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7 Investor Tools to Fight Misinformation: Look for the Gray Areas

By Motley Fool Staff - Updated Feb 23, 2021 at 4:50PM

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Step 3 in staying well-informed online: Value ambiguity over black-and-white arguments.

On Wall Street, information is power. Investors increase their potential to profit by knowing more than the person on the other side of each transaction. But some unscrupulous folks don't stop at simply gathering better intelligence. They aim to cash in by spreading lies that mislead and misdirect ordinary investors like you -- making themselves rich at your expense. With persistence and a little know-how, you can protect yourself, your friends and family, and your money from making these kinds of costly mistakes.

"To be absolutely certain about something, one must know everything or nothing about it." 
-- variously attributed to Voltaire, Henry Kissinger, or Olin Miller (whoever he might be).

We've talked about trust working less like a switch that flips between ON and OFF, and more like a set of scales. The world often works the same way. You'll rarely find any situation, stock, person, or debate that's wholly good or bad. So when you encounter anything that tells you, "This is entirely good, and nothing about it can ever be bad," or vice versa, raise your skeptic shields. 

Even the most seemingly doomed stock could still have good qualities. Even the most promising investment might have downsides. Especially on Wall Street, there's no such thing as a sure bet. Investors don't always behave rationally in the short term. Companies aren't always honest with their investors, or clear-eyed about their own failings. Analysts might skew their facts to fit the story they want to tell.

Peddlers of misinformation often start with the answer they want, and then work backward to justify it. They'll include -- and sometimes distort -- evidence that supports the argument they're making, but leave out arguments that work against it.

Any responsible discussion of a potential investment, or any other situation, will include nuance. It'll acknowledge weak or strong points, concede merits or flaws. When you see arguments that include these shades of gray, consider them more trustworthy. 

Note that we're not speaking up here for wishy-washy both-sides-ism, where two wildly different ideas or actions get treated identically -- i.e., "This unknown penny stock has the exact same merits as this blue-chip dividend aristocrat." But if you find a description whose scales are tilted all the way in one direction or another, the odds increase that whoever's behind it is artificially weighting one side of it, and/or lightening the other.

7 Investor Tools to Fight Misinformation

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