Scam artist: Be ahead of Today's Scams with your in-depth knowledge
The financial markets have over the years seen their fair share of swindlers and scam artists.
Investors have over the decades lost hundreds of millions, if not billions as a result of unregulated or inadequately regulated investment schemes. It is an unfortunate fact that money attracts crooks – forget about the saying ‘Money is the root of all Evil’ we know now that is not of true, and the lure of big money can change ordinary people into cheats or even worse in some sense.
The operators of investment scams always search or find new ways to work outside of regulatory structures, and a strong regulatory environment cannot eliminate them. But it has the more important function of creating an investment environment in which investors can place their faith.
These three pieces of legislation are of particular interest to investors, and professional investors with collective investment schemes:
- The collective investment schemes control Act, 45 of 2002[CICA]
- The financial Advisory and intermediary services Act, 37 of 2002[FAIS]
- The financial intelligence centre Act, 38 of 2001[FICA]
The regulatory framework governing collective investment schemes (and companies and individual that sells them) provides investors with the confidence to entrust their hard-earned savings to their parties. Long-term studies of the performance of different assets classes whether property, bonds, cash, and equities invariably show the superior performance of the equity market over the long-term.
‘It is a universally accepted principle of investment that risk rises with the potential for higher returns: the greater the chance you can make big money – the greater the chance you can lose your shirt’
As in any sphere of human endeavour, be it in sports/athletics and assets management some people have more talent than others. There is no question, however that all things being equal concentrating on a smaller number of stocks generally increases the risk level.
Stock pricing as it is said it requires in-depth knowledge of the market, the economy, and particular companies.
Stocks picking risk can of course be reduced through diversification, and when it comes to assets allocation funds which rely considerably on stock picking, and proven track record of the fund manager is an important consideration.
Thanks for reading! Join our email list here: Newsletter if you’re interested in practical psychology for everyday life.
