A.I.M. Users Bulletin Board

[aptus]

Just to view my recent comments from a slightly different perspective, here's a story that recently appeared in my local Newspaper. It's amazing how health and investing share so many of the same concepts. Oh, and the lessons we can learn.

"TORONTO -- The distributor of an exercise device that stimulates abdominal muscles has agreed to stop selling the products after being fined $75,000 for falsely claiming they resulted in weight loss and improved muscle tone.

Thane Direct Canada Inc., the distributors of the Abtronic and Abtronic Pro, also agreed Monday to offer full refunds to hundreds of thousands of Canadians who bought the electronic devices hoping for flat stomachs without exercise.

Consumers were falsely persuaded into buying the devices, the Competition Bureau said in a release.

'Consumers are particularly vulnerable when it comes to unsubstantiated product performance claims, and more specifically when the claims relate to sensitive issues such as weight loss and physical appearance,' said Raymond Pierce, deputy commissioner of the Competition Bureau.

Thane sold the devices through television infomercials and its Web site for approximately $120 each to hundreds of thousands of Canadians.

The advertisements gave 'the false impression that without any physical exercise, a person could lose weight and get an athletic physique with well-defined abdominal muscles,' said the Competition Bureau, an independent law-enforcement agency dedicated to preserving low prices, product choice and good service."

Now most of us would not think of falling for a line that says we can loose (oops, I mean "lose," just kidding linda weight and achieve flat stomachs with no exercise (although apparently a few hundred thousand did), unless we saw irrefutable proof, even if the premise sounded good -- which it did on the surface, I mean electronic stimulation that forces the muscles to move by themselves and thus provide effortless excercise certainly sounds plausible.

The problem is that I'm sure not one of the hundreds of thousands of purchasers bothered to verify the product's claims by looking at historical data.

However someone obviously did try to verify these claims and that's why a bad product has been removed from the market.

This can be tranferred to the various AIM techniques too. Just because something sounds like it's plausible, doesn't mean it is. Therefore you should backtest all claims using historical data BEFORE running with it.

Regards,
Mark

http://www.automaticinvestor.com