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When I buy books or courses about investments, how can I make sure that I am learning from legitimate educators rather than charlatans? What are some basic ways I can use to determine legitimacy?

I have always suspected that most self-proclaimed "stock market gurus" are charlatans because:

  1. They don't provide statistical evidence of the validity of the techniques they teach.

  2. They don't show you their audited trades, profits and losses.

  3. They may make more money from selling "educational materials" than from the application of their investment methods.

  4. The educational material they provide may be full of self-promotion, and they always attempt to up-sell (e.g. "buy my $3000 course to learn more!").

Points (1) and (4) are easy to check — simply read their book or do their course. Point (2) is not always valid because some people value their privacy. Point (3) is very difficult to verify. Are there other tell-tale signs of a fake investment guru?

Due to the perceived amount of charlatans who are authoring investment books, I have resorted to reading university textbooks. Books written by university professors are presumably less likely to suffer from the flaws I mentioned above, because university textbook authors have a different motive for writing books. If I now want to read "mass-market" investment books (e.g. those in the Wiley Trading Series), how do I filter out those written by charlatans?

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    Jack Bogle of Vanguard fame. Read his books, they are timeless. You don't need much else. – Pete B. Sep 6 '20 at 9:50
  • @PeteB. How can I ensure that this Mr. Bogle is not a charlatan who wants to promote his "Vanguard funds"? – user102086 Sep 6 '20 at 16:17
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    A university professor may not have some of the negative incentives of others ... but he also likely has no practical experience. He may well have lots of theories that he is absolutely convinced are reliable, but he's never actually tested any of them. There are lots of crackpot professors. There's an old saying, usually said about utopian social or political schemes but equally applicable here: "Some ideas are so stupid that only a college professor would believe them." Not to say that a college professor might not have valuable things to say. But far from a given. – Jay Sep 7 '20 at 14:59
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    @user102086 Well, he is dead now and long retired from Vanguard. Mr Bogle, promoted index funds which can be found at Fidelity, Schwab, (as well as Vanguard) and a number of other brokers. So if you don't like Vanguard pick an index fund from somewhere else. When he wrote his books low cost index funds were very rare, the man truly served the retail investor. – Pete B. Sep 7 '20 at 17:17
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More so than ever, we are inundated today with get rich quick pitches for courses and books and as you noted, it's difficult to separate the wheat from the chaff. But you can't go far afield with those who have succeeded in one fashion or another:

There are many "stock market gurus" who either have a track record or whose teachings have achieved results: Warren Buffett, Peter Lynch, George Soros, Benjamin Graham, Richard Dennis, Jim Rogers, John Neff, John Bogle, etc.

If it interests you, in the technical analysis field there are many whose contributions have become industry standards: John Bollinger (Bollinger Bands), George Lane (Stochastics), Gerald Appel (MACD).

One would expect that a book written by any of the above named would have merit.

There are also many worthwhile books about specific topics whose authors may not be world famous: options, ETFs, mutual funds, bonds, et al.

Achievement and authorship doesn't mean that some haven't crossed over to the promotion selling of educational materials and investment courses. Fortunately, you have the benefit of the internet. There are lots of evaluations that rate the performance and usefulness of these.

As for books written by university professors, I'd offer that many may be more academic in nature than practical in terms of application and usage. You want to learn how to trade from a trader, etc.

On a personal note, I have 40 years of retail experience with options. I have read several option books as well as many web sites and blogs. I'm aware that I can always learn more and improve my game so I have attended a few 1-2 hour introductory pitches for an expensive course. Because I have more than a basic understanding, I have been able recognize the BS. While some legitimate courses may exist, I have never found one that was more than hype. My point? In order to evaluate such courses, you need to have some degree of financial literacy. That applies to books as well. Achieve that and you'll be able to "filter out those written by charlatans."

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There are also bloggers who have saved up enough to achieve financial independence, e.g. around $1m. While not a book they give step by step examples of the changes they have made in their lives and some do publish their finances. Try Mr Money Moustache and 1500days. A reliable financial advisor is someone you pay a fee to. If they work for 'free' they are working on commission, and may not have your best interests at heart.

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  • Are you affiliated with Mr Money Moustache or 1500days? – user102086 Sep 8 '20 at 13:30

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