An elderly lady, whom I shall refer to as "Nancy", made a loss of nearly $200,000 from her investments. She is not knowledgeable about investments, but was assured by the relationship manager of a local bank that he would recommend good investments to her, based on his expert knowledge.
Nancy trusted the young man, who gave the impression of being knowledgeable and called her to make many recommendations. Nancy accepted some of the recommendations and invested her money. She trusted that the young man would monitor her investments and contact her about the progress.
He only called her about the investments that made a profit and encouraged her to sell them and re-invest in other investments. Nancy asked about the other investments, but the young man assured her not to worry and he would call her when they made a profit.
As the months go by, some of the investments went really bad. In one case, the loss was nearly 50% on an investment of $200,000. It was a terrible blow to Nancy as she was not aware that such a large sum was being invested. Nancy held on to this investments but decided to sell some other investments at big loss.
This is my advice to the young people who think that they can advise other people about investments. Investing is not easy. If someone ask me for advice on specific shares and whether the shares would move up in value, my standard reply would be, "the current price of the share reflects the views of all the people in the market. The share price can move up or it can move down. Nobody knows for sure".
If, with my experience, I have no clue about which shares are good value for money and which shares would move up, how can a young person know better? It is dangerous for an ignorant and inexperienced person to pretend to be an "expert" and to mislead elderly people into making investments that can lose a lot of money. It is dangerous to allow them to give investment advice to elderly people under the banner of a trusted bank.
Nancy trusted the young man, who gave the impression of being knowledgeable and called her to make many recommendations. Nancy accepted some of the recommendations and invested her money. She trusted that the young man would monitor her investments and contact her about the progress.
He only called her about the investments that made a profit and encouraged her to sell them and re-invest in other investments. Nancy asked about the other investments, but the young man assured her not to worry and he would call her when they made a profit.
As the months go by, some of the investments went really bad. In one case, the loss was nearly 50% on an investment of $200,000. It was a terrible blow to Nancy as she was not aware that such a large sum was being invested. Nancy held on to this investments but decided to sell some other investments at big loss.
This is my advice to the young people who think that they can advise other people about investments. Investing is not easy. If someone ask me for advice on specific shares and whether the shares would move up in value, my standard reply would be, "the current price of the share reflects the views of all the people in the market. The share price can move up or it can move down. Nobody knows for sure".
If, with my experience, I have no clue about which shares are good value for money and which shares would move up, how can a young person know better? It is dangerous for an ignorant and inexperienced person to pretend to be an "expert" and to mislead elderly people into making investments that can lose a lot of money. It is dangerous to allow them to give investment advice to elderly people under the banner of a trusted bank.
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