Place Eggs in Different Baskets

In season 4 of Brothers and Sisters, fictional character Holly Harper, who was a shrewd businesswoman, fell for a Ponzi scheme and lost her entire investment. Ponzi Scheme is named for Charles Ponzi a real life person, who in the 1920’s promised investors huge investment returns. He took money from one investor to pay huge returns to an earlier investor. Many investors lost enormous amounts of money. Eventually he was caught.

When I teach Investment classes I talk about Diversification. Many people advise diversification among types of investments. Example – Susie Sincerety invested $25,000 to buy shares of Apple 2 years ago. Her investment doubled and then she sold her shares. 3 months later she invested $50,000 into Apple again not thinking that in a month she needed the money to give her daughter for a deposit on the home she purchased. The home purchase date approached, Apple went down and Susie sold at a loss.*

Diversification – even investments that have once done very well, extremely well can go down when you need the money. Invest in different companies or in different mutual funds. You might have some investments in

Advertising
Food and Beverage
Construction
Consumer Products.
Financial Companies
Pharmaceuticals
Precious Metals
Shipping
Technology
There are MANY other investing categories.

Not everything goes up or down at the same time.

In addition to investing in different types of industries I recommend people divide up the money have invest through different advisors. It takes some time to do this. The first time you invest you will invest through one advisor. Make some money and then invest some of the gains with a different investment company. I talk about diversification and how to choose a financial advisor in much more detail in my upcoming book.

*Please note since 2004 Apple has been one of the most successful stocks in history.

"Wall Street Money Never Sleeps"

I saw “Wall Street Money Never Sleeps” with Michael Douglas, Carey Mulligan, Shia LaBeouf, Susan Sarandon, Frank Langella and Josh Brolin. Depressing. If you do go see it pay special attention to 2 scenes-

1 Gordon Gekko (Michael Douglas’ character) speaks before a group of college students. He warns about investing getting out of control. This is one of the few scenes in which financial matters are spoken about in plain English. I talk a lot about investing with moderation in my classes and my upcoming book.

2 Gordon Gekko tells his daughter’s fiancé, Jake (Shia LaBeouf’s character) of the Dutch Tulip bubble in the 1600’s. Investors, or better speculators wildly bet on the price of the tulips going up only to find the price came crashing down. Many people sold their land and other major assets to purchase the tulips and lost everything. I show how to avoid such situations in my classes and my upcoming book.

For showing times go to http://www.fandango.com/ and type in your zip code.

“Wall Street Money Never Sleeps” also shows people in the financial know getting caught up in the transactions and manipulating others. Their eye pupils get wide and you can almost see the Adrenaline rush to their hearts, just thinking about all the money they will make. In my experience precious few of those people teach others how to make money. I started this website to share what I have taught myself and been taught. No, I am not a Wall Street Market Maker but I have already helped a lot of people get into the swing of things.

Entrepreneurship/Early Stage Companies
I have known some people who teach entrepreneurs how to make their businesses more profitable. In the 1990’s I organized financial seminars for entrepreneurs and investors in downtown Chicago. Tim Krauskopf, Art Roldan, Jeff Coney, Scott Woodard, Tom Parkinson, Marc Achler, Pat McGivney, Wally Cornett, Jerry Mitchell, Ellen Carnahan, Dan Howell, J.B. Pritzker, the late, Don Frey immediately come to mind.

J.B. founded the Chicagoland Entrepreneurial Center www.chicagolandec.org.

The MIT Enterprise Forum
http://www.mitefchicago.org/
The MIT Enterprise Forum is also in South Florida, Pittsburgh, D.C., San Diego and others.

The Illinois Technology Association. For similar organizations in your area just Google “City or State Name Technology Association”I served on its predecessor’s (Chicago Software Association) Entrepreneur’s Business Plan Advisory Board.

Chicago's Shorebank Shut Down Today

August 20, 2010

Chicago's Shorebank was closed today by governmental financial regulators. This action, although necessary, makes me very sad.

Shorebank, founded in 1973, was for idealistic folks working in Chicago's financial world, our pride and joy. I worked for a private investor during the 1990's and met some people who were then working at ShoreBank. For many of us it was a dream to work there because of ShoreBank's mission to serve low income communities. There was a branch (closed down now for a few years) about 1 mile from my home which I often pass on the way to the city.

According to AP, Shorebank was the 114th bank to fail in 2010.

Now about the FDIC-Federal Deposit Insurance Corporation. When we deposit money in a U.S. bank it is vital to first check whether the bank is insured by the FDIC. You can look for the FDIC sign in your bank's window. You can also go to the FDIC website

http://www.fdic.gov/about/affaq.html

The Frequently Asked Questions section is short and easy to read. On the Home Page is a link "Is My Account Fully Insured". You can click on this link and choose from a list of dozens of banks that have failed (listed in alphabetical order).

Hay bastante informacion en la pagina web del FDIC en espanol.

The Chairman of the FDIC, Sheila Bair, wrote an educational, entertaining book for young children, Rock, Brock and the Savings Shock.

I will have a chapter in my upcoming financial book about How to Talk to Your Kids about Money.

Respectful Comments and Questions are Welcome