Final Friday Thoughts For 09-28-2012
Well some think you are stupid. Having read that you are not very bright in a previous article, according to the SEC, Securities Exchange Commission, or lets say you are not very well informed. We are talking about a group of potential investors that simply does not have the time to understand that there are some real bastards out there who will take your monies and laugh at your naivety.
Oh sure, I know none of my readers will fall for such malarkey, but just in case the next time someone calls you on the telephone and claims he has the deal of a lifetime, my advise is to immediately hang up and run. Below is just one of those scams that seems so stupid. It is so blatant that I can't see how any idiot would fall for it with out first doing some research first.
Again we need to have a look at who these people are that fall into the scams. Paul Farrell writes “Wall Street's soulless, immoral, greedy bankers really believe that the vast majority of America's 95 million investors are not only "predictably irrational" but "stupid”." Mr. Farrell goes on to say, “Yes, investors are "predictably stupid losers," what Vegas croupiers call a mark, a dumb gambler that can be easily conned out of his money. And as we now know, in the stock market the vast majority of America's 95 million investors are fools -- predictably stupid losers.”
American investors: Predictably stupid losers
Yes, folks, Wall Street is certain that America's 95 million investors are clueless sheep headed for the slaughterhouse.
But wait, that's not news. Twenty years ago former bond trader Michael Lewis' "Liar's Poker" described the insanity of our addiction to gambling in a few memorable lines: "Men on the trading floor may not have been to school but they have Ph.D.s in man's ignorance." They know that "in any market, as in any poker game, there is a fool. The astute investor Warren Buffett is fond of saying that any player unaware of the fool in the market probably is the fool in the market."
Other pundits say, we are “Not only are our brains irrational, but our behavior is easily predicted by wolves on Wall Street”.
Scams have been around sense the beginning of time and continue to this day. It is sometime hard to believe that folks are really falling for this BS. Here is The Investment Scam That Refuses to Die
“When a sales pitch begins with, “Hello, my name is John Vallee and I’d like to explain to you why the Iraqi Dinar is not a scam,” it’s…a scam.
There is nothing inherent to the Dinar itself that makes it a “scam.” If one happens to be traveling to Iraq, Dinars will be very useful. As an investment, however, the Dinar is really nothing more than a souvenir.
Analyst John Jagerson, the co-founder of PFX Global and Learning Markets and co-author of the book Profiting with Forex, has sounded alarms about Iraqi Dinar scams for years.
His take on TampaDinar’s rosy outlook?
“Complete bulls**t (pardon my French),” Jagerson wrote in an email.
“Most of the comments are actually just lies, not even outrageous opinions,” he continued. “I am actually very surprised that you got these responses. The bigger dealers won't make those comments -- instead they partner with marketing guys who make the claims and then just advertise with them. The other thing that surprises me is that they would make comments about the IQD as an investment to an individual. That is totally illegal. You have to have a license to make comments like that to an individual person. You can be fined and charged criminally for stuff like that.”
A quick search on the TampaDinar recommended IRA manager revealed that a lawsuit filed in April charged Entrust Group Inc. (as well as an outfit called Equity Trust Co.) with “touting the security and safety of self-directed IRA's without performing due diligence on the investment managers with which they do business.” According to the Wall Street Journal, Entrust was also accused of converting customers' funds for improper use, conspiracy, fraud, negligence, and elder abuse.
It's a start, to be sure -- John Jagerson says he has been frustrated in the past "that no one will do anything [about Dinar promoters], but it's just not as big as the kinds of financial fraud you see elsewhere."
"In the world of financial crimes and scams there are very, very few of them that are actually prosecuted," he tells me. "Regulators are understaffed, scammers can shut down and restart quickly, and most of the regulators I have worked with barely understand the financial markets anyway."
If you are not caught up in a blatant scam like the one above, then there are the financial planners and advisors you have to watch out for doing nearly the same. The interesting part is that you are the ones calling them. They smile, talk with terms that would baffle Bernanke or Warren Buffett and then reach into your pocket unabashed and snatch your money.
Yes, it is true and there is little you can do about it if you haven't taken the time to learn the ropes, educating yourself. The number one resource an investor has to protecting yourself is to tell anyone reaching for your money is that you will call them back. According to PRWeb, Just say "no." Like most business-oriented opportunities, investment scenarios usually involve some risk. Just make sure those risks are worth the potential rewards. If an investor paints a picture that seems too good to be true, it probably is. When in doubt, say "no."
The problem is not the lack of trust in advisors, it is the lack of education. Investors that lose trust in their advisers is primarily because their advisors have not educated them about the downside risks. “Ultimately, an investor's best defense against a crook is vigilance. Pay attention, check your accounts online, study your statements and maintain a healthy skepticism.”, says David McPherson.
Then there are those who are all about filling their wallets. One pundit writes, “If the advisor asks you to write him a personal check, that is a clear red flag.” Another is “If your advisor is guaranteeing an outrageous rate of return, be extremely cautious.” When you are robbed at gunpoint, at least you know you have been taken. When some crooked advisors in a nice suit takes your money, you usually don’t know until it is too late.
In the article below you van get some ideas of how to go about protecting yourself and doing a bit of background checking on your advisor. This excellent news as I floundered around for days trying to find out something about an old advisor years ago. He wasn't exactly a crook, but he was taking VERY high risks and not explaining anything to me. Plus his commissions were absolutely exorbitant. Had I had the information below, I would have been able to figure this fellow out. Check out your broker here.
Start by thoroughly researching any broker, financial planner, or adviser you are considering hiring. Explore the North American Securities Administrators Association Website, www.nasaa.org, or call 888-84-NASAA for a regulator in your state.
You shouldn’t just do a background check on the financial advisor you’re considering hiring. You should also consider doing some research on the one that you are currently working with. You never know what you’ll find out and it literally only takes a few minutes to find out.
The problem that most newbie investors have is that those that appear to be legitimate brokers have scams to offer if they suspect you will fall for the hype. The article appeared a year ago but hold true today. John Waggoner of USA TODAY writes, “Investment scams always sprout during a recession, and con artists are reaping a big harvest in this economic downturn. Investors desperate to make up losses from their 401(k) plans or stock portfolios are the primary victims. The North American Securities Administrators Association released its annual Top 10 Investor Traps.”
Regulators list Top 10 investment scams
•Green schemes. Alternative energy frauds play on the allure of energy-efficient technologies. Some scammers pushed oil-spill cleanup technology in the wake of the Gulf oil spill.
•Affinity fraud. Con artists love a crowd, and particularly a crowd of like-minded people: church members, ethnic groups, professional groups. Check any adviser's credentials before you do business with him.
•"Off-the-books" deals. If your investment adviser or broker offers you a special "side deal" — available only to the best customers — walk away. Odds are the deal is especially risky, illegal or non-existent.
•Unsolicited online pitches. Scam artists have found a new home in social media. You're not going to get a hot penny-stock tip from an anonymous e-mail. You won't get one on Facebook, Twitter or Craigslist, either.
•Exchange traded mutual funds. Although many ETFs are simple, low-cost investments, some use derivatives to amplify gains and losses — something many novice investors may not know, Voigt says.
FULL LIST: Top investment scams
In the article it provides a few more scams that an investor has to watch out for. Read the whole article for an unabridged account.
Top 10 Investment Scams For 2010
1. Exchange-Traded Funds (ETFs). . . be aware that some ETFs are thinly traded and may not always be liquid.
2. Foreign Exchange Trading Schemes. Currency trading and foreign exchange (forex) trading schemes can be particularly harmful to unsuspecting investors. Too often, state regulators have encountered situations where there are no trades; the money is simply stolen.
3. Gold and Precious Metals. High gold prices have trapped some investors in gold bullion scams in which a seller offers to retain “purchased” gold in a “secure vault” and promises to sell the gold for the investor when it gains in value. In many instances the gold does not exist.
4. Green Schemes. Investment opportunities tied to the development of new energy-efficient “green” technologies are increasingly popular with investors and scammers alike.
5. Oil & Gas Schemes. Regardless of the price at the pump, fraudulent energy promoters continue to capitalize both on interest in the commodity and on oil and gas as investment alternatives to the stock market. Some promoters, many of whom have had past run-ins with regulators, have attempted to structure their “joint ventures” or “general partnerships” to avoid securities regulation and deprive investors of important protections.
6. Affinity Fraud. Scam artists have found it lucrative to abuse membership or association with an identifiable group to convince a potential investor to trust the legitimacy of the investment. Typical affinity groups include religious, ethnic, professional, educational, language, age and any other group with shared characteristics that allow investors to trust members of the group.
7. Undisclosed Conflicts of Interest. When obtaining investment advice about securities, investors need to know that not all advice is given with their best interest at heart. Some salespeople can receive lucrative commissions when they sell a product that is risky or inappropriate for an investor, but don’t have to disclose that financial incentive.
8. Private or Special Deals. Some investors encounter investment opportunities or deals couched as “private” or only for “special” clients.
9. “Off the Books” Deals. “Off the books” sales are an increasingly common threat to investors. Be cautious if your broker offers an investment on the side instead of one sold through his or her employer. These “off books” investments may not only be illegal, but they can also be especially risky without the oversight and supervision of the broker’s employer.
10. Unsolicited Online Pitches. Promoters of fraudulent investment schemes are moving beyond e-mail and turning to social media and online communities, such as Facebook, Twitter, Craigslist and YouTube to solicit unsuspecting investors. In many cases, these offers turn out to be Ponzi schemes. Investors should approach any unsolicited investment opportunity with suspicion.
In the following article they point a several more that you may not have heard of like the internet scam, promissory note scam, prime bank scam, commodity scams and my favorite, investment seminars.
“Investment scams come in all shapes and sizes. Con artists often mix and match features of various scams to concoct a swindle that is hard to detect.”
And it that isn't enough, try these.
Follow your nose. If an offer smells fishy, it’s probably bad.
Recent worries about the economy, coupled with poor investment performance, have caused some consumers to swear off traditional, well-known investments in favor of others that offer promises of higher returns and lower risks. But be careful: Many of those investment offers are actually frauds, and you’ll lose all the money you spend on them.
To help you avoid getting ripped off, the North American Securities Administrators Association offers the following “Top 10” list of investment scams. If you’ve invested in any of these, talk with us or your state securities regulator right away.
In conclusion, It's not hard to find the hottest investment scams say some pundits. All that is necessary is to read the headlines and follow the money. They are on the internet, local brokers and even your next-door neighbor. They are everywhere even smoothly weaving their Ponzi schemes in church groups.
To contact me with suggestions or deserved praise:
Written by Gary