This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Investment Scams Endure as Human Nature Hasn't Changed

NEW YORK ( TheStreet) -- Here's some advice to anyone who is new to managing money or analyzing securities: Always hesitate to give investment advice to your friends and family.

Not only will they not value the advice, since it's free, they'll likely blame you if "something goes wrong," as happens at least half the time.  Many people will be more likely to give credence to a horse tip they hear at a bar than they will to your conclusions based on years of serious study.

This "tipster mentality" was the commodity that enabled the fraudulent "pump and dump" schemes executed by Stratton Oakmont during the 1980's and 1990's, as portrayed in the hit movie "The Wolf of Wall Street," by Martin Scorsese and starring Leonardo DiCaprio.  TheStreet early in its life was on the leading edge of reporting these events.

Do  you think Wall Street has really changed?

Years after Bernard Madoff's Ponzi scheme was uncovered, and years after the excesses of the real estate bubble handed us the Great Recession as well as the Dodd-Frank Wall Street Reform and Consumer Protection Act, there were ever more ponzi schemes. (To keep tabs on all of them, check out the  Ponzitracker website.)

And if you think there was anything "innovative" in the efforts of former Stratton Oakmont partners Jordan Belfort and Daniel Porush to rip off gullible investors, think again.

In the glorious Reminiscences of a Stock Operator, by Edwin Lefevre, you can learn the dirty details of similar activity that occurred in the 1920s, and how gullible some investors were back then. Some things never change.

Many investors who have been very successful professionals refuse to apply any of the energy they brought to learning their professions to learning about how to make the right investment choices, depending on their goals.  To use an old cliche, some of these investors will focus more on choosing a home appliance, than they will on selecting an investment portfolio, or an investment advisor.

Getting back to the advice business, one thing you can say to a younger person is, "save your money and put it in the bank."  If you save a bit each week, your savings will probably grow faster than most investments you would pick.

Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $92.94 -0.73%
FB $117.52 -0.46%
GOOG $701.33 0.81%
TSLA $212.61 -4.50%
YHOO $36.96 2.70%


Chart of I:DJI
DOW 17,621.75 -29.51 -0.17%
S&P 500 2,050.03 -1.09 -0.05%
NASDAQ 4,722.6720 -2.9670 -0.06%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs