Have you ever been accosted by a scammy salesman? Like one of those douches who tries to smoothtalk you and be your friend, and then sells you a friggin stone that’s supposed to have healing powers and improve your sex life and make you lose weight? And before you know it, it ends up being a helluva expensive paperweight, and the only way it’s helping you to improve your sex life is when you ask some chick if she wants to come back to your place to check out your “really cool stone”.
I hate scammy salesmen. Like I wish I could round them all up, tie them to a stake, and dump like 8 billion ants on them. And then pour honey onto their testicles. (Or other parts if they’re ladies. Like, maybe their hair). And I don’t know why, but finance has the highest concentration of scammy salesmen (and women) I have ever seen in any one area.
I attended a forex seminar last year, where this charismatic dude gave a speech which was so disgustingly full of crap that I wanted to go on stage, stand on his table, and literally pee on him. He kept promising the audience that they would gain HIGH. SPEED. WEALTH. if they would only purchase his “Pip Maximizer”, “Profit Explosion”, and “100% Accuracy Technique” for a low, low price of $1,000!!
Let’s talk about the 100% Accuracy Technique. His claim: if you bought the EURUSD every year on the 24th of November and sold on the 6th of December for 8 years, you would have made a profit 100% of the time!!! ZOMG WOW LET’S ALL DO THAT RIGHT NOW AND WE’LL BE RICH!!! Ladies and gentlemen, this is a widely employed technique known as “backtesting” – where you would look at how a particular stock, or currency, or asset had performed in the past, and then use trial-and-error to find a trading strategy that would give you stellar results. There are so many permutations out there, it’s entirely possible to find hundreds of trading strategies that would give you amazing results, and if you had only traded them for the past 10 years or 7 years, or 1 year 9 months and 28 days, you would’ve been a gazillionaire by now.
The thing is, they may look absolutely perfect based on past performance by pure chance alone. In the past, maybe buying a stock when there was a full moon and Big Bang Theory was showing on TV would have made you a 500% return, but will that work in the future? THERE IS NO FRIGGIN’ GUARANTEE. There is no reason whatsoever that buying on 26th Nov and selling on 6th Dec would yield a perfect record in the future.
Yet, the hundreds of wide-eyed potential investors around me craned their necks forward when they heard about this amazing 100% Accuracy Technique, furiously scribbling on their notepads. It made me sick. Singapore is supposed to be one of the most highly educated countries in the world, but our brains turn to mush in the face of greed.
I’ve attended dozens of these scammy talks to try to understand the minds of people who sell and buy these scams. And I’ve come up with three ways to prevent you from falling prey to them:
1. Read a book. Seriously, understand how the hell things work before even trying to invest or trade in them. Amateurs see forex as an ATM for them to gain HIGH SPEED WEALTH. Pros understand that the forex market comprises of institutions, brokers, investors, banks, companies, hedge funds, who use it as a means of liquidity, risk management and speculation.
2. Always question promises made. They will make you a gagillion promises and cite their hundreds of success stories who made it through and are earning a passive income of $10,000 a month working from home. Question how they got those results. Were they backtested? Was it a one-off occurrence? Could the data have been manipulated?
3. If you find yourself rushing to buy it, it’s probably not a good idea. 9 out of 10 of these scammers employ a tactic called “time limitation”. They dangle an attractive discount in front of the audience, and declare that it’s only open to the first 50 people who sign up for it, or that it’ll close in 15 minutes. This has two effects – 1) It restricts the supply, which makes it more attractive and 2) They make you feel like you have to act NOW, which is almost always a dumb decision. Most, if not all, good investments are made after careful, controlled, rational thought. NOTHING is worth buying or investing in at that very moment. Take at least a week off to ponder your options before arriving at any decision, even if it means losing that awesome discount. In all likelihood, you’d be able to bargain it back again should you choose to invest later.
All in all, BE SKEPTICAL whenever you’re about to purchase anything. If it sounds too good to be true, it probably is.
Have any of you met scammy, sleazeball financial salesmen or agents who used underhanded tactics to get your money? Share your experiences!