While most financial advisors out there are trustworthy, there are those select few who will do anything to get their hands on their clients’ money. Think of the many people who suffered at the hands of Bernie Madoff and those like him. How are people supposed to avoid scammers like that when making investments? Mark Matson encourages prospective investors to closely vet their financial advisors. Mark Matson and his company want all investors to understand that financial advisors may be people who have no qualms about ripping off their clients.
This issue is more prevalent than most people realize, and investors want to know how and why this happens. They find it hard to believe that others are willing to take advantage of them and make the mistake of trusting advisors enough to hand over their money and expect that it will be handled with integrity. Investors assume that everyone is just like them; they want to believe all money managers are normal, empathetic, average people who will handle their money with the same care that they would take with their own. However, con artists do not see the world this way.
Mark Matson says that, “40 billion dollars a year is lost to people whose money is getting stolen, not just mismanaged.” Industry con artists are only interested in stealing their clients’ assets, and what they are doing is essentially a crime. However, as Matson advises, there is no end in sight. It will continue to happen over and over again if people do not become more prudent in choosing who handles their hard-earned cash.
Mark Matson’s mission is to put this to a stop and he reviews the best way in which that can be done. Matson says, “If you aren’t careful and don’t take the time to understand prudent investing, you will set yourself up to be a victim.” This couldn’t be truer. In addition to the con artists, there are many legal ways for financial advisers to gamble clients’ money away. Since many of these people can’t be held accountable or brought to justice, it is up to the investor to be savvy enough to say no to shifty risk takers and fraudsters. Matson feels that it is “a horror movie all on its own” and that investors are the only ones with the power to put an end to it.
Are you in the market to make money? If so, you might want to stay away from real estate – that’s at least according to Mark Matson, founder and CEO of Matson Money, INC, a Cincinnati-based investment adviser firm. Mr. Matson was recently on Fox Business’s “Money with Melissa Francis,” where he argued that choosing real estate over equities could possibly be the worst investing mistake one could ever make. His contention goes against popular opinion among investors, who believe that real estate represents the more favorable investment opportunity. However, he does have a few points that support his argument. Let’s take a look at some of the reasons Mark Matson has complaints about real estate:
Real Estate has not performed as well: Since the Bear Market Bottom, the median price for homes has gone up by 11%. Do you know how much stocks have increased in that same time? The Dow Jones Avg. has actually gone up by 150%. Those who invested in equity around this time made a ton of money. And that’s not an acute trend.
Liquidity is dependent on the market: Getting out of stocks is one thing. Even if you do lose money, you can usually get out. On the other hand, getting out of a housing investment requires another player. While a home might be a more fun investment, you do have to put money into the home for upkeep. You are also dependent on demand. If you have a down market, like we saw in the mid-2000s, you might not be able to get the price you want for your home – if you get an offer at all.
Millenials are not buying homes at the same rate as other generations: Many Millenials were badly hit by the recession. Between not being able to get a job because of a down market to incurring huge amounts of debt to finance their degrees, many Millenials are hesitant or unable to purchase that first home. Additionally, many are bypassing home purchases to remain flexible in their careers and other life pursuits. The home may not be the American dream anymore, and if the demand isn’t there, neither are the prices.
Is Mark Matson right? Is choosing real estate over equity the worst investing decision you can make?
Fear can be a good thing. It is a product of evolution. When our ancestors perceived an actual threat, their bodies responded in kind. Their brains when into a hyper-focused state that allowed them to better perceive their surroundings. Their heart rates went up to increase oxygen flow, and the Fight or Flight response kicked in to best react to the threat. This was a means for survival against predatory animals or other humans. When there is danger, fear is a good thing. However, this might not always be the case, especially when investing.
Complaints Mark Matson often has concern fear-based investing. We can become influenced by our fears of what might happen next rather than staying in the present and allowing our actions to dictate our futures. One case of this is the worry many investors had after a rather dull first quarter of 2014. A few months ago, Zack Shepard joined several other investors in a panel discussion on the first quarter on Neil Cavuto’s show on Fox Business. His main message was for investors to feel the fear but invest anyway.
Mr. Shepard pointed out the fact that, historically, there is no set direction for the market to go in after a flat first quarter. Each time it has happened, there were different variables that influenced where the market would go. He, therefore, told investors to listen to the fears they might have about the market, but think about what makes the most sense long-term. Investors should take a look at their portfolio and make smart long-term investments in equity that have the potential to sustain them twenty years from now, rather than worry about what happens next month.
Investing wholly based on fear is a self-fulfilling prophecy; it will only cause you to lose focus of what you should be doing to sustain long-term growth. In the appearance referenced above, Zack Shepard made the case that we shouldn’t worry as much about what might happen after a flat quarter, because each instance of a flat 1st quarter is different. Historically, equity investments have helped make investors a lot of money. Investors should remember that as they make moves to create their own little American Dreams.
A little fear is great in many situations. However, it sometimes isn’t when it causes you to take your eyes off the prize. In the case of this first quarter lull, it makes sense to acknowledge the fear but to invest anyway.
After years of thinking about investing in stocks, you’re finally ready to get started. While this process can be very exciting, it can also be extremely stressful and come without the concrete assurances that you may want. Nobody can tell you which stock will be the most profitable, or which one can withstand the test of time. One of the most common complaints Mark Matson hears from new investors is that they really don’t know where to start, or that they aren’t sure that they’re doing things correctly. While there are no secret methods for always choosing the best stocks, there are ways to have more confidence in your investment choices.
Have the right expectations
A lot of the anxiety that first-time investors experience can stem from having unrealistic expectations. If you assume that investing in the right stock will get you rich fast, you’re most likely going to be very disappointed in the future. Returns on your investments can take a long time to see, and you need to be patient if you want to actually reap any benefits. Don’t assume that you need to focus all of your time and money on one stock; it’s usually good to diversify, even in the beginning of your investment career.
Think like a business owner
If you want to get a good handle on your new investments, then view your stocks like you’re the owner of a business. Stocks aren’t just things that people trade – they represent ownership interests in companies. Manage your stocks like you would manage a business yourself. Read and analyze financial statements, and pay special attention to every yearly update that you receive. Keep abreast of trends in the market, and try to keep an open mind and use some foresight when it comes to the future of your stocks.
Whether it’s because of media hype or general popularity, it seems like there’s a new hot stock every month that promises to bring its investors wild riches. It doesn’t take a market genius to see that some stocks can have their value seriously overestimated. So how do you determine which have real potential and which are going to flop? There’s no one answer to this question. Before making any decisions, take a close look at the industry and see how likely the company is to do well. Has their progress been slow and steady or very sudden? When in doubt, always choose steady climbers with a record of stability, even if on a regional scale. If you still aren’t sure, avoid the stocks entirely and go for something more secure.
The investment game isn’t for casual players, but it’s something that countless people try to get into because they see the substantial financial potential some stocks can have. When you’re first starting out and begin to see a modest return on your investments, it can be easy to think that you know everything. You may assume you’re ready to start taking bigger risks and putting in a bit more money, but you shouldn’t let your modest success trick you into making bad decisions.
If there’s one thing Mark Matson hears a lot of, it is complaints from investors who started off well, but now find themselves in a world of financial trouble. It can be difficult and a little embarrassing to find out that something you thought was going to bring in a lot of money is actually messing up your portfolio. Don’t make the same mistakes that many new investors make and avoid these common pitfalls:
Going for what’s hot instead of proven good stocks
You just heard that a hot-shot billionaire swears that they have the next big thing in the market, and people everywhere can’t stop talking about it. You end up investing the majority of your assets into the hot new stock, and end up losing a lot of money in a few months when things cools off. Everybody dreams of “getting in on the ground floor” of a stock and making it big, but a lot of these new “innovations” and ideas people are trying to invest in may not have staying power. Stocks in resources and transportation have been known to do well long-term, but new fads and gimmicks generally don’t.
Going “all in” on one stock
Despite what you may have heard from some of your fellow hot-shot investors, there is no such thing as a “sure thing” in the stock market world. When people start seeing their stock of choice rise, they often put more money in and assume that it’ll keep going up. Others may have heard rumors that a certain company is about to release some sort of groundbreaking product, and end up shifting all of their money and focus into that stock. The secret to making good investments isn’t to dump everything into one place; it’s to have a diverse stock portfolio so that you can keep earning from a variety of investments.
Ignoring plans for “potential profit”
You’ve been telling yourself that you will sell your stock as soon as it hits $100 a share. The day finally comes but, since it hit $100, you’re thinking that it could go up a bit higher; instead of selling, you decide to wait and see how far it can go. That may sound like a bold strategy, but sometimes your old plans are much better than your new ones. Don’t wait for a potential rise in value that may never end up happening. If your plan is to sell your stocks when they hit $100 or to buy certain stocks when they get cheaper, stick to it.