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So, you want to make some extra cash.
You do a quick search online to see if you can learn something about making money.
You see tons and tons of videos about how people are making millions by trading stocks.
Where do you start? How do you learn how to day trade stocks?
Well, you don’t.
While a few content creators out there make good videos with valuable content, the majority of YouTubers who make stock trading videos are trash.
They’re called fake gurus. They pretend they’ve mastered the art of trading stocks only to sell you a course for hundreds of dollars that probably won’t benefit you in any way.
I actually fell for them several years ago. I was so desperate to quit the job I hated so much. I spent so much time and money trying to learn how to trade stocks, only to find out the hard way that they’re all fake.
But I want to help you so you don’t waste your time and money like I did.
I’m going to show you 5 characteristics of fake gurus so you can spot them and avoid them like the plague.
Please be advised that all information in this post is my opinion, but I stand by my opinion.
Now let’s do some exposing.
Evidence of Being Fake
Before we go over the 5 characteristics of fake gurus, let’s dig into the rationality of why they’re fake.
Why would they create a course?
A lot of these fake gurus sell courses that can cost anywhere from a couple hundred to a couple of thousand bucks.
They claim that they’ve found a strategy that makes them a ton of money, and that you can learn how to do the same by buying their course.
But think about this for a second.
If they really make a ton of money from trading stocks, and they’re consistently profitable, why would they need to sell a course?
Creating a course takes a huge amount of time and effort. From planning the material, filming, editing, and putting it all together, it could take hundreds of hours to make. Not only that, but they also have to spend lots of time on marketing and advertising.
Why wouldn’t they just focus their time on improving their trading strategy, so they can make even more money?
Diminishing Returns
If you truly find a strategy to trade stocks that actually works, you would want to keep it a secret. Maybe tell a couple of loved ones, but you wouldn’t sell it to everyone on the internet.
This is because the more people that trade the same strategy, the less effective it becomes.
Let me explain.
The stock market is a zero-sum game. This means that for every buyer, there has to be a seller. You can’t sell a stock if no one will buy it.
Therefore, for every winner, there has to be a loser. When you make money trading stocks, there is always someone on the other end losing money.
Imagine a guru selling a course or trading signals, saying that thousands of other people who bought the course are also profiting. How can the strategy work if thousands of other people are doing the same thing?
They would end up pushing the price up so much that no one would make money.
5 Characteristics of Fake Gurus
Let’s dive into the 5 characteristics commonly shared by fake gurus.
They allure you in with free training and free seminars
For a fake guru to get you to buy their course, they need to get you hooked. They have to catch your attention by offering something valuable.
They do this by telling you to sign up for their free training and seminars.
I’m not sure if you’ve ever signed up for one of these, but those training and seminars usually leave you more confused and make you ask more questions.
They’re completely useless and usually just use it to market their paid courses.
They give you their backstory to make them relatable
Fake gurus usually target desperate people – people that hate their jobs and are desperate to find another way to make a living.
Desperate people are generally emotionally vulnerable, and the fake gurus know this.
In order to dig into their emotions, the gurus will give their backstory of how they were once in their shoes.
They talk about how they were once broke without money, hated their job, and had nothing. They continue with their cheesy story and talk about how they worked hard and changed their lives, eventually achieving financial freedom.
They’re trying to sell you a dream. Everyone dreams of being financially free and not having to work a 9 to 5 they hate. It’s an emotional subject, which is why the gurus use it.
They say that YOU need to put in the work
Let’s say that a fake guru puts in the work to create, market, and sell a course. They managed to sell a couple hundred.
What are they going to do when all those people find out the strategy actually doesn’t work? They’re going to be upset and come after the guru.
To avoid this, they say that you need to put in the hard work from the get-go. That way, if the strategy doesn’t work, it becomes your fault because you didn’t work hard enough.
This automatically takes the liability off of the gurus, so you can’t blame them when the strategy that wasn’t going to work in the first place doesn’t work.
They show off their luxurious lifestyles
Fake gurus usually have videos of them driving in fancy cars or riding in private airplanes, living in gigantic mansions.
They do this to create trust with their audiences. People won’t just spend money on something they aren’t sure is going to work. But when they see that the guru is already living the life they aspire to achieve, they tend to trust them more.
It gives the gurus more authority to talk about the subject since they appear to have already succeeded
Once their viewers trust them, they have a higher chance of spending money and buying their course.
They use Pump and Dump schemes
Do you know what a low-float stock is?
A low-float stock is a stock that has a low number of shares.
Think about this concept: if a lot of people buy a stock that has a low number of shares, what will happen to the price?
The price would skyrocket.
It’s the simple concept of supply and demand. If a lot of people demand something of little quantity, it would jack the price up.
A lot of fake gurus with a decent audience following use this concept to make money. They buy into a cheap stock with a low float. They then make videos about how “this new stock” is going to be the next Tesla or Amazon, and how their followers need to buy in now before they miss out.
This creates FOMO or fear of missing out. All of their audiences would flock to the stock and buy-in, causing the price to go up, and the guru would sell to close their position once the price goes up.
Everyone else left holding the stock loses money as the price falls back down and the fad dies out.
Examples of Fake Gurus
Now, the fun part. Let’s take a look at some fake gurus I’ve found on the internet.
Ricky Gutierrez
Ricky Gutierrez is a 20-something-year-old fake guru with over a million subscribers on YouTube. He lives in a mansion and shows off his multiple different cars and sells a course called “Learn Plan Profit.”
One of the things he says is that he achieves 1% in the stock market every day. Now if this were true, why would he be selling a course? Why would he spend so much time making tons of YouTube videos when he can make even more money just focusing on his strategy?
Let’s do the math on 1% a day. Let’s say Ricky started the year off with just $1,000.
Here is the equation to calculate an additional 1% in one day:
$1,000 + $1,000 x 0.01
To repeat this for one year, we can use the following equation:
$1,000 x (1.01)^365
Solving this equation would give us this:
$37,783.43
Can you imagine turning $1,000 into $37,783.43 year after year? If this was true, Ricky would not be making videos on YouTube.
Ricky also made a video explaining how he can make 1% a day. The only thing is, he doesn’t explain how. He goes off-topic and shows himself transferring $50,000 from his trading account to his bank account. He then shows a bunch of stocks that are up +100% and says that everyone has their own strategy and that he uses his own.
He continues to talk about how there are different methods to achieve the same result and that he trades ETFs. But what does that have to do with how he makes 1% a day?
All he does is beat around the bush and never cuts to the chase.
You may get lucky and find yourself turning $1,000 into $37,783.43. Getting lucky is one thing, but doing this consistently is an entirely different thing. It’s impossible and insanely risky.
ZipTrader
Charlie from ZipTrader is another YouTube fake guru with over 600,000 subscribers.
He never shows his account balances or verifies his income statements, and he sells a course called ZipTrader U, outrageously priced at $500.
His videos are often about cheap stocks of companies that you’ve never even heard of. He claims that these companies are going to skyrocket and become the next big thing. But the thing is, the majority of these companies have not profited yet! They’re still in the beginning stages, which makes them extremely risky investments.
Sound familiar? There’s a high probability that Charlie is running a pump-and-dump scheme.
Let’s take a look at a few examples.
Back in 2021, Charlie made a huge deal about a stock called Nano Dimensions. He went on and on saying how the stock is undervalued and urged people to buy in. Where’s the stock now? Let’s take a look.
It’s at rock bottom, of course.
Jumia was also another company that Charlie constantly raved about. He said that this company was going to be the next Amazon in Africa. What’s the price of the stock now?
At rock bottom as well.
If that’s not enough, here’s another one. Look at where the price is now.
You should avoid investing in companies like this because it’s super risky. You never know when the company may go out of business because they’re unstable businesses that have yet to prove their business model.
Conclusion
These days, the internet is extremely saturated with fake gurus. You really need to watch where you get your information from.
A much better alternative to day trading stocks is having a simple 3-fund portfolio. It’s the simplest and easiest way to build generational wealth in the stock market, and it’s what I teach here on InvestaMind. It’s also proven to be effective and profitable.
You shouldn’t treat your finances like a lottery ticket. There’s no such thing as a secret method you can use to get rich in a short amount of time. You may have seen some people pull it off, but luck plays a huge role in that.
Rather than trying to get rich quickly, learn how to build wealth over the long term. Learn how to distinguish between assets and liabilities and buy more assets. Learn how to spend less than you earn, save, and invest. This is the proper way to manage your finances.
Getting rich, along with anything meaningful in life, takes time. But keep on learning, put in the effort, and you’ll come out on top.
InvestaMind is a great resource to start learning. I offer all the information you need to take charge of your finances for completely free.
Why, you ask? I’ve seen too much B.S. online and have fallen for them myself. My goal is to help you manage your finances the proper way so you don’t have to go through the same thing I did.
Thanks for stopping by!