BUYER BEWARE!
Careful here!
The perfect scam is one that, at its fundamental core, is not really a scam, yet has the same hook, line and sinker:
It lures the victim with the possibility of unrealistic material gains attained by the possession of some “secret” quality, usually knowledge of some “trick” or special “method” known only to a very lucky few,
It creates the impression of easy accomplishment of such gains through this knowledge, and
It requires the victim to pay a considerable amount of money for access to this “secret”, preying on the victim’s sense of greed through the appearance of rare opportunity (further prodded by urgent cautions that “this offer won’t last forever” and assuaging the victim’s doubts by assuring him that the money made through the “secret knowledge” will more than offset the initial expense, and in fact, the victim is getting a special “deal” in the price.
The “legitimate” scam incorporates one significant fourth criterion which distinguishes it from an actual scam: it offers authentic content based on genuine services but with no guarantees or promises of it bringing wealth. Thus, there is no fraud or deceit as to what is actually being offered. Nevertheless, it dangles an enticing illusion to credulous takers, much like the lottery (“Hey, you never know!”)
What separates this kind of promotion from honest marketing is that it suggests financial success for the taker as opposed to a nuts and bolts sell of a product or service. No advertisement, whether for a car, a beverage or even a financial services company even hints at supplying wild profits. Even a financial services company only claims to offer “security” through prudent financial management, and usually for retirement with the retiree’s own funds, without speculating as to results. You’ll never see a commercial from Morgan Stanley depicting a retiree making $4,000 per week – in fact; you’ll never even see a number of any kind. Rather, in the financial services business, capable stewardship of funds with a goal towards achieving secure retirement is the selling point.
The OTA is much like a company such as Herbalife. Cleverly playing on people’s greed, yet not running afoul of the law, it runs a legitimate enterprise almost entirely based on separating people from their money by suggesting hopes of helping them make more money without ever really working. In this, it is very similar to the gambling industry with its lure of the jackpot. Herbalife implicitly promises financial independence through a taker’s involvement in its “marketing”. It sells no products in most brick and mortar stores. Rather, it relies on an army of street peddlers pushing various health products motivated by a profit model similar to a pyramid scheme. The OTA also relies on turning ordinary people into company stooges. Instead of a tangible product, they market “advice” “training” and “coaching”. By skillfully presenting the concept of market timing, they create the impression that there is some “secret” as to why “novices” lose money in the market while “professionals” and “institutions” such as banks or Goldman Sachs only profit and never lose, and that the takers, too, can make the same kind of money applying the same principles as the professionals. If they don’t, they will “blow up their account”.
The OTA begins its pitch by organizing a “seminar” at a hotel, usually in Manhattan. A speaker is invited to explain complicated investment concepts to unsophisticated attendees. The speaker is usually someone with a strong investment background and explains, in an entirely credible fashion, how money is made and lost in the market. The speaker shrewdly twists the assembled guests around his finger as he explains the fluctuations of the market through a slide presentation. Even experienced investors (though not professional traders, who know better than to attend such events) are taken in. A “client base” is thus prepared and formed.
While a variety of speakers are utilized, they are for the most part employees of the company, with an occasional guest speaker brought in. Every OTA speaker is a thoroughly trained and highly sophisticated presenter – perhaps huckster would be a more accurate term. Every one of these narrators connects to his audience with the brash confidence and aplomb of a carnival barker and exhibits thorough mastery of the discussed subject. In this manner there is never a moment’s doubt in the audience’s mind that every word spoken is absolutely correct.
Various psychological tricks are used during this spoken “orientation”. After explaining a particular point, the speaker will seek confirmation from the audience by asking “am I right?” or “does that make sense?” which always results in a positive affirmation from the audience, thus confirming the sales pitch as indisputably true. Other times, the speaker will suddenly halt before speaking the last word of his sentence, encouraging the audience to “fill in the blank”, ostensibly to stimulate retention, but in reality to manipulate the audience into self-validating the speaker’s message. This way the audience subconsciously upholds the worth of whatever the speaker tells them, regardless of its actual substance.
To disarm any skepticism, a speaker may even encourage dissent. The reverse psychology can take the form of the speaker encouraging the listeners to convey misgivings by calling out “B.S.!” This contrived show of openness and superficial sincerity leads the audience to trust the speaker even further and qualms any remaining doubts.
One cunning ploy is to provide dollops of technical information, described in such a way as to appear like a tantalizingly successful formula, “whetting the appetite” of the listener, then offer more such goodies, but only “when you sign up”. Through each level of progression (orientation, apprenticeship, internship, etc.) a payment schedule is offered to the taker, with each stage more expensive than the last. The final level is the “mastermind” series, which offers access to an online “gated community” of previous graduates who are touted as successful investors. A computer interface of online members is provided, where the “community” gives each other advice and interaction. Reaching this stage requires the expense of approximately $30,000 and results in “graduation”. This completion of “courses” does not qualify a “student” for any professional license, such as a broker’s license.
To reinforce the enticement, a speaker will explain that “novices” or “amateurs” do things the way “the book” tells them whereas professionals and institutions do things in a much different way. A chart is presented in the slide during this particular presentation.
For example, the speaker may say that “the book” will advise that you buy during an uptrend and sell during a downtrend, but that a professional will do exactly the opposite. Or that the book will tell a novice to “confirm” a “leveling off” in supply and demand three or four times before entering a trade whereas the pros will enter only after the first leveling off.
To the poorly informed or misinformed, such insights are positively brilliant and earth-shattering, but such wisdom is in fact standard knowledge within the trading industry. The hook is set when the speaker tells the assembled takers, “We want the amateurs to keep reading the book”.
This review is the subjective opinion of an Investimonials member and not of Investimonials LLC
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