Genuine investment communities play a crucial role in achieving financial success. However, the presence of fake investment experts can pose challenges to cooperation within these communities. In this blog post, we’ll guide you on how to spot fake investment experts and provide valuable insights to help you stay alert and safeguard your investments.
The Context
Some people are in such utter darkness that they will burn you just to see a light. Try not to take it personally — Kamand Kojouri
We’re on a mission to unlock behavior finance’s deepest, darkest, most enigmatic mysteries.
This guide is a unique one that seeks to uncover the harmful traits in the behavior of fake investment experts. Authentic investment networks are essential for financial success, but imposters make it difficult for real investors to collaborate effectively. Serious investors avoid drawing unnecessary attention because they understand that this goes against their strategy for achieving their actual objectives.
On the other hand, fraudsters who pretend to be investment experts only have one aim: to make you believe what they want you to believe to get your attention or money. Let’s take the example of some very desperate social media personalities who initially claimed to be stock market investment experts during the 2020 COVID crisis, only to later shift to discussing unrelated topics such as political dramas, wars, human rights, celebrity weddings, soccer, and intense investigations about coke-mentos and theory of relativity.
This is commonly referred to as the “halo effect,” a destructive phenomenon where unsuspecting investors are taken advantage of even if a subject is outside of the supposed expert’s field of knowledge.
For instance, would it be logical for us to promote baby diapers or anti-dandruff shampoo on a personal finance blog and disguise it as financial education?
Similar to how this circus tarnishes and corrupts the clarity of ideas, this faction poses a threat to the growth of ethical investors. Our aim is to help you build mental resilience, and thus, we’ve devised this easy manual to help you recognize and steer clear of this marginalized group as you concentrate on your financial well-being.
1. They Keep Talking The Ticker
One of the key indications of a fake investment expert is someone who is constantly monitoring and talking about the stock market performance. They often lack confidence in their financial strategy, which leads them to continuously seek validation for their decisions. In addition to fueling your fear, they want you to see that they are actively managing their money to establish their superiority.
This behavior can be seen in individuals who are often seen fixated on stock market tickers or their investments in busy social or virtual settings. Investing is a personal matter, and breaking this norm reveals their lack of authenticity. If someone in your investment network is exhibiting this behavior, keep this write-up in mind, smile, and simply block and ignore their disruptive presence.
2. Fake Investment Experts Offer Unsolicited Advice
Because fears and uncertainties are easily spread in the investment world, imposters often try to impose their unskilled beliefs on others. You will often see fake investment experts attempting to assert themselves as experts on a financial topic during casual conversations or posts on social media. Due to their lack of understanding of the finer details, they forcibly push their flawed opinions on a sector, economy, or stock.
For prudent investors who value conducting their independent research, this can be especially damaging. Fake investors often lead rational investors to question their sound beliefs due to these foolish attitudes. If you suspect someone is acting this way, it’s best to avoid engaging with them in conversation or debate.
3. They Falsely Claim To Be Geniuses
Fake investment experts often present themselves as brilliant investors who always make huge profits. They do this to undermine the steadfast beliefs of other individuals.
To support their claims, they may even mention current news headlines or popular themes related to stocks that show market optimism. However, due to their lack of knowledge, fake investment gurus likely do not have the time or patience to thoroughly research the subject.
Don’t let their fabricated stories of success make you feel inadequate, as they have no bearing on your investments. Don’t feel bad if you miss out on an opportunity when a fake expert boasts about it, as there is a good chance it’s not true. If someone was truly skilled at generating wealth, they would be enjoying a relaxed lifestyle rather than seeking desperate attention on social media and in public
4. Imposters Like Passing Sarcasm
Have you ever tried to engage in a conversation about investments with someone you believed shared your views, only to be met with sarcastic remarks that demotivated you? People who are not truly knowledgeable about investments and only pretend to be, don’t have much interest in serious topics like insurance or retirement because they have not given their future much consideration.
Rather than providing helpful advice, they engage in competition for attention and exhibit negativity through thinly veiled sarcasm. This behavior is rooted in psychology as it allows them to avoid confrontations and hide their true selves.
As motivational speaker Jim Rohn says, we are influenced by the average of the five people we spend the most time with, which supports the law of averages. So, it’s important to consider whether you want to surround yourself with negative variables that could potentially harm your average success outcomes.
Think about it!
5. They Leech On Third-Party Insights
This peculiar trait can serve as a quick indicator of fake investment experts. When they come across valuable financial concepts from credible sources, they often try to pass them off as their own. Ideas are meaningless unless they are put into action, and fake experts are usually hesitant to implement the ideas they borrow on their own.
To test them, simply ask them questions about the concept they are trying to promote. They will either resort to trait number four (sarcasm) or start talking about irrelevant topics with their limited knowledge.
6. They Display a Strong Survivorship Bias
Survivorship bias, also known as survivor bias, is a common phenomenon in investing where people tend to overlook the failed stocks or investments and focus only on the successful ones. Fake investment experts often only highlight their profitable investments and ignore the ones that did not perform well.
If you ever mention their past stock purchase that has gone bad, they will try to defend themselves by saying “I knew it all along, so I got out in time. They avoid admitting their mistakes and instead cling to their wins to maintain their perceived dominance.
7. Imposters Desperately Seek Stock Tips
Many fake investment experts themselves seek out free stock advice as a convenient method to make easy money, avoiding the discomfort of evaluating the financial and market conditions. They search for a “magic word” or insider tip, act on it, and hope to profit greatly.
However, their dissemination of these harmful ideas is harmful to genuine investors. To protect your investments, it is crucial to conduct extensive research and analysis, rather than relying on any stock tips from unreliable sources. The words “Free” and “investment” are rarely a good match and should be approached with caution.
8. Fake Investment Experts Pose As Members Of The Big Boy Club
“Mock Millionaires,” or fake investment experts, put on a façade to give the impression of being wealthy. They like to critique others but are not open to criticism themselves. In contrast, genuine investors tend to be self-focused, flexible, and capable of making educated decisions.
These fake experts can be found in our society and on social media, but how can they be recognized? The key is to look for inconsistencies. You can easily profile them by correlating their income, educational background, and professional history to the value of items they flaunt and exhibit, such as luxury watches or gadgets.
9. They Constantly Talk about Materialism
Fake investment experts try to present themselves as popular by emphasizing their material possessions. They often brag about their vacations, cars, the latest pre-ordered phone, or access to exclusive clubs. Studies show that an obsession with material things is often linked with a lack of empathy and an inclination towards manipulation and selfish behavior towards others.
Not posting your personal life on social media doesn’t mean you have a dull life.
These fake investors are more materialistic due to their fear of being rejected socially. If you notice these tendencies, it’s best to move on and not waste your time indulging in their desires.
10. They Entice You, Then Act Mysterious
This is a typical example of deceptive and manipulative behavior. Fraudulent investment experts often pretend to have privileged information, such as confidential data, secret information, or magical formulas about companies and stocks, to attract the attention of lazy dreamers.
This may be done to take advantage of people with attention deficit disorder or even worse, to cheat inexperienced investors out of their money. The stock market is known for its unpredictability, complexity, and nonlinearity, making accurate stock predictions challenging. This is because of multiple factors, including politics, global economic conditions, unexpected events, or a company’s overall financial performance.
Moreover, using insider information to trade is illegal under the Companies Act, 2013 and the SEBI Act, 1992.
A few illegal tips cannot solve all your financial problems and will only create a never-ending cycle of dependence.
Anyone claiming to have a profitable edge is either lying or engaging in unethical practices, putting themselves in danger. So, when faced with someone posing as a wise sage, ignore them and focus on your own research and hard work.
Conclusion
Avoiding Deception in investing separates genuine investors from shallow people. Investing requires self-effort, but there will always be those who try to mislead you with their private interests in drama and speculation.
Engaging with them will only lead to negative outcomes. Identifying fake investment experts through your physical, social, and online interactions is crucial. Some people will always harm others for personal gain. Don’t take it personally and stay vigilant. Share this article to help others stay informed and protect themselves from deception in investing.
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