How To Spot an Investment Scam on Twitter

investment scam on twitter
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When I was traveling around England last fall, I decided to make a stop at Cambridge University to hang out with a friend I made along my travels. Through him, I met another Cambridge university student from Nigeria with whom I also became buddies, who I’ll call TJ. He asked me about a couple guys who were hitting him up for investment money on Twitter, and he wanted to know if they were legit. They had thousands of followers, impressive sounding tweets, and pictures of beautiful luxury cars all over their pages. Thus began my education on how to spot an investment scam on Twitter. I want you to be able to tell if an “investment guy” on social media appears to be a scammer, so I am equipping you with three questions to ask yourself before giving them any money. I will use the account examples TJ provided, the Twitter handles @elijah_oezz and @robertTM_ . I am linking to their profiles for the pictures in this article. If their profiles ever get pulled then this post will be text only. These two Twitter guys were selling a mentor and advisory service to teach people how to trade futures contracts.

What Proof of Investment Skill is Posted?

investment scam on twitter
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You do not need to be an investment genius to look at the messaging on the left from their Twitter accounts and know that it tells you absolutely nothing. This info is taken from the @RobertTM_ handle. For some background information, futures are derivatives contracts offered on exchanges to bet on anything imaginable. You can buy these derivative contracts on speculation corn prices will triple, gold will collapse, oil will recover, or soybean will enjoy a bumper harvest. You can also bet on the levels of currencies, stock indexes, interest rates, and more. It is the wild west for people who do not know what they are doing.

Notice how the comments on the left make no mention of how much money was risked to make the 92 pound profit. Another problem with this chat is imagine I bet on black and red at the same roulette table with two different people’s money. I am guaranteed to win, and when I do I can take a picture of the event and post it on my Twitter page. I do not have to mention the guy who lost money, because I control the message. This is their strategy in effect. They want thousands of small time investors to trust them with their savings. By the law of large numbers, a few of these individuals will earn a significant amount of money because the futures markets are a zero sum game. With these significant wins from a few accounts, these Twitter scammers can market their services as investment geniuses without accountability.

So if someone hits you up for an investment service or advice offering on social media, ask to see their performance record. Do not accept mere profit and loss figures as they mean nothing. You need to see percentage performance. Furthermore, an established firm will have these performance records from audited financial statements. A lot of their strategies involve making lots of small profits while leaving you exposed to large losses. Ask about the worst case scenario for an investment strategy. If they cannot answer you plainly what could happen where they would lose money, they are idiots or crooks and you shouldn’t be investing with them regardless of which they are.

Do They Show Off?

investment scam on twitter
A resounding yes for blatant materialism. Source

Notice this car above is the same as the one from earlier in this post. These Twitter traders place more pictures of fast cars on their profiles than investment results. Even if they posted solid returns, I still would not touch these guys as investment managers with a 10 foot pole because of their ostentatious car photos.

Whether you realize it or not, these guys are appealing to one of the basest urges of young men: easy riches. By flaunting these beautiful vehicles while pitching a get rich quick investment scheme, they sell the opportunity to look brilliant while living in luxury. What could be better than that? By posting all the photos of things they have that you don’t, these guys can inspire envy and elicit a desire for what they have.  Even though you know their investment program is probably a little too good to be true, you just have to find out. True investment professionals would never flaunt their riches this openly. They tend to care a lot about their own privacy. I would not be surprised if the cars in these guys’ Twitter accounts are rented for the day or leased. They view it as a business cost for sucker acquisition marketing.

If Their Investment Program Is So Good, Why Would They Give It Away Any Price

As a former professional bond trader, whenever I had information that nobody else had, it was like sitting on gold. You never told that info to anybody. The best in the business were the best at getting information and giving none back. The guy with the best picture of what was going on would tend to make the most money. In the stock world, information advantages are worth even more because of the greater volatility of the stock market. In the futures markets where these two Twitter scammers are playing, information advantage would be even better than the stock market because you can earn multiples of what you bet if you are correct.

With all the hedge funds out there getting billion dollar paydays, why would anyone give away information if it was indeed special? It would make no economic sense whatsoever. You would open your own hedge fund, bet everything you had on the price of corn going higher because of some rare corn virus, and walk away an extremely rich person. How many people could an investment mentor hope to sign up for his program? If you do the math, you would have to have millions of people signed up for this investment program before the gains from starting your own hedge fund firm would be outweighed.

Namely, this is why I view all investment newsletters predicting future stock prices as total junk. If there was value in what the author had to say he or she would trade on it. Perhaps then you could sell your newsletter afterwards and try to push up the price of the stock you just bought. Plenty of people have done just that.

Similarly, any service that promised to turn you into a fantastic active investment trader should be uninterested in you. I do not mean that in a bad way, they should be uninterested in me too. If these guys were actually good, they should have zero time for us and constantly be trading for big money accounts to take home big paydays. The fact that they are targeting smaller investors makes the likelihood of this being a scam almost certain.

Did TJ Figure Out This Investment Scam on Twitter?

I asked TJ for more detail. I was floored by these guys’ aggressiveness. They asked for his credit card number and then when he gave part of it to them they tried to draw $1,000 from the card to fund his “account.” He was also marketed heavily to by his “assigned account manager.” TJ was just a student and had barely $100 to his name, but somehow an account manager was going to give him close attention and focus with this low level of assets?

Clearly these guys are frauds. The problem is there are a lot of people just like them out there that will take advantage of you. Follow the test above and you will almost always be able to tell if someone is a fraud in no time at all. Be careful to spot an investment scam on Twitter if someone like this ever tries to take your hard earned money.

Ever experienced fraudulent or scam-like financial practices or sales pitches? What context did they occur in? Feel free to comment below. 

2 thoughts on “How To Spot an Investment Scam on Twitter”

  1. Nice job bringing some big red flags to the light. It is sad how many of these scams are out there. Hopefully this saves somebody out there a very expensive lesson. Another red flag is when returns are “guaranteed” or consistently in double digits with never a down year.

  2. Might be harder to come up with rules for identifying legitimate investment opportunities discovered on social media. I would imagine that 99% of opportunities are either outright scams or just high risk.

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