Social media has been blamed for being the cause of many ills over the past decade. The ability to analyse our behaviour and micro-target us with advertising may become the biggest ill of all.

Facebook recently criticised Apple’s move to give users the ability to block ad tracking and complained it is bad for small businesses. The biggest irony is that the world's largest social network took out full-page ads in several newspapers attacking Apple's new privacy changes.

In the ad, Facebook says: "Many in the small business community have shared concerns about Apple's forced software update, which will limit businesses' ability to run personalised ads and reach their customers effectively."

It actually does no such thing. Literally, the only thing new is that Apple will require apps to request permission from users before tracking them.

Of course, Facebook knows that most people will opt-out when faced with the reality that ad networks, like Facebook, are tracking their activity across apps and the websites they visit. Sure, it's true that targeted ads, or as Facebook prefers to call them, "personalised" ads, work.

Do you know what else works? Peeking in someone's window to see what kind of shampoo or toothpaste they use and then sending them promotional material and coupons for other brands.

Being able to blatantly tell lies and distort the truth to a narrow group of people is regarded as a serious problem on social media. There is no strong regulation around the content that gets shared, promoted and targeted on platforms like Facebook, Instagram and YouTube. It’s harder to address than general advertising. If deceptive ads were more widely seen, they would be more likely to be flagged and exposed, but generally, the damage has already been done by then. Much of the focus to this point has been on political campaigns, but the investment world is quickly catching up.

Although every year New Zealanders lose millions of dollars in investment scams, we are a little behind in discovering and reporting online fraudulent investment schemes. So we’ll begin in the US where the world’s best grifters are usually found.

Back in December 2020, the Federal Trade Commission (FTC) granted a temporary restraining order against a company called Raging Bull and its co-defendants. Why?

The FTC’s complaint alleges that the defendants fraudulently marketed investment-related services that they claimed would enable consumers to make consistent profits and beat the market.

Something we know couldn’t and wouldn’t happen. What the FTC alleges did happen was a loss of at least $137 million by investors in the past three years. Raging Bull and its co-defendants, a group of course instructors or coaches, claimed they had all stock market secrets and they’d already made a fortune. Why not learn their secrets on how to get rich?

Digging into the specifics of the FTC case, it’s the section detailing the advertising that is most familiar. Relying on social media platforms, Raging Bull and its co-defendants would show ads to people who were identified as being interested in the stock market and investing. The ads showed the instructors with fast cars, private jets and luxury hotels.

Prospective investors were encouraged to download a free ebook. This meant giving up their email address to then be bombarded with emails pushing expensive ‘limited time’ courses. The courses were taken by the coaches who were marketed as investment gurus, all with rags to riches stock trading tales. They all knew how to identify the winning trades on a weekly basis. All investors had to do was pay up and follow the tips.

The truth is that a substantial number of consumers have lost money attempting to invest based on the “education” provided by Defendants or attempting to follow the instructors’ trade alerts. 

And defendants do not tell consumers that the instructor’s income is primarily derived from subscription fees consumers pay to Raging Bull and not from stock and options trading. The instructor has incurred substantial and persistent losses as a result of his own stock and options trading activities.

If you’re of a certain demographic in New Zealand you’re being bombarded with similarly themed ads on social media right now, particularly Facebook. Market trading coaches, property investment gurus and business coaches are running through a similar playbook to Raging Bull. Pitching their nonsense standing in front of a pool, high-end sports car, mansion, or office window with a city vista in the background.

You don’t need a lot of time. You don’t need much money or experience to start. Big money returns. Learn the system and secrets. Lifestyle. Anyone can do it. I started with nothing. I was seriously in debt, now I’m free. Free ebook. Passive income with as little as $1000.

Those are the claims being thrown around. It’s wild west stuff. Some are in New Zealand. Some are offshore. Some are licensed and claiming they’re an education service. Some are unlicensed. Some claim to be the recipients of awards you won’t find evidence of. Some of the worst are linking back to their social media profiles. There you’ll find pictures of alleged stockmarket trading profits interspersed with sports cars, boats, high end hotels and travel to exotic destinations.

Investing is not a competition. Investing is not even a skill. It’s a discipline. This is revealed with the passing of time, not short-term spurts of speculation. Historically (1926-2018), market directions on a daily basis are little better than a coin flip. On a monthly basis, 63% are positive. On a 12-month basis, 75% are positive. One a five-year basis, 88% are positive. 95% of 10-year periods and 100% of 20-year periods.

Staying disciplined with investing approach is the one thing an investor has in their favour and finding an indpendent fee-only adviser who is interested in your financial goals will help achieve that level of discipline. An adviser will then able to devise a financial plan and risk appropriate portfolio you can stick with, along with a realistic timeframe to be where you want to be.

• This article is prepared in association with Mancell Financial Group, Australia. The information provided, or any opinions expressed in this article, are of a general nature only and should not be construed or relied on as a recommendation to invest in a financial product or class of financial products. You should seek financial advice specific to your circumstances from a Financial Adviser before making any financial decisions. A disclosure statement can be obtained free of charge by calling 0800 878 961 or visit our website, www.stewartgroup.co.nz