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.”
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.”
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.”
•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
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.
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.
To contact me with suggestions or deserved praise:
Written by Gary