On Our Minds: How I Outsmart Questionable Investing Tips

When I started investing, I immersed myself in financial news, blogs, books, social-media accounts, Discord channels, podcasts and other media. What I found: a passionate community of investors sharing tips, resources, ideas and more – the kind of knowledge that can build confidence. But, as a journalist for more than a decade, I also found myself questioning a lot of what I was finding.

Like the “fake news" that continues to erode public trust in legitimate media, financial misinformation is becoming a real concern. Yale University researchers recently attributed costly market movements to misleading articles published by news-like sources. New investors put a lot of stock into social media, which can expose them to great new ideas, but also to questionable advice (just ask anyone who's lost money on meme stocks.)

It's not always easy to filter out information that's misleading or outright false. As our own seasoned fact-checker and former editor Mary Levitski writes, “The thing with misinformation is that it looks a lot like the real thing. The more authentic 'imitation facts' seem, the more likely we are to eat them up unquestioningly." (Her Fact-Checker's Guide to Misinformation is well worth a read!)

I recently circled back to resources from the Poynter Institute for Media Studies, a journalism non-profit, for a refresher on catching misinformation online. Here are some highlights that resonated with me.

Understand how algorithms work

Whether it's the notifications that appear on your phone, or the order in which you receive search results and social media posts, algorithms play a major role in determining what you see online, according to Poynter. Some algorithms measure engagement – like your search history, social-media likes or clicks – to serve you similar content that holds your attention.

For investors researching a stock or investing strategy, they may be fed more of the same, over and over. This content feedback loop can reinforce our views and lead to confirmation bias, causing us to miss opportunities or take risks we're not entirely comfortable with. Understanding the relationship between our online behaviour and the content we see can help us be more critical consumers of information online.

Misinformation feeds on emotion

One reason misinformation works so well is that its plays on our emotions – like “rage, anxiety and fear," writes Poynter – and what's more emotional than money? Some content intentionally triggers our emotions to boost views or shares.

Any time we let our emotions hijack our investment decisions, we risk doing something we may regret. Knowing this can help us look out for and avoid appeals to FOMO (say, chatter about missing out on a market trend).

Follow the money

An important question to ask about any investing content is: Does the source have a vested interest in the securities it discusses? Look (or listen) for disclaimers related to their interest or positions. One of my favourite podcasts turned its disclaimer into a rap song – but it's not always immediately obvious. Sometimes the source is intentionally hidden: In 2017, the Securities and Exchange Commission laid charges after determining that several bullish articles, in the guise of independent, unbiased analysis, were secretly paid for by communications companies hired to promote a company's stock.

Poynter suggests using a “lateral reading" strategy to do a bit of background research, such as searching an outlet's name in phrases like “is X credible?" (Beware: on more than one occasion I've noticed the top search result comes from the site itself.) Similarly, you can run a check on an author's name. Using this tactic, I've discovered articles by writers with no expertise at all.

As Levitski writes, going back to the source is another important tool. See an eyebrow-raising headline? Try finding a relevant press release on the company's website or read through an earnings report for yourself.

Sometimes, it's plain ol' clickbait

About a year ago, a certain hot stock was making headlines and I wanted to research it for myself. I found an article titled “Why you should buy [company name] right now" and clicked through. Unfortunately, after a brief mention of the company in question, the article launched into a discussion of a different organization entirely. Then it tried to sell me a subscription.

This tactic, known as clickbait, draws readers in using misleading headlines and other tactics. More telltale signs of clickbait can include unrelated or over-the-top images, suspenseful headlines that leave out information, and unrelated sales pitches.

It happens to me, too

Take heart: if you've fallen for misinformation online, you're not alone. It can happen to anyone, regardless of investing experience – or journalistic background (Guilty!). Spotting misinformation takes practice and discipline. If you make a mistake, remember to give yourself grace and consider it a learning opportunity.

Here are a few things I'll be doing differently moving forward to keep investing misinformation at bay:

• Tailor my newsfeed: Many news-aggregating apps, like the kinds built into Android and Apple smartphones, allow users to hide content from specific outlets. If I spot a repeat offender, I block their articles. I've also unfollowed several social-media accounts.
• Take my own advice: Rather than seeking out content for investing tips that may or may not work for me, I will use articles as a starting point for doing my own research. I didn't become a DIY investor to have others make decisions for me.
• Trust my gut: If something feels off about a piece of investing content, I will close the tab even if I can't immediately spot the red flags.
• Bring paper back: The digital age has incentivized the spread of misinformation. While many online resources are credible and easily accessed, I've beefed up my (physical) reading list with a number of investing books.
• Invest in information: While legacy media outlets are not immune to misinformation, they tend to be some of the most reliable sources of information.