Avoiding scams
Guaranteed returns, or an invitation to a chat group to follow a 'teacher' — always a scam.
In One Sentence
Anything that guarantees profits, rushes you to decide or wants you to join a group and trade along with a "teacher" — assume it's a scam.
Why It Matters
Scammers keep changing their pitch, but they only ever hold a few cards: guaranteed high returns, a celebrity's name used without permission as an endorsement, asking you to download an app or wire money to a personal account, and limited-time offers to force your hand. In all my years of investing, I've never seen anything that was truly guaranteed; and if there really were a sure way to make money, a stranger wouldn't be the one teaching it to you. If something feels off, call the 165 anti-fraud hotline to check. (This applies to Taiwan.)
One Number
Taiwan's day traders watch the market all day, every day, yet fewer than 1% of them manage to profit consistently over the long run (Barber et al. 2014 · Chapter III).
In the Book
Section 7 of Chapter V groups avoiding scams with not borrowing, not gambling and not using leverage. Appendix 3 in the Appendix sets out the five most common scam pitches.
Go Further
- Defensive investing Putting "don't lose" first starts with not letting anyone con you out of your principal.
- Circle of competence If you can't see how something makes money, don't buy it — ever.
- Borrowing and leverage Avoiding scams and not borrowing are covered in the same section; both call for patience over haste.
- Broad-market index ETFs My method is to buy broad-market ETFs myself every month; I have no use for any "teacher" or hot tip.