Back in the 1990s, I worked with a guy who had a friend on Wall Street that he called the "chief." I think they went to college together.
Every once in a while, this friend would get a call from the "chief." The "chief" always had some inside information about a deal that was going to be announced, and he was telling his friend so that his friend could invest in the stocks involved. Let's ignore for the time being that what was going on was probably highly illegal and grounds for an insider trading case.
More often than not, my co-worker took the advice of the "chief" and invested in the stocks he had been told about. Being the friendly sort, he often shared the tips with the others in the office, but I don't recall any of the rest of us ever joining in the fun and investing.
It's now more than a decade later, and I don't know how much my friend made from these tips, or whether the "chief" is still providing them. But I do know that my friend is still working — in fact, he's working harder than he was a decade earlier — so I know he didn't make a killing on the tips so that he could retire to the Bahamas.
Why do I bring this up now? Because with the Dow Jones Industrial Average recently topping 12,000 for the first time in three years, it seems we've re-entered a period when everyone has got a way to get rich quick off of some sort of investment.
There are the people who think that investing in precious metals such as gold will be the path to wealth. And then there are the people who believe that the only way to get rich these days is to invest in emerging economies such as China and India, even though both countries seem to have as many, if not more, scams as the United States.
The point of all of this is to remind everyone that it's when the market is near its top that such schemes begin to multiply. And I use the word "scheme" with its English interpretation, not its American, which means there are a lot of ideas about how to make money.
Don't forget the American connotation. Nearly every day, my e-mail inbox and my mail box is filled with ways to improve my investment performance. Just this past week, I even received a phone call from an investment advisor wanting to sit down and talk about whether I had saved enough for retirement.
While I'm sure there are many good ways to invest my money, I'm also sure that there are many ways to lose my money, and fast. And there's a lot of people who are more than willing to separate me from my money so that they can benefit.
If you're looking at a way of investing that you've never done before, than I caution you to be extremely careful. Do not change investment strategies in an attempt to eke out a better rate of return. There are no guarantees out there, no sure things.
My father had a belief that he called the Greater Fool Theory. He believed that buying something as an investment was good as long as there was a fool bigger than yourself waiting to purchase the same investment at a greater price. As long as you could find this fool, then you were safe.
But what happens when these fools disappear? We are often left holding our investments at a loss, and wondering why we got suckered into their get-rich scheme.
We are not all rabbits. We are tortoises. Slow and steady wins the race.