I once read a satirical article on how to market a stock newsletter successfully. It goes something like this:
Take 1,000 free subscribers. Split them into two groups. For 500 of them, make a bold declaration that Company X's earnings will be so disastrous, its stock price will crash at least 5% overnight; to the other 500 subscribers, declare that Company X's result will be so wonderful, its stock price will rise at least 5% overnight.
If Company X's earnings proves disastrous and its stock price crashes at least 5% overnight, take the 500 subscribers who received your accurate forecast, split them into two groups again. To 250 of them, declare that Company Y's earnings will be so disastrous, its stock price will crash at least 5% overnight; to the other 250 subscribers, declare that Company Y's result will be so wonderful, its stock price will rise at least 5% overnight.
If Company Y's result turns out better than expected and its stock price soars at least 5% overnight, you should now have a group of 250 subscribers who are fairly convinced of your predictive power.
To those 250 converts, market your stock newsletter at no less than $100 per subscription. If you have 100 of them who sign up, you will have earned $10,000. Not bad for two hours of work.
I hope you can see how evil selective omission of information can be. What then, is a whole lie?
That will be the facade staged by the Bernie Madoffs and the Ng Yu Zhis (of the nickel scam saga) of this world. Unfortunate as the victims may be, at least the truth came to light and the perpetrators were put behind bars.
But those 100 paying subscribers will never know the truth. They may remain faithful to the guru, even if later predictions turn out to be inaccurate (a.k.a. the sunk cost fallacy).
There are two morals to take away:
First, always read every stock opinion you found on the Internet with a pinch of salt (including this author's blog). You are entitled to reject the thesis, but are strongly encouraged to consider the FACTS presented about the company, especially if they run counter to your view. This will ensure you arrive at a balanced judgement of the company;
Second, nobody has a crystal ball into the future. Before you sign up for a stock newsletter or an investment course, be clear on the end goal. You should try to get behind the thought process of the investment coach, so that you can apply it in your own analysis. If you are looking for quick and easy profits like copy trading, you are bound to be disappointed over the long run.
A healthy dose of objectivity and scepticism will make us better investors.
Take 1,000 free subscribers. Split them into two groups. For 500 of them, make a bold declaration that Company X's earnings will be so disastrous, its stock price will crash at least 5% overnight; to the other 500 subscribers, declare that Company X's result will be so wonderful, its stock price will rise at least 5% overnight.
If Company X's earnings proves disastrous and its stock price crashes at least 5% overnight, take the 500 subscribers who received your accurate forecast, split them into two groups again. To 250 of them, declare that Company Y's earnings will be so disastrous, its stock price will crash at least 5% overnight; to the other 250 subscribers, declare that Company Y's result will be so wonderful, its stock price will rise at least 5% overnight.
If Company Y's result turns out better than expected and its stock price soars at least 5% overnight, you should now have a group of 250 subscribers who are fairly convinced of your predictive power.
To those 250 converts, market your stock newsletter at no less than $100 per subscription. If you have 100 of them who sign up, you will have earned $10,000. Not bad for two hours of work.
I hope you can see how evil selective omission of information can be. What then, is a whole lie?
That will be the facade staged by the Bernie Madoffs and the Ng Yu Zhis (of the nickel scam saga) of this world. Unfortunate as the victims may be, at least the truth came to light and the perpetrators were put behind bars.
But those 100 paying subscribers will never know the truth. They may remain faithful to the guru, even if later predictions turn out to be inaccurate (a.k.a. the sunk cost fallacy).
There are two morals to take away:
First, always read every stock opinion you found on the Internet with a pinch of salt (including this author's blog). You are entitled to reject the thesis, but are strongly encouraged to consider the FACTS presented about the company, especially if they run counter to your view. This will ensure you arrive at a balanced judgement of the company;
Second, nobody has a crystal ball into the future. Before you sign up for a stock newsletter or an investment course, be clear on the end goal. You should try to get behind the thought process of the investment coach, so that you can apply it in your own analysis. If you are looking for quick and easy profits like copy trading, you are bound to be disappointed over the long run.
A healthy dose of objectivity and scepticism will make us better investors.
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