They are fabulously well-paid, fabulously educated, and fabulously well-dressed. After spending years at Harvard or in an online finance degree program, they are the modern day financial geniuses and bankers, the powerhouses of American industry. Their expertise keeps the wheels of capitalism spinning, so that every man and woman may enjoy the benefits of prosperity and abundance.
Yet, with the American economic crash, one might wonder, are they to be trusted? Following are 10 great reasons to never trust a guy with a finance degree.
1. Never swim with sharks, especially if you’re a person. In the world of investing and finance, the big money is in percentages and commissions, and investors are the red meat that keeps this shark tank fed. Investment advisors frequently suggest ‘great’ investments because they offer great commissions.
2. Bernie Made-off with the money, and so are other people. The rise of social media has had a profound effect on people’s ability to swindle one another because of the lightning speed at which relationships can now grow.
3. Has your advisor explained High Frequency Trading? The vast majority of stock exchange trading is conducted by computers, that ‘front run’ customer orders. This means that they jump in front of the customer bid and grab a few pennies off the top, before the customer transaction takes place. It adds up to big money for the connected investment banks.
4. Nobel prize-winning laureates are well paid by those for investment strategies that crash in the real world. And they are paid by those who are more interested in keeping their money than anyone else.
5. The ‘demographic bubble’ is never mentioned. Beginning in 2010, withdrawals from retirement accounts held by baby boomers were long projected to exceed contributions. This would inevitably create a dampening effect on the stock market. Did your financial advisor ever mention this to you?
6. Equations, algorithms, charts and graphs are hype. They know it, now you do too.
7. The housing bubble was unforeseeable. Really, if the investment world couldn’t see this one coming, what are they good for?
8. The mortgage interest rate con. This is how it works. You get a mortgage with a sweet interest rate of 3% amortized over 30 years. What the bank fails to share with you is that the interest is front loaded. During the first five years, the interest paid is far higher than the amount averaged over the entire 30 years. And the main thing they fail to share is that the average American moves every five years, resulting in massively higher interest paid.
9. The mutual fund racket. The promise is that ‘professional’ management of your portfolio will lead to wealth creation. Just hand all your money to this guy over here, and he’ll take care of your retirement and savings so you never have to worry. The truth is, mutual funds charge high fees, underperform the market in almost every case, and benefit no one but the salesmen and managers.
10. From tea to tulips. The financial industry has a long history of schemes and frauds. Back in the day, there were the great trading companies, such as the British East India Trading Company, American Railroads, and Dutch Tulips. Every one promised huge profits to their investors, and every one became a bubble burst.
Even with loads of financial regulation and oversight, financial fraud and ponzi schemes persist. This is because information is not equally shared. Your banker may not know if any investment is going to pan out for you, but they do know what their cut of the fee is going to be. Just remember, this is an industry that didn’t get wealthy by making things, they got rich by taking a cut. Be sure that cut doesn’t come from your hide.
Tagged as: dating, relationships