Why Is Financial Fraud Prevalent and Difficult to Guard Against? With Bob And Eric June 17, 2018

Guests: Bob Carlson and Eric Lutton

The Income Generation With David J. Scranton
The good news is that I learned a hard lesson and prevented it from ever, ever happening again in my life. In fact, one thing that we as old-timers have going for us when it comes to protecting ourselves against scams and schemes is an experience. We’re more apt to recognize a phony pitch for what it is because we may have heard it before and were less likely to ignore our instincts when something simply doesn’t pass the sniff test. But experience alone often isn’t quite enough to protect us and there is simply a cold hard fact of nature that these scams exist all around us and even smart sensible people with loads of life experience end up making poor choices. Why? Because the two fundamental emotions that drive financial decisions, fear and greed you probably heard me discussed it before as it relates to investing most people simply aren’t hardwired to be good investors. Why? Because it requires being able to override those basic emotions on a regular basis, it means being able to buy when the markets are low and being driven by fear. And if so when the markets are high you’re being driven by greed, for most people their own greed impulse kicks in during a high market and they want to stay put. Then their own fear impulse kicks in when the market’s falling near rock bottom and that’s when they pull out. That’s why buy low, sell high is a simple principle but for most people, it’s not easy in practice, why? Because of human nature buy low, sell high is simple but not easy. But those same instinct and emotions are what make us all potentially vulnerable to financial scams regardless of our age. Regardless of our experience and regardless of our ability to sniff out deception, con artist will typically play upon the instincts of greed or fear or often both to try to get you to make impulsive decision before your protective instincts have a chance to kick in.

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