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Enough Already; A New Fraud Everyday Hitting The Wires
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Monday, 26 January 2009
By Rick Pendergraft
It seems like everyday there is a new story about a hedge fund scam.
First there was Bernie Madoff and his Ponzi scheme.  A good number of his investors were from the most elite of country clubs, The Palm Beach Country Club.  We are talking about a club where the monthly spending requirements are higher than 90 percent of the countries annual income.
There was the less publicized case of George Theodule.  Theodule is a Haitian immigrant and he was targeting other Haitian immigrants with a promise to double investors’ money in only three months.  According to the SEC, Theodule swindled investors out of $23.4 million.

Then there is the case of Marcus Schrenker, the Indiana investment manager that tried to fake his own death by allowing his plane to run on autopilot for 200 miles.  His plane crashed to the ground in the Florida panhandle within yards of a neighborhood of homes.  He is being investigated for fraudulent activity in Indiana.

There is the case of hedge fund manager Arthur Nadel.  The Sarasota based hedge fund manager went missing when faced with redemptions that he couldn’t cover.  There have been claims that he made off with as much as $350 million.  Whether he stole it or lost it has yet to be determined and Mr. Nadel has yet to be located.

All of these cases have transpired in the last six weeks.

What are individual investors supposed to do?

The first thing to do is pursue independent research like the advice you get in IDE.  We might not be right all the time (no one ever is), but we try to lead readers down the right path.  We don’t control your money, but we try to make you money.  Our vested interest is giving you good solid advice so that you trust us and continue to visit our site and read our publication.

Another thing you can do is educate yourself by learning how to do your own research.  I personally have written two different programs that teach people how to trade.  Velocity Strategy teaches investors how to trade e-Mini futures and is co-written with Tom Gentile of Optionetics.  The K.I.S.S. program teaches people proper money management, how to trade options, how to read charts and how to read sentiment.
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We also have a number of subscription-based services where you pay a flat fee for an annual subscription.  In these services, we make recommendations that we think will perform extremely well.  Sometimes we are right, sometimes we are wrong, but we have your best interest at heart each time we make a recommendation.

Once you have purchased a service, our goal is to make you money so that you will renew that service.  There are a number of factors that will lead you to renew your subscription: if you have made money, if you have gained an education, if you have protected your portfolio from losses, or if you perceive value in receiving the newsletter.  So if we haven’t met these requirements, you aren’t obligated to pay us another dime.

In fact, all of our services and products come with a money back guarantee of at least 30-days.  If you try the product or service and you don’t think it is right for you, you cancel the service or return the product and get your money back.

This is about the only time you can use the word “guarantee” when it relates to investing.  Hedge funds can’t guarantee returns, nor can mutual funds or brokers.  In fact, when I first started my first official job in the investment business back in 1987, my boss told me to forget three words: guarantee, never and always.  Here it is 21 years later, and I still remember those words and I still picture him saying them.

Having a trusted source for investment information is imperative.  The investment world as we know it has changed forever.  Being a passive investor may never be the same.  You can keep doing the same old things or you can change your approach.  Albert Einstein defined insanity as “doing the same thing over and over again and expecting different results.”

The problem with the hucksters and scam artists that are making the news is that they make it harder on everyone in the investment industry.  The investing public becomes more skeptical of everyone because of a few shady characters.  And you should be skeptical to a degree.

As I said before, when we make a recommendation, it is for one of two reasons: to make you money or save you money.  We aren’t making a commission on the activity, we don’t have access to your money and we can’t use it for personal gain.

We have your best interest at heart.  We might not be right all of the time, but we always make our recommendations for the right reasons.

Good luck and good trading,

Rick

Make your voice heard -- to let us know your thoughts on this article, you can click here and leave your comments for the IDE community as well as the editors.

[Ed. Note: Subscribers to Rick's KISS Investing service recently closed out gains of approximately 154% on Gilead Science and 187% on Juniper Networks. Click here to learn more about KISS Investing]

P.S. To let me know what you thought of today's article, send an e-mail to: This e-mail address is being protected from spam bots, you need JavaScript enabled to view it

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