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Recognizing the red flags
10-04-2019, 01:19 PM
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#1
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Confused about dryer sheets
Join Date: Oct 2019
Posts: 3
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Recognizing the red flags
Hello-
I'm a new member to the site. I happened across Early Retirement.org the other day when a friend who frequently invests in my real estate company asked my opinion on a company that was guaranteeing 18% returns, an obvious red flag. As I searched the entity making the claims I came across a thread from this site where most all the contributors to the subject were right on point- as a return that high is unlikely sustainable and certainly can't be guaranteed. I am proud of the fact that I have over the last 25 years produced well above average returns that are collateralized by real estate in the economically sound central Iowa market. It was encouraging to come across a site where the members recognize the difference between realistic and unrealistic claims. Which leads me to the question-what besides pie in the sky returns coupled with implying a guarantee throws your radar up? I always scrutinize the core collateral and durability of an asset. Glad to be a member- thanks!
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10-04-2019, 01:38 PM
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#2
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Administrator
Join Date: Jan 2008
Location: Chicagoland
Posts: 40,518
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Quote:
Originally Posted by Farrell
Hello-
Which leads me to the question-what besides pie in the sky returns coupled with implying a guarantee throws your radar up? I always scrutinize the core collateral and durability of an asset. Glad to be a member- thanks!
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My radar goes up when people talk about decades of above average investment performance and then offer to help me.
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10-04-2019, 02:05 PM
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#3
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Moderator
Join Date: Feb 2010
Location: Flyover country
Posts: 25,155
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I might take it even a step farther and say just the offer to help me is enough to make my spidey sense tingle.
If they're so good at investing and financial management, why do they need my business? Sounds like the old distinction between something you buy and something you're sold.
__________________
I thought growing old would take longer.
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10-04-2019, 02:21 PM
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#4
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: May 2008
Posts: 6,496
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Quote:
Originally Posted by braumeister
I might take it even a step farther and say just the offer to help me is enough to make my spidey sense tingle.
If they're so good at investing and financial management, why do they need my business? Sounds like the old distinction between something you buy and something you're sold.
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Agree. A few weeks ago got a congratulatory letter from some outfit, complimenting me on my sizeable assets. And offered to manage it for me.
The fine parchment paper the stuff was written on was useful for starting a fire in my camp stove.
__________________
There must be moderation in everything, including moderation.
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10-04-2019, 02:27 PM
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#5
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Dec 2008
Location: On a hill in the Pine Barrens
Posts: 9,669
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Biggest red flag I personally can recall was the time I met an advisor at local restaurant. It was a fine meal at his company's expense. Later I looked up his name, and found that he once owned the local adult video store.
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10-04-2019, 02:35 PM
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#6
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Thinks s/he gets paid by the post
Join Date: Feb 2007
Location: Upstate
Posts: 2,944
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Yep. Better to keep that kind of performance a secret lest others ruin the game.
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10-04-2019, 02:40 PM
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#7
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2002
Location: Texas: No Country for Old Men
Posts: 50,000
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Surely (can I call you that?) all those years as a mod haven't tainted your objectivity when it comes to too-good-to-be-true investment opportunities?
__________________
Numbers is hard
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10-04-2019, 03:13 PM
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#8
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Aug 2004
Location: Laurel, MD
Posts: 8,304
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A pitch or presentation using what I consider “trigger words” that are intended to evoke an emotional response vs a rational one:
Wall Street casino
Crash
Crisis
Always
Never
Free
etc
__________________
...with no reasonable expectation for ER, I'm just here auditing the AP class.Retired 8/1/15.
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10-04-2019, 06:23 PM
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#9
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jan 2018
Location: Tampa
Posts: 11,197
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Sounds like more investment porno.
__________________
TGIM
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10-04-2019, 07:58 PM
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#10
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Mar 2017
Location: City
Posts: 10,308
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Any complex product was designed to make money for the seller, not for you.
If you don't understand an investment, don't buy it.
Anyone who can actually achieve consistent above-average returns will not be offering this skill to retail investors for a pittance. He/she will be on a private tropical island drinking from a glass garnished with an orchid and stopping by the computer once in a while when the checkbook gets low.
KISS
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10-04-2019, 09:05 PM
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#11
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Thinks s/he gets paid by the post
Join Date: Feb 2014
Location: Williston, FL
Posts: 3,925
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And it was probably one of the most profitable businesses in town.
__________________
FIRE no later than 7/5/2016 at 56 (done), securing '16 401K match (done), getting '15 401K match (done), LTI Bonus (done), Perf bonus (done), maxing out 401K (done), picking up 1,000 hours to get another year of pension (done), July 1st benefits (vacation day, healthcare) (done), July 4th holiday. 0 days left. (done) OFFICIALLY RETIRED 7/5/2016!!
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10-05-2019, 05:01 AM
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#12
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Dec 2008
Location: On a hill in the Pine Barrens
Posts: 9,669
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Quote:
Originally Posted by Senator
And it was probably one of the most profitable businesses in town.
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Not by a long shot. Dingy strip mall with no customers. A real blight on the upscale neighborhood. Fortunately for him he was able to get into more profitable porn business.
Still trying to understand his coming to dinner with stains on shirt.
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10-05-2019, 06:24 AM
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#13
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
Posts: 36,204
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Quote:
Originally Posted by target2019
Not by a long shot. Dingy strip mall with no customers. A real blight on the upscale neighborhood. Fortunately for him he was able to get into more profitable porn business.
Still trying to understand his coming to dinner with stains on shirt.
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What kind of stains?
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.
Retired Jan 2012 at age 56
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10-07-2019, 10:34 PM
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#14
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Recycles dryer sheets
Join Date: Feb 2011
Location: On a dirt road
Posts: 332
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Been telling my kids for years, "Never say always or never ". Just tried it out on my 5 year old grandson and about a minute later he started laughing and said I get it grandpa. There's hope for that kid!
Quote:
Originally Posted by jazz4cash
A pitch or presentation using what I consider “trigger words” that are intended to evoke an emotional response vs a rational one:
Wall Street casino
Crash
Crisis
Always
Never
Free
etc
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__________________
"Up sluggard and waste not the day, in the grave will be sleeping enough." Benjamin Franklin
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10-08-2019, 02:12 AM
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#15
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Recycles dryer sheets
Join Date: Aug 2013
Location: Stuttgart
Posts: 50
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Whenever a thirty something financial advisor offers their advice...
__________________
Retired military 2011, Retired Fed 2018. Expat living in Europe or the US depending on which way the wind blows...
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10-08-2019, 05:07 AM
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#16
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Thinks s/he gets paid by the post
Join Date: Aug 2011
Posts: 3,587
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Quote:
Originally Posted by target2019
Biggest red flag I personally can recall was the time I met an advisor at local restaurant. It was a fine meal at his company's expense. Later I looked up his name, and found that he once owned the local adult video store.
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Gotta hand it to those Financial Advisors. They may not be great at detailed mathematics/analysis, but they sure are experts in the human behavior department.
-gauss
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10-08-2019, 05:14 AM
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#17
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jan 2018
Location: Tampa
Posts: 11,197
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Quote:
Originally Posted by Backpacker
Been telling my kids for years, "Never say always or never ". Just tried it out on my 5 year old grandson and about a minute later he started laughing and said I get it grandpa. There's hope for that kid!
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Funny, I tell that to the DGF when arguing on occasion.
__________________
TGIM
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10-08-2019, 06:38 AM
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#18
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Thinks s/he gets paid by the post
Join Date: Aug 2010
Location: Back woods of Fennario
Posts: 1,170
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I think I just recognized one.......
__________________
"Time wounds all heels...." - Groucho Marx
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10-08-2019, 07:46 AM
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#19
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Thinks s/he gets paid by the post
Join Date: Jan 2017
Posts: 2,628
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OK, I think the "free dinner" thing has been mentioned...
So expanding a bit, how about the words "introductory offer?" Sometimes it's in the headline, but often hidden in the smaller print. At any rate, it's rarely worth the effort to cancel whatever it is they're peddling when the introductory period is over.
Next, anything that comes unsolicited in a thick, expensive-looking package containing glossy printed material. It must be some racket if they can afford to send those out!
Finally, anything at all from my cable company. Which usually represent both of the above red flags.
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10-08-2019, 08:08 AM
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#20
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jan 2008
Location: NC
Posts: 21,148
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The adage that captures most of the good suggestions above, ‘if it sounds too good to be true, it probably is...’
Don’t invest in things you don’t understand. And why would someone with a sure fire outperforming investment be looking to make measly commissions on your money, if the investment itself pays so well? I’d keep that info to myself, and enjoy the proceeds. Once everyone knows about the great idea, returns will revert to mean if it’s a legal investment.
__________________
No one agrees with other people's opinions; they merely agree with their own opinions -- expressed by somebody else. Sydney Tremayne
Retired Jun 2011 at age 57
Target AA: 50% equity funds / 45% bonds / 5% cash
Target WR: Approx 1.5% Approx 20% SI (secure income, SS only)
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