Expert Contributor by Brendan Magee, Founder & President Inevitable Wealth Coaching
Mobile Trading Apps Destroying More Than American Dreams Mobile trading apps have exploded over the past two years. With a cell phone, anyone can start buying and selling stocks, bonds, and all kinds of investment products, whether they know what they are doing or not. Think for a second what could happen if the public had unsupervised access to their prescription medication. Can you envision what a disaster that would be? The apps make use of subtle yet very suggestive marketing campaigns. One ad from the Super Bowl claimed “You were born an investor.” Nothing could be further from the truth! No one is born an accountant, a doctor, a lawyer, or a master plumber. Real and permanent harm can be done by people believing they are experts in something that they aren’t. Massachusetts Securities regulators agreed and charged one mobile app with luring young investors into making risky and costly trades by making investing seem more like a video game. Apps have also given investors access to margin accounts where they borrow against their account values. Like any other debt account, there are heavy interest charges and fees that go along with them. A tragic story tells of a 20-year-old investor who never heeded any warnings, and after believing he ran up debts of over $730,000, sadly he committed suicide.
What these mobile apps really take advantage of is the vulnerability of human beings. No one likes to think of themselves as vulnerable. But let’s face it we all have blind spots and biases that can lead us into destructive thinking and behavior. Bullies know how to seduce us into believing something about ourselves that just isn’t true. They manipulate our desire to belong and fit in, to the point where we completely lose sight of the risks we are exposing ourselves to. So effective was one app that from January to April, they racked up over three million funded accounts which now has a value of $11 billion. The destructive behavior that app users are being talked into is stock picking, market timing and track record investing, which in all their forms have been academically proven to be destructive. Why? Because to be successful at these activities a person has to have the ability to consistently predict the future.Through bait and switch tactics, some mobile apps are turning future generations of investors into gamblers without them ever even suspecting it. As a point of reference, The Prudent Investor Law of 1990 states “Efforts to separate the winners from the losers through forecasting and analysis are deemed wasteful.” Sadly, it is sometimes more than money that is being wasted.
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Inevitable Wealth Coaching Empowering Investors
Newtown Square Friends & Neighbors
August 2021
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