A close friend of mine recently attended an investment seminar where the speaker explained to the audience that by using options they could “double their money in 3 months - guaranteed!” She said that when the presentation was over everyone ran to the front of the room to sign up. Absolutely amazing!
Not only do I find it amazing that people are fooled by the word guaranteed, I find it extremely interesting that in light of the Madoff and Standford scandals (among many other things) people are still buying into the hype and making the same mistakes. When will we learn our lesson? Perhaps we never will.
I am also seeing a lot of people trying to pick one or two stocks that have been beat down to pennies. I call this bottom fishing or “get rich quick” deals. Where is the diversification? There is a reason these stocks have been beaten down so badly; they have fundamental problems. Wal-Mart’s stock did not increase dramatically by decreasing earnings, high debt, lower sales, etc. I see a lot of risk on this approach and I am baffled so many people try it.
It seems to me that the majority of people are taking a “guaranteed” approach or trying to find “get rich quick” deals. The truth is, these deals aren’t guaranteed at all. Both of these scenarios are extremely risky ventures; and in my experience the only people I’ve known to “lose everything” have done so by being lured into them.
In my position, it is frustrating to watch people take the bait. I have adapted my approach to investing using personal experience, reading books from people who have actually made money in the stock market, and by following a disciplined, long-term strategy. I have yet to find anyone who has written a book explaining how they made a bunch of money from one of these so-called “get rich quick” schemes.
Posted on
Thu, August 13, 2009
by Mark Simmons