The Stealthy Sisters of Spin and Speculation (Part 1)

I believe in large part, people mistake the forest for the trees when it comes to trading and investing. To explain this, I will step back and review some of the things I have seen over these last couple weeks.

I saw a lot of spin on August 11 with Mr. Black Box: the guy selling an algorithmic trading system. Spin is advertising or marketing. In my view, spin dominates the financial industry. Spin is misdirection, illusion, and non-information. Spin is everything that sounds good but doesn’t actually work.

Spin is not what trading/investing is about and I think many people fail to realize this. Spin often wins when a financial adviser gains a new customer. Spin wins when an investing newsletter [service] gets a new subscriber. Spin wins when someone decides to pay money for a trading system. Most of this is [inadequately] tested and/or does not have a high probability of working in the future. What jumps to mind is optionScam.com.

With regard to the cliché, I believe people look at “spin trees” and think they are seeing the whole forest. Unfortunately, many people get taken in by this, suffer catastrophic losses, and swear off investing altogether as a risky pursuit. They never realize that besides the spin, many other trees representing responsible trading/investing also live in the forest.

What’s worse is they feel so violated, embarrassed, and ashamed that they never want to tell anybody about their negative experience. Just like [physical, emotional, sexual, etc.] abuse, con-artistry perpetuates because it lives in the dark corners of the room. It’s like a vampire that would burn were sunlight ever shined upon it. In classic literature, light often represents “the good” and “knowledge.” People get taken advantage of because they lack knowledge.

Is Speculation one of Spin’s sinister sisters? I will address that in the next post.