Scams

  We all need to be extra careful out there. Seems every day there are more people who are dedicated to trying to take away what is ours.The other day I got an email from my personal email  provider stating that I needed to update my credit card info since my payment was rejected. The email looked legitimate and sounded plausible since my cards expire at various times and I had this happen a few years back and I was about to click on the link on the email but something stopped me and  I sent an email to another address I had for my provider and it came back stating there was no problem with my credit card and that it was a phishing scam, so whew!, I missed the bullet. But a lot of people fall for scams like this.

The worst scams are those like Bernie Madoff stealing client’s money. The best way investors can protect themselves is to simply call the company holding their securities to make sure their money and investments are where their supposed to be. Just this past week a broker in New York was arrested for stealing millions from his high profile clients. You would think people like Uma Thurman and Nora Ephron would have had strict investment instructions and oversight but that was not the case. Yes, the rich are different, they lose more money then you and I.

Con artists work fast taking advantage of situations. In the month of May stock con artists sent out bogus propaganda on companies that were allegedly helping BP clean up the mess in the Gulf. Promoters of the scam worked chat rooms and sent blast faxes to get suckers to buy into the stock and once the price got high they unloaded a ton of shares they bought for pennies.

Jeff Opdyke in his WSJ column writes about the possibilities investing in motion pictures. If you hear or get close to this one stay away. While Opdyke suggests the riches one can get for a mere pittance the real facts are that some motion picture producers know how to manipulate monies so no investor ever sees a penny. This is a lose-lose and you can’t drink this investment pretty no matter how hard you try.

Finally, a decade or so back an acquaintance of mine loved the horse race track. He and his two buddies were there several times a week. After years of losing money betting on the ponies they decided to become horse owners and bought a thoroughbred at a claiming race. They were excited about the possibilities because the horse had a solid record of winning. But they needed to feed, house and train the animal which also cost a lot of money. They felt that they could cover their costs plus get the VIP treatment at the Jockey Club with the winnings derived from their new investment. Win-win, right? Well, not so fast, Hopalong.

One of the first things they did was hire a trainer but, from the time they handed him the reins, their horse did nothing but lose every race it ran. It was like it had become a totally different animal from the one they bought. After months of pouring money into the horse for feed, shelter and the trainer the three amigos wanted to know what was wrong. The trainer said their horse had ‘psychological’ issues and it may take years to get him well enough to win. The three investors reluctantly decided to sell the horse to the trainer at a substantial loss.

Sure enough, the following race and almost every one after the horse miraculously recovered and either won or finished in the money.

There are  lessons here but I’ll let you fill in the blanks. Like the old Sarge said at roll call, ‘Be careful out there.’

If you have questions call Paul at 877 783 7080 or write him at pstanley@westminsterfinancial.com. Share this blog with someone who cares about their money.