Part 1 of 2
By Sandy Hunter
Administrative/Marketing Assistant
As we have begun the uphill climb from the market slump it has created the perfect breeding ground for investment scammers to run rampant. With tensions high and people feeling desperate to make up their losses investors, if not educated and on the defense, are sitting ducks for con men on the hunt for easy prey. Following you will find information on how to protect yourself and your investments from would be thieves.
The Psychology of a Scam
“If it’s too good to be true, it probably is” – which is true but one of the struggles is knowing the difference between good and too good. In this economy it is even harder, which is exactly what investment fraudsters are counting on. Their smoke and mirrors can make any investment seem like a sure fire deal. Scammers look for your Achilles heel by asking seemingly harmless questions. They might ask about your family, health, hobbies, past employers, political views, anything that might seem like just small talk or basic information. They will use their new found personal information as ammunition against you through one of these popular persuasion tactics:
The “Phantom Riches” Tactic-dangling the promise of wealth. Enticing you with something you want but can’t have. “These gas wells are guaranteed to produce $6,800 a month in income.:
The “Source Credibility” Tactic-trying to build credibility by claiming to be with a reputable firm or to have a special credential or experience. “Believe me, as Vice President of XYZ firm, I would never sell an investment that doesn’t produce.”
The “Social Consensus” Tactic-leading you to believe that other savvy investor have already invested. “This is how ____ got his start.“
The “Reciprocity” Tactic- offering to do a small favor for you in return for a big favor. “I’ll give you a break on my commission if you buy now, half off!”
The “Scarcity” Tactic-creating a false sense of urgency by claiming limited supply. “There are only two units left, so I’d sign today if I were you.”
These are all tactics used by genuine companies, which makes it even harder to distinguish the difference. These tips can help you tell the difference.
1. End the conversation. It is not impolite of you to tell them “no thank you I am not interested” and then hang up. It is impolite of them to try to steal your money so you are under no obligation to listen to what they have to say! If you struggle with being direct, tell them you don’t make financial decisions without consulting your _______ first. Let your spouse, lawyers, accountant, financial advisor, whomever be your escape goat.
2. Take control and ask the questions. One blanket red flag is if they are not licensed and registered. Ask if they and their firm is registered with FINRA? Securities and Exchange Commission? If so, which one(s)? Then do your homework and verify that they are by using: FINRA Broker Check or call 800-289-9999 for Brokers. Use the SEC’s Investment Adviser Public Disclosure Website which is: http://www.adviserinfo.sec.gov/IAPD/Content/IapdMain/iapd_SiteMap.aspx
3. Research an investment. Ask if it is registered with the SEC or with your states securities regulator/ Then use the SEC’s EDGAR database of company filings at to confirm it really is: http://www.sec.gov/edgar.shtml
4. Always get a second option. If they tell you to not tell anyone else be extremely skeptical. Even if they are registered it is a good idea to talk to other people and see what they know before making a decision.
One way to help safeguard yourself is to reduce the amount of telemarketing as much as possible. One easy step is to take your number off telemarketing and junk mail lists.
Telemarketing calls- www.donotcall.gov or call toll free (888)382-1222
Direct Mail and email offers- www.dmachoice.com
Credit Card Offers- www.optoutprescreen.com
Online Cookie Collecting- http://www.networkadvertising.org/
Most legitimate firms will honor your request. So if you receive solicitation after taking these steps, be even more skeptical.
If you believe you have been scammed you can file complaint with FINRA at:
FINRA Complaints and Tips
9509 Key West Avenue
Rockville, MD 20850
I also found this great tool to help you decide if an investment is “too good!” Visit this website: http://apps.finra.org/meters/1/scammeter.aspx
Source AD#: C10-01881








Bountiful, UT 84010
Why this is not a “Lost Decade”
February 23rd, 2010We have lost track in the last year of the number of times we have heard commentators on TV, radio or in print make a statement that if you were in the S&P 500 you lost money in the last 10 years (-0.95%), hence a “lost decade”. Though the statement is true that the S&P 500 lost money, the danger is to assume that you as the investor did the same, worse or that you will loose the same for the next decade.
The past decade has been one of the most challenging on record for investors. We experienced two recessions, which hasn’t happened since the 1930s. The real question is “During this volatile period, how have well run equity mutual fund managers done?”
The below chart illustrates how a balanced portfolio brought back a 59.9% cumulative return in 10 years compared to 9.1% for the S&P 500. While past returns are not predictive of future results, they powerfully illustrate how “good money managers” and a well diversified portfolio help investors achieve their long-term goals. We continue to belief the key elements to successful investing include: 1) Diversifying in the appropriate mix of stocks and bonds based upon your risk tolerance 2) Optimizing your portfolio with an appropriate mix of different asset classes. 3) Hiring quality managers that have consistently beat their benchmarks 4) Regularly monitoring and rebalancing your portfolio when appropriate.
Source: Russell, MSCI Inc., Dow Jones, Standard and Poor’s Barclays Capital, NCREIF, J.P. Morgan Asset Management. The “balanced” portfolio assumes the following weights: 25% in the S&P 500, 10% in the Russell 2000, 15% in the MSCI EAFE, 5% in the MSCI EMI, 30% in the Barclays Capital Aggregate, 5% in the CS/Tremont Equity Market Neutral Index, 5% in the DJ UBS Commodity Index, and 5% in the NAREIT Equity REIT Index. Balanced portfolio assumes annual rebalancing. All data except commodities represent total return for stated period. Past performance is not indicative of future returns. Data are as of 12/31/09, except for the CS/Tremont Equity Market Neutral Index, which reflects data through 11/30/09. “10 Year” returns represent cumulative total return and are not annualized. Index Definition: S&P500 (500 large-cap common stocks actively traded in the United States), Russell 2000 (small cap index), MSCI EAFE (Europe, Australia, Farr East index), Barclays Capital Aggregate (investment grade bonds index), CS/Tremont Equity Market Neutral (hedge fund index), DJ UBS Commodity Index (commodities index) , NAREIT Equity REIT Index (real estate investment trust index). You cannot invest directly in any index. Individual results will vary.
Source AD #C10-03249. An excerpt from our 4th Quarter 2009 newsletter. Written by Marvin T. Ellis, Jr, Financial Consultant.
Tags: 2009, Advisor Commentary, Our Recommendations
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