Opinion – From Grain to Grain: Don’t fall for false promises like this one

Despite the fact that so many reports about scams are published, I am impressed that there are still people who believe. Yesterday I came across a false promise that I will share with readers.

How many times have you seen someone advertise the possibility of double-digit earnings per month?

I’ve seen some. From the educational aspect, I’m always curious to see what the advertiser promises and what their real intention is.

However, this week, I saw, on one of the main financial portals in the country, an announcement of earnings between 2 and 3 digits per week.

Just to clarify, double digit gains are gains above 10% and triple digit gains are those above 100%.

That offer made me fall off my chair.

If the promise of earnings from 10% to 100% per month already seems like a lie, imagine per week. To my surprise, this promise was made by a renowned financial market research company that begins with the letter L. The adoption of this practice is shameful for this company L.

I’m sure many ended up being lured by the false promise. It is intriguing how investors are suspicious of yields of 120% of the CDI, or 1.27% per month, but think that it is likely to earn 100% or more per week.

Most people are unaware of the relationship between return and risk. Many believe that more risk means more return. This is not true. If it were true, it wouldn’t be risky.

More risk means greater potential for return, but also for loss.

However, the potential for gain does not rise linearly with risk, nor does the potential for loss. Remember that risk means uncertainty about future returns.

Explained further, the potential positive return grows at diminishing marginal rates with risk, but the potential loss grows at increasing marginal rates. This means that as the risk increases, an enormous asymmetry between potential gains and losses begins to emerge.

For example, something that can give you 10% or more per week, possibly has a chance of making you lose up to 100% of the capital invested in the same period. If an investment can earn you 100% or more a week, chances are you’re leveraged. Soon, you can lose everything and still have to contribute more to pay the resulting debt.

Company L’s aim was just to lure innocent people to sell course subscriptions and reports. That is, the sale of a dream that will not come true. Avoid falling for this type of promise.

Easy, quick and high earnings are not natural in the financial market. If someone happens to find this magic formula, he will never teach or sell it.

Michael Viriato is an investment advisor and founding partner of Investor House

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