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  • Writer's pictureInno Wambugu

Simple Success Podcast - Scams

Updated: Jan 5, 2022

Scams are really distractions. They're like shiny objects but intentional ones. The difference is that, as good investors, we won’t be distracted by any types of content, not even by identity theft or scams.

You can’t change your life until you change your life. What we really do not want, in investing and in anything, is to be distracted and that's what scams can do. I don't want to imply that everything is a scam because it's not. It's not like there are bad actors and scam artists everywhere. Sometimes pitches come to us that are not exactly what we had in mind, that does not necessarily make them scams.

Like in the case of this comment about what was called a scam email from an actual service.

Spammers spam spam spam spam emails despite a long waitlist "because we found your LinkedIn profile compelling".

Then there were a few statements of agreement around the ethics or lack thereof, including the idea that this particular service was allegedly sending emails to all the contacts of new subscribers after pinching them during the sign up process.

Getting access to consumers isn't really a scam. "Spam" and "scam" are very often connected and part of the same deal. Anyway, it wasn't really a scam. That was a legitimate attempt to drum up business, they just didn't do it very well.

I learned about actual scams when I was an active financial advisor. Every year, I had to re-certify as having learned senior ethics, or how to deal with older people in a way that is both ethical, legal, and straightforward.

These were people who might be told they needed new roofs for their houses that they didn't need, from a place charging them a ton of money that they didn't have. And getting them on the hook before later upselling them or just demanding more money, with an inability to cancel or take any action against the caller. Those kinds of things are scams.

There are a lot of investment scams as well as a lot of legitimate investing opportunities.

For example the one name in the last 20 years that no one wants to be associated with...Bernie Madoff, the biggest Ponzi Scheme yet!

But that’s just the other extreme. And extremes are just another distraction. So, say this with me: "Don't be overly worried. Just be aware." If you really need to demonstrate your concern over scams for any reason, focus on the more concerning issues.

Such as bubbles, and so-called can’t miss opportunities.

Examples of bubbles:

A really old but important one is known as the Dutch Tulip Bubble or Dutch Tulip Mania. It happened in the 1630s, long before any email scams or harmful software. What happened was that prices for some tulip bulbs got really high and then collapsed. It is probably the first recorded asset bubble in history. But it was not a scam. It was an Irrational Exuberance. People wanted to get rich quick without putting anything into it.

Another example is the housing bubble of the early/mid-2000s which led to the Great Recession, the financial crises of 2007 and beyond. This wasn’t a scam either, except in the sense that some mortgage products were offered for the wrong reasons.

Why bring it up then you ask? Because it’s what is really likely to happen, that is, if anything bad happens, which…although possible, just isn’t likely.

What do I mean when I'm talking about scams and investing? Let me direct your attention to a bit from a distracting email I got while writing this. Here’s the mail, with the key identifier thingies taken out so as not to embarrass anybody.

Hello, Congratulations! You’ve completed your pledge drive. Your combined pledges total $0.00 for [fill in the charity name here]. That’s amazing! We’ve sent an email to your pledgors indicating where they should donate and how much based on their pledge amount. I’m sure you’ll want to reach out to them directly too. Thank you for taking on such a big challenge. You’re making a huge impact. Sincerely, Mr. Generic.

This email was about a fitness thing. But let’s suppose it had been about a financial thing.

And let’s further suppose that you considered paying attention to it as working toward your goals.

When we allow ourselves to spend time with a mail from a business owner like the above, or something the postman brought, or something from one of the many government agencies, yet it's something that's designed to separate you from your money and give you nothing in return. Remember, this is always going to be relative to your goals, so stay focused on that.

Just learn to ignore the distractions as well as any bad business practices.

People may not understand you when you do. They’re trained to think a certain way, which is not the way of success. And they want you to think that way too, so that they don’t feel alone.

However, a statement like, "The Titanic is unsinkable!" just designed to get attention is not a scam. Well, I suppose the Titanic could have been just one of many business opportunities, if they knew it was not unsinkable, and they knew about icebergs and such…which they didn’t. Which means it wasn’t a scam. They weren’t intentionally lying.

But they were distracting people. Like what recently happened with the GME thing from early 2021. Everyone got caught up in the side story about how the short-sellers how the short sellers just couldn't take home those millions of dollars as a quick profit. They had to be stopped and they, the GME/Wall Street Bets people, were going to see to that. What happened was, a very popular online trading service put a halt on trading that stock, and depending on who you believe, shorted out the whole plan. What happened was, a very popular online trading service put a halt on trading that stock, and depending on who you believe, shorted out the whole plan.

But they didn’t, they stopped trading because of a pretty obscure federal trading rule. Which we won't be going into. That’s been done and that’s not what we do here. It would just be adding noise. Like phone scam calls or telemarketing calls or other common scams or imposter scams or any type of scam!

We simply want people to cut that noise out, like noise-cancelling headphones. Cut it out and focus! Make monthly payments to your investments, not your debts!

When you can see what you’re doing, and you’re not looking at distracting things, whether or not they might be scams, then you can THINK! Practice remembering, and you remember to practice. Because ALL YOU NEED TO DO IS PRACTICE, AFTER WHICH YOU’LL GET GOOD!

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