I’d take Warren Buffett as the perfect example of a great investor — arguably the greatest — who never formulated and merchandised a comprehensive investment course. He also hasn’t authored a book that details the strategies that drew him billions of dollars in the stock market. However, Warren did teach investing at the University of Omaha for a good decade (’52 to ’62), but that was primarily to reinforce what he had learned from taking the Dale Carnegie public speaking course. So, it’s pretty appropriate to say that Warren Buffett was laser-focused on his craft for the large part of his career and making money off of selling stock tips is peanuts compared to doing the real thing.
The point of starting this article with a Warren Buffett example is to segue to stock investing classes conducted by “experts.” These self-proclaimed investing authorities have always incited the cynic in me, and they trigger a desire for me to probe into their motives for selling their “money-making systems.” Because, to me, if the greatest investment mind in history hasn’t created an elaborate program that blatantly gives away his secret sauce, then why should I trust the others who claim to have the secret formula?
My goal for writing this article is to help readers be more forethoughtful in spending their time and money on classes about investing. To make it easier for our readers, I’ve highlighted facets of an information product that should be examined or even scrutinized.
The Confused Guru
A three-second search on Google about investing courses would yield a multitude of results. And, because investing is one of my interests, the algorithm of Facebook permits stock seminar promotions and other finance-related ads to permeate my news feed.
One time I saw a sponsored post of a particular stock investing guru who had embellished his name with all sorts of titles like a consultant, an investor, a trader, and the top dog of his company, and although there isn’t anything wrong with that, I couldn’t help but question what he offers.
Somehow he had mixed up investing and trading! What he was promoting is investing, but the strategies outlined in his modules included words like quick profit trading, hourly trading, and scalping.
To an experienced investor, trading and investing are obviously not the same and using the word “quick” in proximity to investing is simply erroneous — unless the sentence goes like, “making quick profits is not investing.”
The dictionary may fail to give me a credible argument, but I leave this to how trading and investing is defined in finance.
Here is the goal of investing according to Investopedia:
“The goal of investing is to gradually build wealth over an extended period of time through the buying and holding of a portfolio of stocks, baskets of stocks, mutual funds, bonds, and other investment instruments.”
Note that the keyword there is to gradually build wealth over an extended period of time — no way does that mean “quick” to me.
Now, here’s Investopedia’s definition of trading:
“Trading involves more frequent transactions, such as the buying and selling of stocks, commodities, currency pairs, or other instruments.”
Yes, when someone is trading, they are taking more frequent transactions, which can qualify as “quick” in relative terms. Hence, my humble request to that stock investing guru: please make up your mind.
Scrutiny and Skepticism on Investing Courses
Since not everyone can be relied upon to lecture life-altering financial decisions, I practice scrutiny and skepticism. I look at every opportunity with a grain of salt — books and courses are not exempted.
Here’s my rationale: if I’m going to invest money and especially time on a learning opportunity, I might as well double or even triple check if I am indeed poised to learn something.
What are the contents?
The worst thing to detect midway into an investment book or course are platitudes, irrelevant motivational messages, statements that merely ride on previous assumptions or information that can be retrieved from a thorough internet search.
It is not that I am hunting for breakthrough or sophisticated data all the time, but if I am going to spend hard-earned cash and irrecoverable time, the book or course should be well worth it.
So, I counteract by investigating the author, the presenter, or the lecturer of the learning material. I look at the contents of the course and the objectives, and I cross-check them to what I know before I subscribe myself to it.
I don’t instantly reject a book or a class if I encounter a topic I am familiar with, but instead, I assess what my overall gain would be. If the overall learning constitutes new and practical knowledge in contrast to what I know, I will give it a shot.
What’s the motivation behind it?
The reason for assessing the author, presenter or lecturer is not to end up disappointed and dissatisfied. As I said, the worst thing is to find some irrelevant stuff in a course or book, so the way around it is to assess the person who manufactured the information.
I look for answers as to who the teacher is and what he has done so far. If he has verifiable credentials and a track record, I will be on the lookout for those too. The reason for this step is to understand the incentive of the person for selling his program and if the information he offers is worth its weight in gold.
If the person makes money from his stock investing strategies, why would he bother teaching his techniques?
Could he be a charlatan who is only motivated by getting clients to open trading accounts for his company so he could earn a commission?
Could it be that his book or course is just marketing material for a more expensive product?
Does he share accurate information?
My job is to know the reason why he sells his system so that I can judge the quality. I suppose this step is somewhat unusual because the majority of people de facto pay deference to figures of authority, i.e., we may easily believe someone who seems credible enough.
But, my rule is to break that dogma and boldly ask (whether directly or indirectly) the fundamental whys and whats to the authoritative figure: why should I believe you? why do you do what you do? what can I learn from you and what makes you the expert?
Are there free alternatives?
Once I’ve collected all that I need to know from utilizing the two previous methods, the last step is for me to check if there are free resources. Considering that not all information products are equipped with game-changing data, I assume that a free online article or video may have broadcasted the same information already.
Some expensive investing classes, for example, are just repackaged versions of a book that I can get from a public library. Or if it isn’t available in the library, I’m sure the cost of the book is still much cheaper than the tag price of the actual course.
Books like The Intelligent Investor, Security Analysis, One Up on Wall Street, and plenty of others are packed with ageless stock investing wisdom and are unquestionably more affordable than a $5000 course without Warren Buffett as the teacher.
Still, there are some classes conducted by the lesser-known talents of the investing game that are certainly worth the time and money. These nonmainstream talents are propelled to share their techniques out of the passion for teaching and helping others — much like the great Peter Lynch. However, being selective is still the key to avoid spending money on a lousy class or a book. It is always practical to exercise skepticism and scrutiny to weed out the best learning material from the shoddy ones.