Last Sunday, an article written by Lorna Tan “Lessons from get-rich courses” was published in the Straits Times.
The article spoke about the numerous advertisements for “get rich courses” you see in the newspaper every day.
Some samples of what you can see in the adverts:
“Our graduate made 770 per cent profit and turn $1000 into $78000 from Forex trading in 2 months”.
“How to create wealth in the stock market 30 minutes a day.”
If you see these advertisements repeatedly in the newspaper, it means that they work very well. In case you get me wrong, no, I’m not referring to the strategies that are being taught. Instead, what I’m saying is that the advertisements work well in attracting people to the free previews and subsequently converting the attendees into paying customers.
As long as the advertisements continue to be profitable for the advertisers, they will continue to appear, week in and week out.
Lorna spoke about her experiences in signing up for an options trading seminar. She paid $5000 for a 4-day course, and the session was attended by about 500 students. At $5000 a student, the organiser would have grossed a cool $2.5 million from organizing the course.
The course covered the basics of options along with the strategies for trading them.
So did Lorna become an expert trader or start making money after the course?
No.
She actually did nothing. Whether it was information overload, too busy with other stuff or being not hungry enough, she didn’t try to apply the things she learnt. Before long, the stuff she learnt faded from her memory. This actually happens to 80-90% of people who attends such courses. I have encountered people who have attended half a dozen of such courses and they are still trudging along, ready to attend another course that can (hopefully) give them a breakthrough.
Should you consider attending such courses yourself?
You have to be very selective of what course you sign up for. You will hear many claims from different trainers but remember, most of them are trying to sell you something. Don’t sign up on the spot and always go home to do research on the trainer first. Establish from an independent source whether his claims are true or not.
Don’t be pressurized by their special price which is only available for that day. You can easily get the so-called special offer they give you by attending another preview session on another day.
The traders/trainers I respect are those who are upfront and tell the audience (the fact) that trading is difficult. You would actually have done well if you don’t lose money in your first year.
If somone promises that he can help you make GUARANTEED returns from trading, stay away! Anyone who gives you the impression that trading is easy (and you can make money easily) is causing you more harm than good.
Overconfidence has been the downfall of many traders. Would you want to learn from a person who starts you on the wrong footing?
Personally, I would avoid any training course that is packed with 100+ participants. Even if you don’t mind paying top dollar to learn from a professional trader, what you need is a coaching session and not a lecture based training. Learn the basics yourself, then find someone who is trading professionally to guide you along on a one-on-one basis. There is no point paying so much for basic information that is readily available everywhere.
Learning to trade is just like learning a sport.
Will you pay $5000 for a 3-day training session from Tiger Woods?
What if the training session is attended by 100 other people? How much do you think it will benefit you?
Will you become an expert golfer after the training?
There will be improvements to your game but let’s be realistic. Tiger Woods works with his coach every day for years to get to where he is. Three days will not magically change your game by many notches.
Also, the benefits you get from getting him to improve your game would be much greater than getting him to teach you how to play the game.
However, results ultimately come from years of training (trading), and not from a 3-day boot camp.
I find it ironic that MAS regulates and has certain rules on the giving of financial advice on a personal basis, yet does not regulate investment/trading courses. More harm can be done in giving the wrong advice to 100 people than to one person.
Recall that private schools were also previously not well regulated and you get all the nonsense with degree mills, etc.
The Caveat Emptor approach might not be the way to go for everything.