What’s An Investor To Do?

What’s An Investor To Do?

Article by John Dade

What’s An Investor To Do??

Thank you Bernie Madoff! You, along with the rest of the Ponzi scheme emulatorslike Robert Allen Stanford have managed to stink up the Alternative investment arena even more.

It was bad enough that investors who were already shell shocked by the mortgage marketmeltdown and subsequent Wall Street carnage that saw their IRA’s, 401K’s, pensionsand mutual fund programs take a 40% + plunge were on the ropes and panic mode.

Now you came along with your Billion mess and pile it on top of the Lehman, Citi,Bear Stearns and AIG debacles, all of which were supposedly “legitimate” and“regulated” firms, and investors at all levels, individual to institutional are in a “deer inheadlights, investment paralysis” mode.

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

For the investor though, now is NOT the time to panic or put their heads in the sand.Now is not the time to run with the heard and chant “I’ll never do any investing again”!The old adage voiced by Baron Rothschild many, many years ago is just as viable todayas when he first exclaimed it: “the time to buy is when the blood is running in the streets”!

That being said, investors should not just run out and buy, buy, buy because “Bernie” saidso. The investor has to get back to the basics of sound investment decision making based on research and due diligence.

The reason Ponzi scheme’s and the other frauds work is that the investor is lulled into a place where greed and false “trust” in the sales person overtake the need to do proper andthorough due diligence. Furthermore, one of the major components of these types of fraudsis the fact that the money is sent to, or check made out to the “promoter” of the investmentand / or sent to “their” company and not to an established, regulated third party clearing firm that has been established for some time and can be researched and verified.

Investors looking at any investment whether they are solicited or have inquired on their own, should look at not only the industry (stocks, options, Forex, etc) but also do their duediligence on how long the investment has been around and who the major players are andchoose one of the bigger, more established firms which are register with the appropriateregulatory agencies. All of which can be checked rather easily through the internet.

Also important to the investor as a way to help expose suspect investments are what Ibelieve are two critical features: Transparency and Liquidity. First is transparency. This is having access to your account balances, fee’s and activity easily and virtually at any time thru a third party entity. Preferably the third party registered clearing firm.This allows the investor to verify account activity for themselves and not just take the word of the investment promoter.

The next very important feature in my opinion is liquidity. With few exceptions, the Investor should be able to access their funds and their account balances at almost anytime. The investor should also have the ability to withdraw funds, stop the investmentand / or have the funds partially or totally sent to them in a timely fashion without penalties or fees. It is the investor’s money, and they should have control.

In summary, the investor who knows who they are dealing with, where their money is being deposited and has open access to their investment account balances and activitythrough a reputable and researched firm, coupled with funds on demand liquidity andtransparency would I believe, increase their potential for making sound investmentdecisions. And while there are still no guarantees in the investment world, following afew time tested due diligence guidelines could allow smart investors to at least avoid many of the schemes out there as well as allowing for some regulatory recourse if thevictim of an investment scheme.

Find More Investor Articles

Tags: major components, aig, due diligence, sales person, Investor