It’s all in the Math

Watch out, America—Misleading Marketing is everywhere. You may have seen that viral video on social media where a young woman walks through a major retail store on Black Friday. She stops in front of a large TV with a sign advertising the Black Friday Deal price of $649. Then, she pulls off the sign to reveal… the Pre-Black Friday price: also $649.

That’s what I call Misleading Marketing. Let’s break it down: If a TV is $649 today and $649 tomorrow, it’s not actually on sale, right? You can do that math pretty quickly.

You probably already suspect that prices sometimes get artificially inflated before a “sale” so stores can claim they’re giving you a discount. For example, imagine an item priced at $75 today. The store raises the price to $100 overnight, then puts it “on sale” for $75, advertising a 25% savings. Are they really offering a deal—or just misleading customers?

Now, let’s explore how Misleading Marketing also targets your investments.

The Math Behind Misleading Marketing in Investments

Take a look at the chart below.. It shows two different sequences of returns:

Scenario 1

  • Starting balance: $100,000

  • Rate of return (ROR): +25% every year for 10 years

  • Final balance: $931,322

If you add up the rates of return over 10 years and divide by 10, you get an average return of 25%. And since the balance grows consistently, the math checks out.

Scenario 2

  • Starting balance: $100,000

  • Rates of return alternate between +100% and -50% for 10 years

  • Final balance: $100,000

Wait… what? Despite an average return of 25%, the investor made absolutely no money.

      

Why Averages Are Meaningless

Here’s the takeaway: When it comes to your investments, averages mean nothing.

This is a classic example of Misleading Marketing. You might hear something like:
“The stock market has averaged 25% over the last 20 years. If we invest your money, you can expect the same average return—and you’ll end up with a lot more!”

But as you just saw, you can “average” 25% and still walk away with nothing. It’s not about averages—it’s about how returns actually happen year over year.

When it comes to your money, don’t fall for misleading statistics. It’s all in the math.