Thanks Bernie Madoff! You, along with the rest of the Ponzi scheme emulators like Robert Allen Stanford, have managed to suck the alternative investment field even more.
It was bad enough that investors already shocked by the mortgage market crash and subsequent Wall Street carnage that saw their IRAs, 401Ks, pensions, and mutual fund programs plummet by 40% or more and were against the odds. strings and in panic mode.
Now you came up with your $ 50 billion mess and stacked it on top of the debacles of Lehman, Citi, Bear Stearns and AIG, all of which were supposedly “legitimate” and “regulated” firms, and investors at all levels, individual to institutional. . they are in “deer in headlights, reversal paralysis” mode.
All of this has placed a great burden on those companies that are legitimate and are trying to do the right thing and the best for their customers. And yes, they are out there.
However, for the investor, now is NOT the time to panic or put your head in the sand. Now is not the time to run with the listener and sing “I’ll never invest again”! The old adage expressed by Baron Rothschild many, many years ago is as viable today as when he first said it: “the time to buy is when the blood runs through the streets”!
That said, investors shouldn’t just rush out and buy, buy, buy because “Bernie” said so. The investor needs to get back to the basics of sound investment decision making based on research and due diligence.
The reason the Ponzi scheme and the other scams work is that the investor lulls into a place where greed and false “trust” in the seller outweigh the need for proper and thorough due diligence. In addition, one of the main components of this type of fraud is the fact that the money is sent or a check is made out to the “promoter” of the investment and / or is sent to “his” company and not to an entity established and regulated. Third-party compensation company that has been established for some time and can be investigated and verified.
Investors looking at any investment, whether it is applied for or has asked on their own, should consider not only the industry (stocks, options, Forex, etc.), but also do their due diligence on how long the investment has been around. and who is the main one. Players are and choose one of the largest and most established firms that are registered with the appropriate regulatory agencies. All of which can be checked quite easily over the Internet.
They are also important to the investor as a way to help expose suspicious investments what I think are two critical characteristics: transparency and liquidity. First is transparency. This is to have access to your account balances, rates and activity in an easy and virtual way at any time through an external entity. Preferably, the third party registered clearing company. This allows the investor to verify account activity for himself and not just take the investment promoter at his word.
The next very important feature in my opinion is liquidity. With few exceptions, the Investor should be able to access their funds and account balances at almost any time. The investor must also have the ability to withdraw funds, stop investment, and / or have funds partially or fully sent to him in a timely manner without penalties or fees. It is the investor’s money and must be in control.
In short, the investor who knows who he is dealing with, where his money is deposited and has open access to his investment account balances and activity through a reputable and researched company, along with funds on demand, liquidity and transparency, I think, would increase. its potential to make sound investment decisions. And while there are no guarantees in the investment world yet, following some time-tested due diligence guidelines could allow savvy investors to avoid at least many of the schemes out there, as well as allow for some regulatory recourse if you are the victim of a investment scheme.