Sun Tzu said in The Art of War that all warfare is based on deception.
While every business has its own "tricks of the trade," few other businesses have such a direct impact on your pocket book, checking account and net worth as the investment business does. It is important to learn when you are getting the straight scoop or when you should invest in hip boots and a shovel.
Today, there is an absolute plethora of investment managers, brokerage firms, banks, mutual funds, hedge funds and other financial institutions. People are deluged with information over-load from newspapers, periodicals, the internet and other on-line services, all with products and services competing for your business and your assets..
To complicate matters even more, the range of various investment vehicles and alternative investments is mind boggling. Between the stock markets, bond market and other fixed- income investments, options and futures markets in agricultural commodities, currency, energy, interest rates and equity indices, the choices become even further confusing.
This concept has not gone unnoticed by the financial services community. To the average person, it must be indeed be a daunting task to even begin to know where to start. For those that consider themselves knowledgeable and experienced, there are more products and services designed to further reinforce that perception.
One would think with various Acts of Congress, oversight and regulation by the Securities and Exchange Commission and other government agencies and exchange regulations that this business would have to be on the up and up. Not necessarily so. One of the oldest clichés on Wall Street is, "if you can't dazzle them with brilliance, baffle them with b*&^%#@." To be candid, unless someone has spent a good number of years as an investment professional, many people have no idea of what really goes on and how they can be taken advantage of.
There are indeed some questionable practices on Wall Street and the investment business. It is worthwhile for people to know how to recognize a professional when they see one and how to use that person to their best advantage.
It will also help investors to recognize someone who puts their own interests ahead of their client’s or an amateur as well. Indeed, some of these practices are so wide spread and pervasive, one has to wonder if the investment community even recognizes them as such any more. Some of these practices and deceptions are in fact, de rigueur.
A little education goes a long way and it is important that investors learn how to recognize deception when they see it, identify reality when they encounter it and learn how to be a more knowledgeable, savvy and hopefully a more profitable investor.
Dean Lundell - A capital markets professional with over thirty years of experience and a licensed Commodity Trading Adviser.
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