A firm prints ten thousand letters. Half say the stock goes up. Half say it goes down. They mail them out.
The stock goes up. Five thousand people got the right call. The firm throws the other names away.
Next month, same trick. Half the winners get "up." Half get "down." The stock drops. Twenty-five hundred names survive.
Six rounds later, one hundred fifty-six people have received six perfect calls in a row. They think they found a prophet. They wire money. The firm already won before the first stamp hit the first envelope.
I heard this con explained at a dinner twenty years ago. Nodded. Filed it away. Figured it belonged to a world of boiler rooms and yellow legal pads.
Then last month I watched a video. A guy showed an AI trading bot. It claimed 240% returns. The chart climbed like a staircase to heaven. The comments were on fire. People wanted the code. People wanted in.
And I felt that old dinner story crawl up my spine.
The bot ran thousands of combinations on old price data. Different settings. Different windows. Different cutoffs. One combination looked like genius. That's the one they showed you. The other thousands got thrown in the trash. Same trick. Different envelope.
There's a name for part of the cheat. It's called data leakage. The model peeked at tomorrow's prices while it was still "learning" from yesterday. Picture taking a math test with the answer key taped to your desk. You'd ace it too. Someone ran the test again the honest way. Locked the model out of future data. Added real trading costs. The returns collapsed. The staircase to heaven turned into a sidewalk to nowhere.
And that 240% number? It needed 2.5 times borrowed money to get there. Debt stacked on debt. Strip the borrowing and the raw signal shrinks to coin-flip noise. Borrowed money is makeup on a corpse.
This is the part that sits with me at night. Every one of these bots needs the grid up. The internet on. A broker that hasn't frozen your account. All at once. All the time. One break in that chain and your "wealth" is a blinking cursor on a dark screen.
Meanwhile, gold hit $5,020 an ounce in March 2026. Up from $252 in 1999. A 1,892% gain with no algorithm, no borrowed money, no electricity needed to hold a coin in your hand. It just sat there in a safe while the clever people kept building fancier mousetraps.
I'm not saying gold is the only answer. I don't have all the answers. But I know the difference. Twenty-five years of showing up versus a backtest that showed up last Tuesday.
Dividend Aristocrats have raised their payouts every single year for at least twenty-five straight. They didn't peek at future data or fiddle with knobs until the chart looked pretty. They just mailed checks. Quarter after quarter. Through crashes and recessions and every shiny new thing that was going to change the world.
The best backtest is a check that clears.
Remember those ten thousand letters. You and I are the people who threw the first one away. We didn't feel smart at the time. We felt like we missed something. But the firm went broke. The prophet was a printing press. And the people who wired money never saw it again.
Some things don't change. They just get new envelopes.
— H.L.
