Online investing content is abundant. Some of it is thoughtful education. Some of it is marketing. Some of it is persuasion that pretends to be education.
Key takeaway
A claim is only as strong as its evidence, incentives, and missing context. Online, the missing context is often the point.
The challenge is not that people are gullible. The challenge is that the internet rewards confident simplification. Nuance is slower, and slow content rarely goes viral.
This article provides a framework for evaluating investing claims online in an Australian context. It focuses on how to read claims, identify incentives, and notice missing information.
This is general educational information, not personal financial advice.
Start with a definition: what counts as a “claim”?#
A claim is a statement that implies something is true and matters.
Examples include:
- “This strategy beats the market.”
- “This indicator predicts crashes.”
- “This stock is undervalued.”
- “This product is safe.”
Claims are not automatically wrong. They are simply statements that can be tested, questioned, or clarified.
A “soul” line that often holds up is that the most persuasive claim is usually the one that cannot be pinned down.
The core framework (five questions)#
1) What exactly is being claimed?#
Many online statements use soft language that feels precise but is not.
Watch for:
- Undefined terms (“safe”, “low risk”, “consistent returns”)
- Moving targets (“in this market”, “for the next few years”)
- Vague comparisons (“better than most”, “outperforms”) with no benchmark
A clear claim has:
- A benchmark (compared to what?)
- A timeframe (over what period?)
- A risk statement (with what volatility or drawdown?)
- A cost statement (after what fees?)
2) What evidence is shown, and what evidence is missing?#
Online evidence is often:
- A chart of a hand-picked period
- A screenshot of a single trade
- A backtest without transaction costs
- A testimonial
These are not “fake” by definition. They are incomplete.
Research on performance reporting and individual trading behaviour highlights that outcomes can be heavily influenced by timing, costs, and behavioural execution.¹
Common missing context includes:
- Fees, spreads, and FX costs
- Taxes
- The effect of leverage
- The full distribution of outcomes (not only the good ones)
3) What is the incentive structure?#
Incentives shape content.
Common incentives include:
- Affiliate links to brokers or products
- Paid courses or “memberships”
- Sponsorships
- Lead generation for advice or trading services
- Social media engagement itself
ASIC has published guidance on discussing financial products and services online, including the risk that content can stray into regulated conduct.²
Incentives do not automatically make content wrong. They increase the need for sceptical reading.
4) What would have to be true for the claim to fail?#
This is a useful way to reverse the persuasion.
For example:
- If a strategy “beats the market”, what happens in markets where volatility rises and spreads widen?
- If a signal “predicts crashes”, how often does it produce false alarms?
- If a product is “safe”, what happens when liquidity dries up?
Many online claims avoid falsifiability by staying vague.
5) Is the claim compatible with basic finance principles?#
Some claims contradict basic constraints:
- Higher expected returns typically come with higher risk.³
- Persistent outperformance is difficult in competitive markets.³
- Costs matter because they reduce net returns.⁴
A claim does not need to cite academic papers to be sensible. But if it implies free returns without risk, it is fighting the basic structure of markets.
Common online claim patterns (and why they work)#
Pattern: “Just follow this simple rule”#
Simple rules spread because they reduce cognitive load. But real investing systems have trade-offs.
When a rule is offered, the missing piece is often the regime where it fails.
Pattern: “Here is my track record”#
Track records can be real and still misleading.
Common issues include:
- Survivorship bias (only successful accounts are visible)
- Selection bias (only the best period is shown)
- Missing benchmark comparisons
- Missing risk metrics
Pattern: “Institutions don’t want you to know”#
Conspiracy framing creates narrative certainty. It is persuasive because it explains complexity with a single villain.
It is also a red flag because it discourages verification.
Pattern: “This is not financial advice” plus a strong recommendation#
Disclaimers do not neutralise content. In Australia, whether something is advice depends on the substance and context, not only on a disclaimer.²
A simple evidence hierarchy (useful online)#
Online content often mixes three types of “evidence”:
- Anecdotes: a person’s experience or a single example trade.
- Demonstrations: a backtest or chart showing historical performance.
- External documentation: product documents, audited reports, regulator guidance, or peer-reviewed research.
Anecdotes are easy to understand and easy to share. External documentation is slower, but it is usually harder to manipulate. When a claim is important, it is often worth noticing which tier of evidence it relies on.
Verification tools in an Australian context#
Online claims often come with a named provider: a broker, a platform, a “fund”, or an advice service.
ASIC registers can help confirm legal identity and licensing status for Australian providers.⁵ This is not a quality rating. It is a basic identity check.
For products, the Product Disclosure Statement (PDS) and Target Market Determination (TMD) can provide the product’s mechanical truth: fees, risks, liquidity, and distribution conditions.⁶⁷
A calm conclusion about uncertainty#
No framework turns uncertainty into certainty. The best it does is reduce avoidable errors.
Online, the most valuable skill is not prediction. It is interpretation: spotting when a claim is evidence-based versus when it is storytelling.
A second “soul” line that tends to be true is that good investing ideas usually survive boring questions.
Closing#
Evaluating investing claims online is mostly about clarity and incentives. Clear claims can be tested. Vague claims can only be believed. A simple due diligence framework focuses on what is claimed, what evidence is missing, who benefits, and whether the claim respects basic finance constraints.¹³⁴
In Australia, verification can also include checking licensing and identity through ASIC registers and reading product documents that describe fees, risks, and operational rules.²⁵⁶
Summary#
Online investing content mixes education, marketing, and persuasion. A practical evaluation framework asks what is being claimed, what evidence is missing, what incentives exist, how the claim could fail, and whether it fits basic finance principles. In Australia, ASIC guidance and registers, alongside product documents such as PDSs and TMDs, help separate identity verification and product mechanics from online narratives.
Sources#
- Barber, B. M., & Odean, T. (2000). Trading is hazardous to your wealth: The common stock investment performance of individual investors. The Journal of Finance, 55(2), 773–806. https://doi.org/10.1111/0022-1082.00226
- Australian Securities and Investments Commission. (2022). Information Sheet 269: Discussing financial products and services online. https://asic.gov.au/regulatory-resources/find-a-document/information-sheets/info-269-discussing-financial-products-and-services-online/
- Fama, E. F. (1970). Efficient capital markets: A review of theory and empirical work. The Journal of Finance, 25(2), 383–417. https://doi.org/10.2307/2325486
- Australian Securities and Investments Commission. (n.d.). Fees and costs. Moneysmart. https://moneysmart.gov.au/managed-funds-and-etfs/fees-and-costs
- Australian Securities and Investments Commission. (n.d.). ASIC Professional Registers. https://asic.gov.au/online-services/search-asics-registers/
- Australian Securities and Investments Commission. (n.d.). Disclosure: Product Disclosure Statements (PDS). https://asic.gov.au/regulatory-resources/financial-services/disclosure/
- Australian Securities and Investments Commission. (2021). Regulatory Guide 274: Product design and distribution obligations. https://asic.gov.au/regulatory-resources/find-a-document/regulatory-guides/rg-274-product-design-and-distribution-obligations/