What should an investor do?

Thanks Bernie Madoff! You, along with the rest of the Ponzi scheme emulators like Robert Allen Stanford, have managed to further stink the field of alternative investments.

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 over 40% were on the ropes and coming in. in a panic.

Now he came up with his $ 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, individuals through. institutional. They’re in a “deer in the headlights, reversal paralysis” mode.

All of this has placed a heavy burden on those firms that are legitimate and are trying to do the right thing and the best for their clients. And yes, they are out there.

However, for the investor, now is NOT the time to panic or bury your head in the sand. Now is not the time to run with your ear and sing “I will never invest again”! The old adage expressed by Baron Rothschild many, many years ago is as viable today as when he first exclaimed 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 has to get back to the basics of making sound investment decisions based on research and due diligence.

The reason the Ponzi scheme and other scams work is that the investor is led to 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 checked in the name of the “promoter” of the investment and / or is sent to “his” company and not to an established and regulated company . Third-party compensation company that has been established for some time and can be investigated and verified.

Investors looking for any investment, whether solicited or consulted on their own, should look not only at the industry (stocks, options, Forex, etc.) but also do their due diligence on how long the investment has been around and Who the main players are and they choose one of the largest and most established companies 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 having access to your account balances, fees and activity easily and virtually at any time through a third party entity. Preferably the registered third party 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 the investment and / or receive the funds partially or fully in a timely manner without penalties or fees. It’s the investor’s money, and they should be in control.

In short, the investor who knows who he is dealing with, where his money is deposited and has open access to the balances and activity of his investment account through a reputable and researched company, along with funds on demand, liquidity and transparency. I think it would increase your potential to make sound investment decisions. And while there are no guarantees in the investing world yet, following some time-tested due diligence guidelines could allow savvy investors to at least avoid many of the schemes out there, as well as allow for some regulatory recourse if you are the victim of a. investment scheme.

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