
At least you managed to avoid the other sharks.
Mostly.

I did lose a toe or two before hitting shore. I fiddled with W.J. O'Neil's CAN-SLIM method, options, and a bunch of expensive newsletters. I knew the waters were infested so never committed more than a small amount to check things out.
May neither drought nor rain nor blizzard disturb the joy juice in your gizzard. -- Squire Omar Barker (aka S.O.B.), the Cowboy Poet
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