With global uncertainty, rapid technological changes, and a surge of potentially risky investments, including a tidal wave of cryptocurrencies, pandemic-related schemes, “hot stocks,” and more potentially sinister fraudulent vehicles, investors can be lured in many ways to speculate and gamble with their financial futures. Whether you have been investing for years or are just starting out, critical thinking and research can empower you as an investor with confidence around decisions and investing strategies. Money is a thread in the fabric of life – it touches everything – so where do you begin when seeking to protect your financial future?
Anyone can be vulnerable to investor fraud
Bernie Madoff, known for one of the largest financial frauds in modern-day history, ran his Ponzi scheme for decades, defrauding investors out of tens of billions of dollars.1 How? Many of those investors followed what others were doing; they didn’t ask questions or do their own research. When you become aware investing biases exist and you can be influenced by them, investors can look out to protect themselves from schemes. Many dangerous scams look perfectly legitimate from the outside and balance on the line of never sounding too good to be true.
Smart decision making vs. investor biases
To help protect your long-term investing strategy, there are a few biases to recognize and challenge. Below are three of the ten that we review during the Matson Money American Dream Experience.
A critical time for investors
With the gamification of investing, do-it-yourself investing platforms on the rise, and celebrities endorsing the potentially dangerous realm of cryptocurrency, who can investors trust with their financial futures?
Many popular trends today are cleverly disguised as investing but more resemble gambling. Take, for example, cryptocurrency: at its best, it is gambling with a wide entrance but narrow exit. Unlike the stock market and bond market where there is a positive-sum game, cryptocurrency markets begin with a zero-sum and require others to participate for there to be an opportunity to come out above what an investor puts in. This is the basis of gambling – an entity that can have no more winners than losers.5
“It’s so easy to speculate and gamble but there are some things in life that shouldn’t be a game,” said Mark Matson, Founder and CEO of Matson Money. “I know it sounds extreme but it’s a life-or-death situation. You should never gamble with your future or your hard-earned money.”
Instead, we urge investors to find an advisor coach to help create their investing strategy based on empirically tested, Nobel-Prize winning investing science. This can empower investors to be prudent and disciplined over a lifetime and help equip them to not panic during a volatile market or fall prey to potential fraud and scams that may be out to destroy their American Dream.
About Matson Money
At Matson Money, we are a bold stand for the Fiduciary Standard – in all circumstances, we put the needs of investors above all other considerations. We educate and coach investors to be vigilant when it comes to their financial futures; to always verify, then trust.
We cannot guarantee that fortune will favor the brave, but Matson Money has an aggressive and bold battle plan intended to help investors and their families protect their financial futures. You can learn more about Matson Money and our commitment to investors here or join us for an American Dream Experience, A 2.5-day event for advisors and investors to get the coaching, training and structure to help give you confidence in you and your family’s investing strategy.
1. Investopedia: Who was Bernie Madoff? Updated July 2, 2022 https://www.investopedia.com/terms/b/bernard-madoff.asp
2. Chen, James. ‘Herd Instinct’. Investopedia. 14 August 2019. <www.investopedia.com/terms/h/herdinstinct.asp> Web. Accessed 23 October 2019.
3. Nofsinger, John R. and Varma, Abhishek. ‘Availability, Recency, and Sophistication in the Repurchasing Behavior of Retail Investors’. 9 January 2013. Journal of Banking and Finance.. <ssrn.com/abstract=2214216> Web. Accessed 22 January 2020. Page 37(7)
4.Scott, Gordon. Confirmation Bias. Investopedia. July 6, 2022. Retrieved 4 August 2022 from https://www.investopedia.com/terms/c/confirmation-bias.asp.
5. Mellor, Sophie. Crypto Companies Spent Millions on Super Bowl Ads. So Did Pets.com. Fortune. February 14, 2022. Retrieved 9 June 2022 from https://fortune.com/2022/02/14/crypto-companies-super-bowl-ads-coinbase-ftx-bitcoin-ether/
This content is based on the views of Matson Money, Inc. This content is not to be considered investment advice and is not to be relied upon as the basis for entering into any transaction or advisory relationship or making any investment decision. This content includes the opinions, beliefs, or viewpoints of Matson Money and its Co-Advisors. All of Matson Money’s advisory services are marketed almost exclusively by either Solicitors or Co-Advisors. Both Co-Advisors and Solicitors are independent contractors, not employees or agents of Matson.
Other financial organizations may analyze investments and take a different approach to investing than that of Matson Money. All investing involves risks and costs. No investment strategy (including asset allocation and diversification strategies) can ensure peace of mind, guarantee profit, or protect against loss.