Stock market land mines
Stock market land mines

An excellent post on investments which will wipe out your capital:

And there are other investor traps out there, too numerous to expound on each of them here. They include:

 Oil and gas limited partnerships. (If you’re being cut in on them, the wells are dry.)

Principal protection funds. (They always come out after the market’s been killed and cap your upside on the recovery.)

Insurance brokers selling asset management. (Does your hairdresser also repair the roof on your house?)

Stockbrokers selling guaranteed-return equity-linked annuities. (Yeah, that’ll end well.)

Reverse convertibles and other structured products. (They will pit you against both the market and the banker — good luck!)

Brokers with one day left in their pay period. (They will call you with the news that “we need to rotate and move some things around.”)

Brokers with thick New York accents and Boca Raton area codes.

Anyone who claims to have a “system.” (Why? Because there is no such thing, and if there were, you would be the last person to hear of it.)

Anyone who calls himself a “financier.” (He’s guaranteed to be full of sh*t and probably wears dress shoes with no socks.)

Financial advisors who self-clear or self-custody client funds. (Always be sure there is another pair of eyes on your money, preferably a large corporation’s.)

Currency brokers and forex sites. (Nobody knows anything; this is all highly leveraged speculation, and the brokers are actually trading against you when you take a position.)

Managed futures funds. (The fees are so over the top that your actual return will look nothing like the advertised return.)

Movie investments. (The latest telemarketing scam; no studio worth investing in is going to unleash an army of cold callers to raise funds.)

Closed-end fund IPOs. (These funds should only be bought at a discount in the secondary market. Within 90 days of the IPO, the “penalty bid” phase ends and brokers can freely dump shares while keeping their commissions — you will be down 15 percent in a blink.)

Read the whole thing. It is devastating. Hat tip The Big Picture

Graphic from Alcatraz

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