This “you are the product” saying is a new meme that’s emerged from the era of social media. But the same thing’s been true for decades in finance, if not centuries—or the entire history of money.

• When short sellers publish free reports on how terrible a company run by crooks is, it’s not because they’re noble crusaders fighting for truth and justice. It’s because they will make money if they spook investors into selling the stock. And they can realize profits faster than the truth of most allegations can be determined. This being the case, it’s vital for investors to question the truth and accuracy of free research from short sellers—no matter how persuasive it looks.
  
   
• When brokerage analysts publish glowing free reports on Dog’s Breakfast Ventures, Inc., it’s not necessarily because they believe in Dog’s Breakfast so much that they’re willing to put their own money into it. Remember that brokers make money every time we trade. They get paid whether or not we make or lose money. Sure, they may lose our business if they give us lots of bad ideas, but a few good ones gets them a lot of forgiveness. And with all the free investment ideas being thrown at us every day, do most of us really remember where they come from?
  
   
• When promoters at conferences get up on stage and tout stocks, it’s not because they believe what they’re saying is the unvarnished truth. Whether it’s a company CEO or an Investor Relations professional, they’re paid to put the most positive spin on everything they say. I remember one guy saying that he’d been paid 500,000 shares to tout a stock, but that he believed from the bottom of his heart that it was going to be one of the greatest investments of his career. Yeah, right.
  
   
• And of course, when people post stock tips on investor websites, social media, and the like, you have to ask why they’re taking the time to do so. Whenever I see that, it seems clear to me that they either own the stock and are trying to pump up the share price, or they have been paid to promote the story.
   

Everyone has an agenda.

Even I have an agenda. As I’ve said all along, my “evil plan” is to be as useful as I can possibly be. I want to help free readers make money so they have both the means and motive to become paid subscribers. So yes, the “if it’s free, you are the product,” warning applies even to my free material.

But you’ll notice that I don’t give away free research that recommends specific investments.

I insist on being paid for the in-depth research on opportunities I’m willing to put my own money into. That’s how you know I have skin in the game in The Independent Speculator. There are serious consequences for my reputation, my subscription cash flow, and my own invested funds if I get something wrong.

Free research on general topics can be seen as advertising the expertise of the researcher. The logic is on the consumer’s side here; expertise has to deliver consistent value, or it fails as marketing. Fair enough.

But free research that includes an investment recommendation—that’s when we have to be on our guard.

Whether it’s experts, brokers, CEOs, or some guy on the internet, we always have to ask what the agenda is when we get a free recommendation. People don’t take the time to research, write up, and publish such research if it doesn’t benefit them.

And, frankly, there’s tons of garbage out there.

If you’re as busy as I am, you don’t have time to wade through a bunch of biased promotional material.

We need clear, useful, unbiased—dare I say, independent—info.

I’ll give you a litmus test:

• Does the person giving free recommendations stand to lose anything if they’re wrong?

If not, FIDO (forget it, drive on).

If they do have meaningful skin in the game—which they do, by definition, if they have to earn my renewed business—I’ll pay more attention.

I’ll still make my own call, of course. But if I know they stand to suffer real downside if they are wrong, I’ll be more inclined to give them a bit of my time… until they say something I know is wrong, inaccurate, misleading, or so daft it insults my intelligence.

Rapid triage is the name of the game.

Bottom line: don’t trust free research—it's a trap.

Caveat emptor,