How to Identify Financial Scams & Investment Schemes

An old proverb claims, “The art is not in making money, but in keeping it.” Unfortunately, con artists and swindlers are anxious to separate you from your money by means of deception and fraud.
 
In an interview with BBC Future, Dr. Eryn Newman of the University of Southern California said a positive story that “feels smooth and easy to process” is easy to accept as truth. Con artists are particularly talented in creating believable lies. Falling for their tricks costs U.S. citizens billions every year.
 
According to Anthony Pratkanis, “Every year, Americans lose over $40 billion in telemarketing, investment, and charity fraud.” However, this amount may be vastly understated because instances of fraud are likely under-reported. According to the Financial Fraud Research Center, up to 65% of victims fail to report their victimization. They typically do not tell the authorities because they lack confidence in the police and the likelihood of restitution. Many are embarrassed by their gullibility.
 
But in her interview, Dr. Newman claims that gullibility – the tendency to be duped or manipulated by one or more people – does not reflect intelligence. Anybody can fall prey to a financial scheme or scam. Therefore, your best line of defense is to have a thorough understanding of how con artists operate – and how to spot them before they take advantage of you.

The Players

Marks

Victims of scams – known as “marks” – are often fooled when they hope to get something for nothing or very little. Other victims – often the elderly – may be susceptible due to their good intentions and desire to help others.
 
While many believe that the typical victim of an investment scam is older and less educated than the general populace, the Financial Fraud Research Center reports that this stereotype is false. The average investment fraud victim is “more likely to be male, relatively wealthy, risk-taking, interested in persuasive statements, open to sales situations, and better educated than the general public.” Martha Deevy, director of the Stanford Center on Longevity’s Financial Security Division, stated in an interview with the American Psychological Association that the typical investment fraud victim is a middle-aged, married, educated, financially literate white male under some financial strain.
 
Dr. Stephen Greenspan has spent more than a decade studying the problem of gullibility. In the The Wall Street Journal, Dr. Greenspan names four distinct factors that make a person more susceptible to being duped:
 
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Seven Investments That Can Ruin Your Life

scary-placesThe Wall Street Jungle, written by Richard Ney in 1970, compares the field of investments to a shadowy, sometimes impenetrable wilderness filled with dangerous beasts and hidden treasures. Blindly venturing into this unknown world can easily end in disaster.
 
Often, predators such as con men, thieves, and bandits lurk and set traps for overconfident, naive adventurers foolish enough to believe that a free lunch is possible. Inexperience can lead to a failure to recognize risk (or underestimate it) and result in poor decisions and financial loss.
 
However, overconfidence is more often the cause of investment catastrophes, especially when coupled with the innate tendency of people to follow the herd. In his 1871 book The Descent of Man, Charles Darwin writes, “Ignorance more frequently begets confidence than does knowledge.”
 
No investment is free of risk, but the following seven are particularly dangerous. If you want to protect your investments, read this guide carefully.

The Most Dangerous Investments

1. Penny Stocks

Common stocks trading for less than $5 per share are called “penny stocks” by the Security and Exchange Commission. Their stock prices are quoted on the “pink sheets,” an over-the-counter market that connects traders electronically. The companies are not required to register with the SEC and typically do not file periodic or annual reports with the Commission.
 
Penny stocks are the preferred vehicle for “pump and dump” schemes, fraudulently manipulating prices upward to sell owned shares with huge profits. Testifying before the House Subcommittee on Finance and Hazardous Materials, Committee on Commerce, SEC Director Richard H. Walker stated that organized crime families have been actively involved in manipulating penny stock since the 1970s. The New York Times reported activities of the New York and Russian mafias in two New York brokerage firms: White Rock Partners & Company and State Street Capital Markets Corporation.
 
Penny stocks attract gangsters and con men because they are easy to manipulate due to the lack of the following:
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Trump’s Election: The Winners and Losers

trump-2The election is over, and the people have spoken. Donald Trump will be the next President of the United States. For years, political pundits and academicians will discuss the outcome and the possible reasons for the unexpected results. At this time, no one knows how President Trump will govern. Presumably, he will attempt to fulfill the promises that he made during the campaign. If so, who are the likely Winners and Losers as a consequence of the Republican sweep of the Presidency, the Senate, and the House of Representatives?
 
Here are my initial thoughts:

WINNERS

The American Democracy

Despite claims of voter fraud and election fixes by some as well as concerns about the peaceful transfer of power from one Presidency to another, it is clear that the transition will be peaceful. Candidate Clinton conceded the election and offered to help the new President in any way she could. President Obama has invited the President-to-be to the White House to begin the plans for the upcoming transition. Unlike other countries, most Americans will accept the new President and hope that the future will be better for all.

The UltraRight

Having been ignored or chastised by the public and political parties generally, the election of Donald Trump has returned the most extreme element of the Republican Party to power. As a consequence, Federal regulations will be severely cut back, and power will be restored to State legislatures. In many states, this means that recent laws expanding the rights of minorities will be rolled back including same-sex marriage, a return to racial profiling, and the expansion of Christian religious beliefs in the everyday lives of Americans.

NRA, Gun Owners & Dealers

The NRA was the first major organization to endorse Trump and noted the day after the election that “He [Trump] will certainly remember who helped propel him to office and the promises he made to respect our right to bear arms.” As a consequence, efforts to expand laws to reduce the ownership and carry of guns of all types will be unsuccessful. Federal and State legislature will repeal existing laws restricting the sale of guns, and expand open-carry laws.

Soviet Union

Russian President Vladimir Putin quickly announced his support for a Trump Presidency and the possibility of new Russian-American relations. Trump had previously recognized Putin as “ strong leader – stronger than our President.” He has also indicated his support of Russia’ absorption of the Crimea in a July 31, 2016, interview with ABC’s George Stephanopoulos with his statement that “The people of Crimea, from what I heard, would rather be with Russia than where they were.”

The Top 1% of Tax Payers

According to studies by the Citizens for Tax Justice, Trump’s tax plan will deliver “massive tax breaks to the wealthiest Americans and a pittance to the poorest.” The Tax Policy Center projects that “the largest benefits (47% of all cuts in 2017 going to the top 1%) would go to the highest income households.” The Tax Foundation concurs, projecting that the top 1% will receive an increase ranging from 10.2% to 16% while the average taxpayer would get an increase of less than 1%.

Coal and Oil Industries

According to an article in the Wall Street Journal, a Tump victory means eased regulations, lifting limits on mining and drilling on federal lands, and the promotion of energy-related infrastructure including oil and gas pipelines. He also promised to repeal regulations regarding the production and use of coal, including environmental regulations.

White Conservative Evangelicals

Despite Trump’s marital history and questionable statements about women, white evangelicals turned out in greater numbers than for Romney, McCain, or Romney in recent elections. In a meeting January 24, 2016, in Sioux Center, Iowa, Trump promised with evangelicals, “I am a true believer. . . When I win, the war on Christianity stops! . . . If I’m there [as President” ], you’re going to have plenty of power. You don’t need anyone else, you’re going to have someone representing you very, very well, remember that.”

LOSERS

Partisan Cooperation

Despite calls for an end to political deadlock and return to civility, Trump promised to appoint a special prosecutor to “put Hillary in jail,” repeatedly labeled his opponent “Crooked Hillary,” and encouraged his supporters’ chants to “Lock her up!” His public pronouncements – if implemented – will widen the gap between neighbors, families, and friends with opposing political views.

President Barak Obama

Trump, with the assistance of a Republican Senate and House, has promised to roll back Obama’s Executive Orders, renege on the Iran Nuclear Agreement, cancel the Paris Agreement to address climate change, and halt participation in the TransPacific Partnership (TPP). He has also promised to repeal The Accountable Care Act, President Obama’s most noteworthy accomplishment.

House Speaker Paul Ryan

With the election of Trump, he replaces House Speaker Paul Ryan as the country’s #1 Republican. Also, Trump and his supporters are likely to hold Ryan accountable for his failure to fully endorse the President-to-be during the election cycle. Finally, many of Trump’s positions during the campaign are contrary to positions the Republican Establishment has carefully developed under Ryan’s leadership.

Republican Establishment

Trump’s unorthodox campaign focused upon a rigged system that disadvantages the average American. His targets included the Republican leadership and those members who failed to support him or, in many cases, actively campaigned against his election. His self-identified penchant for “counter-punching” does not bode well for cooperation among the Party elite, the elected Congressional members, and his Executive Branch.

Federal Bureau of Investigation

Director James Comey’s ill-advised insertion into Presidential politics eleven days before election (despite acknowledging that there was no new evidence regarding Clinton’s emails0 has significantly reduced the Bureau’s reputation for thoroughness and professionalism. His latest act followed confusing testimony regarding Clinton’s culpability, but not criminality in the in the initial investigation during the campaign. The subsequent exposure of deep division within the organization suggests significant changes will occur in the coming months.

NATO

During the campaign, Trump questioned the value of the North American Treaty Organization, a 28-nation alliance established in 1949. In an interview with the New York Times in July 2016, he stated that he would decide to honor the terms of the pact only after reviewing whether they had fulfilled their obligations to us, i.e, paid for their defense. According to Trump, “We are spending a fortune on military in order to lose $800 billion. That doesn’t sound very smart to me.”

Immigrants

Whether a Syrian refugee or an illegal from Mexico, Trump has shown an antipathy to immigrants. President-to-be Trump has repeatedly promised to build a wall between the borders of the United States and Mexico, deport millions of illegals peaceably residing in this country for years, and reject Muslim refugees from the war territories in the Middle East.

Free Trade and American Consumers

Trump’s promise to restore American jobs by renegotiation of existing trade deals and imposing penalties on imported goods will result in higher prices for goods for all Americans, whether in the form of higher tariffs or increased labor costs.

Science and Environment

As Trump said early in his campaign, “I love the poorly educated. We’re the smartest people, we’re the most loyal people.” He distrusts science, tweeting on November 6, 2012, that “The concept of global warming was created by the Chinese in order to make U.S. Manufacturing non-competitive. Vice President-to-be Mike Pence has questioned the validity of evolution and proposed the teaching of creationism – intelligent design – in public schools.

Final Word

Undoubtedly, others may conclude a different list of winners and losers. One of the contentious elements of the campaign was President-to-be Trump’s deplorable statements about women in conversation with entertainer Billy Bush. This might lead some to conclude that women are one of the preeminent losers of the election. However, Mr. Trump;s employment of women in key executive positions in his companies suggests his position is evolving. As a consequence, I have deferred on including women on this list.
 
When discussing Trump’s election with a staunch Republican friend this morning, he assured me that President Trump’s actions would not reflect Candidate Trump’s promises. According to him, Trump will not seek to prosecute Clinton, build a border wall, or implement any of his more extreme campaign promises that appealed to his core supporters. He will, instead, implement traditional Republican policies following the counsel of such luminaries as Speaker Ryan, Senate Majority Leader McConnell, former Mayor of New York Rudy Giuliani, and Governor Chris Christie.
 
Which Trump will we see in the Presidency? I hope for all our sakes he is a uniter, not a divider, even if it means he reneges on his campaign promises.

Joining the Military After High School – Benefits and Risks

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Military service has long been a path for social and economic mobility – the gateway to the middle class – for thousands of young American men and women. Service is both a way to see the world and learn valuable skills that can be transferred into civilian life – and many enlistees would not have the opportunity to attend college or purchase a house without the benefits associated with military service. Furthermore, veterans who forego college are likely to earn higher pay than non-veterans who do the same. According to Jay Teachman, a sociology professor at Western Washington University, interviewed in The Fiscal Times, “Even if they [veterans] don’t earn more education, they certainly earn more money.”
 
The opportunity to learn responsibility, focus, and discipline from military service can benefit enlistees for life. People in the military are taught how to make decisions in extreme conditions and function in periods of stress – traits critical in civilian life. However, it is important to have a thorough understanding of the risks as well as the benefits of military service, and what the commitment to a career in the Armed Forces involves.

Military Experience and Success

Political Leaders

In addition to the financial benefits of military service, the training and experience it provides have enabled many to achieve high positions in politics and business. Since World War II, 10 of the United States’ 12 presidents have served in the country’s military. While the percentage of senators and representatives with military service has steadily declined since the 1970s, veterans continue to represent a significant portion of Congress. According to the Congressional Research Service, 73% in the 92nd Congress (1971 to 1972) had military experience, while 18.7% of the 114th Congress (2015 to 2016) were veterans.

Business Leaders

Executive offices of the country’s largest companies are full of military veterans. These include:

  • Frederick W. Smith: The founder and CEO of FedEx served with the Marines in two tours of duty in Vietnam.
  • Roger Staubach: Staubach, a former Heisman Trophy winner and founder of a national real estate firm, graduated from the U.S. Naval Academy and served two years in Vietnam.
  • Alex Gorsky: The chairman and CEO of Johnson & Johnson graduated from the U.S. Military Academy and served six years in the U.S. Army.

 
According to a 2012 report by the Center for New American Security, companies are likely to pay higher starting salaries for employees with military service. The reasons cited for the employers’ preference include:

  • Leadership and Teamwork Skills: Typically, veterans have led colleagues, accepted direction from others, and operated as part of a small team.
  • Character: Veterans are perceived as being trustworthy, dependable, and drug-free, and having a strong work ethic.
  • Structure and Discipline: Companies, especially those that emphasize safety, appreciate veterans’ experience following established procedures.
  • Expertise: Companies value veterans’ technical skills, job-specific experiences, and understanding of the military community.

Entrepreneurs

Veterans are responsible for a significant percentage of start-up and small businesses using the experience and education provided during their service. According to Marianne Hudson writing in Forbes, 30% of all American businesses are owned by veterans. As a consequence, the National Veteran-Owned Business Association proudly proclaims, “The lessons learned and lived in military service like leadership, teamwork, competitive spirit, mission-orientation, and ambition are the same attributes needed to succeed in business.”
 
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