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Investment scam and manipulation – abound!

July 2, 2010

No one today can get me to invest my savings in mutual funds, bond issues, derivatives, limited partnerships, Junk bonds,  penny stocks, or most other stocks, no one! But, 20 year ago when I was just a professor of psychology, not an investor, I was happy when I broke even in hard times or made 10% on my investment during bull markets. Thank God those days are over. From my self-published book you know that now I double my money every 2-3 years. Well, I am not here to Brag. The purpose of this blog is not for me to toot my own horn but to help naive middle class folks avoid investment scams and start making smart money. Can you imagine buying Pixar at $12 and selling at $65. It is called BLASH is my book. By the way, my self-published book isn’t selling well, and that tells you everything about most investors. They think they know what they are doing, but they are really the worse enemies of their finances. God bless them! Let the good times roll!

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6 Comments leave one →
  1. July 9, 2010 1:15 pm

    I would be interested in learning why you have such an aversion to derivatives.
    Even the venerable Buffet who was quoted as calling derivative “financial weapons of mass destruction” holds futures and options contracts on stock indexes and foreign currencies, and has stated that “derivatives aren’t evil”.

    Derivatives can be used in myriad ways, some of which are abusive and extremely risky while other ways are very much risk averse/risk limiting.

    For instance, being in a long position on stock XYZ while simultaneously owning an XYZ put, acts as insurance against unforeseeable market moves ( ie, flash crash) which could otherwise wipe an investor out. This is just one simple example out of many where using derivatives decreases rather than increases portfolio risk.

    • July 9, 2010 3:09 pm

      Buffett can afford to lose money. Middle class folks can’t. Humans had always cherished; gold pieces, silver, platinum, jewelry, diamonds, food and food spices, medicines that heals, silk, land and certain animals. In modern times the real things we cherish are bonds backed by permanent and secure governments such as the US, home mortgages backed by law abiding banks, land deeds devoid of deceptive prospects, vehicles whose real value can be estimate, these are real things we need for modern living. My aversion to derivatives stem from the fact that nowadays many of these certificates sold to you as exchangeable with real things – are not! For example, the worth of my mortgage is 50% of the worth of my home. if the worth of my mortgage was 150% of the worth of of my home, my mortgage would be a subprime mortgage, a paper derivative not backed by anything. My aversion, my friend, is not to derivatives per se, but to worthless pieces of paper sold as worth their face value. If a rich woman had a legally signed prenuptial agreement and a judge gave her money to a divorcing husband on technicality, what she had was not a prenuptial agreement, what she had was a false derivative! My aversion is to false derivatives.

  2. August 17, 2010 9:40 pm

    I would recommend individuals learn the ropes of investing before just diving into it. Take some time to practice with fake money and keep track of how you are doing until you feel comfortable enough to step up to the plate.

  3. August 18, 2010 3:36 am

    This is really a nice blog to get information I need!. The post here helped me a lot. Thank your guys, and I wish I could do something to help back.

    • August 20, 2010 4:09 am

      You can help back by introducing my blog to people who you think tend to make poor financial judgments. I am just one guy who informs the public on these matters because years ago I made poor financial decisions before I became an investor-psychologist expert in behavioral financing.

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