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I recently watched "The Gilded Age" on Max, which is a essentially "Downton Abbey" set in New York. In the second season (spoiler alert), one of the main characters, Oscar Van Rhijn, makes a small investment in railroad company which quickly pays off handsomely.
After he receives his large investment return, he asks if he can invest more in the railroad company. The financial professional let's him know that unfortunately it won't be possible as they are aren't accepting any additional investments. Feeling rejected and left out of an investment of a lifetime, Oscar decides to invest his entire fortune, knowing that they would have to accept him given the large sum. Reluctantly, the financial professional agrees to invest his fortune in the railroad company.
In a subsequent episode he finds out that the railroad company never existed and the entire investment was a fraud. Below are the key lessons for you:
Madoff Persona: Bernie Madoff was famous for denying people access to his fund, much like the financial professional originally refused Oscar's money. The air of exclusivity is a classic sign of a ponzi scheme. People would regularly beg and plead with Madoff to take their money, which he would reject initially and then eventually accept.
Quick Returns: If you are fortunate to stumble onto an investment that pays a quick and startling large return, think early days of Bitcoin, it doesn't always mean that you should push all your chips into the center of the table. You were lucky and should likely take your profit and move on. If Oscar had moved on after his initial profit, things would be drastically different.
Manage Your Own Money: Giving your money to someone else to manage is giving up control. Managing your money effectively does require professional help, but that doesn't mean you can't do it yourself with some guidance.
Single Asset: Investing your entire fortune in a single asset, even if it is legitimate, is a risky proposition. You could own stock in the next Amazon, Google, Microsoft, or Lehman Brothers.
Although this is a fictional series set in the 1800s, these lessons are as applicable today as they were then. No one ever thinks this will happen to them, until it does. The Netflix documentary, "Madoff: The Monster of Wall Street," is eye-opening and shows many real and average people who were swindled out of their life savings in much the same way as Oscar.
If you are looking for a financial planner who wants to help you manage your own money, then schedule a free introductory meeting below. For less than $5/day, Walk You To Wealth is the most affordable way to access professional help.
Disclaimer: The information in this post is provided for your convenience only and is not intended to be treated as financial, investment, tax, or other advice. The information is intended to be educational and is not tailored to the investment needs of any specific individual. It is also not intended to be relied upon as a forecast and is not an offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed are those of the author. Reliance upon the guidance and information in this presentation is at the sole discretion of the individual.
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