Where there is opportunity, there is opinion and opinion is what makes a market, especially if you can make money predicting it. Prediction markets have fast become a pure source of money-backed opinion. Which I’d say is more reliable than survey data. But, unfortunately, where there is opportunity, there are also opportunists. And some of them are not always on the level…
The rapid growth of prediction markets is creating a new opportunity for social media influencers to promote speculative trading products, despite growing evidence that consumers remain deeply sceptical of financial content shared online.
As with forex social media scams, it was reported on the Wall Street Journal that creators were allegedly posting videos showing simulated trades and exaggerated profits on prediction market platforms, raising fresh questions about transparency in financial marketing and the risks faced by retail traders.
The allegations are likely to add to concerns about the growing influence of so-called “finfluencers” social media personalities who discuss investing, trading and financial products with large online audiences.
According to our latest Good Money Guide’s latest finfluencer research, trust in financial promotions on social media remains exceptionally low. Just 6% of respondents said they trust social media platforms to display financial advertisements, making them the least trusted source of financial information online.
By comparison, 48% trust national newspaper websites and 26% trust search engines.
The survey also found that 72% of consumers do not trust any social media platform to display financial advertisements. Among individual platforms, LinkedIn was the most trusted at 14%, followed by YouTube at 11%, while TikTok scored just 2%.
Perhaps most strikingly, 65% of respondents said influencers should not be allowed to promote financial products at all. A further 26% said they should only be allowed to do so if they are regulated or certified. Just 4% believed influencers should be free to promote financial products without additional oversight.
The findings suggest that despite the explosive growth of online investing content, the credibility gap between regulated financial information providers and social media influencers remains significant.
Consumer concerns may be justified. Good Money Guide’s survey found that 58% of people have seen what they believed to be a scam financial advertisement online, up from 43% in a similar survey conducted in 2020. While scam awareness has increased, 4% of respondents said they had still lost money after interacting with a suspected fraudulent promotion.
As prediction markets become more mainstream and attract greater attention from influencers and content creators, regulators may face increasing pressure to ensure promotional content is clearly labelled, accurate and does not create unrealistic expectations about potential profits.
Personally, I love social media, it’s great for discovery and there are some real experts that do know what they are talking about. But, as always, if something looks to good to be true, it is probably not.
In my nearly three decades in finance now, I have never met anyone who makes money and is willing to share how they do it. After all, number 3 on my list of golden rules for traders is:
Those who can, trade, those who can’t, teach – with a few exceptions, the majority of trading educators are snake-oil salesmen. Successful traders will be trading, not flogging trading signals on social media
P.s. I feel a bit mean saying teach, actually, maybe that should be changed to “Those who can do, those who can’t post”.
The older I get, the more respect I have for teachers…
Richard is the founder of the Good Money Guide (formerly Good Broker Guide), one of the original investment comparison sites established in 2015. With a career spanning two decades as a broker, he brings extensive expertise and knowledge to the financial landscape.
Having worked as a broker at Investors Intelligence and a multi-asset derivatives broker at MF Global (Man Financial), Richard has acquired substantial experience in the industry. His career began as a private client stockbroker at Walker Crips and Phillip Securities (now King and Shaxson), following internships on the NYMEX oil trading floor in New York and London IPE in 2001 and 2000.
Richard’s contributions and expertise have been recognized by respected publications such as The Sunday Times, BusinessInsider, Yahoo Finance, BusinessNews.org.uk, Master Investor, Wealth Briefing, iNews, and The FT, among many others.
Under Richard’s leadership, the Good Money Guide has evolved into a valuable destination for comprehensive information and expert guidance, specialising in trading, investment, and currency exchange. His commitment to delivering high-quality insights has solidified the Good Money Guide’s standing as a well-respected resource for both customers and industry colleagues.
