Blog Article
A Bitter Lesson
Posted on July 10th, 2009
From the news reports that I have read about the Madoff scandal, most of the people who were highlighted lost all or nearly all of their wealth through investing with Mr. Madoff. What if these same clients had an investment portfolio similar to that of the typical millionaire in America? Then less than 30% of their wealth would be invested in publicly held stock, i.e. common stock managed under the Madoff brand. If they did the maximum they would have lost would have been less than 30% of their wealth.
Back in 1985, I put together the first set of commandments for building wealth based on my research of the habits of self made millionaires. One of the most important commandments was "Thou shall not have a single source of financial advice." And since that time I have preached this message.
When the investment gurus talk about diversification, they show how very parochial they are. Real safety is not in a diversified stock portfolio. One of the reasons that real millionaires are economically successful is that they think differently. Many a millionaire has told me that true diversity has much to do with controlling one's investments; no one can control the stock market. But you can, for example, control your own business, private investments, and money you lend to private parties.
In a way, the credit crisis of 2008-2009 is serving as something of an intervention. But for the treatment to work, people must begin to think and act for themselves when it comes to investing and especially selecting sources of financial advice.
Category: Current Events
Tags:
investing, diversification, Madoff, wealthy, ,
Post A Comment
Comments are moderated and generally will be posted if they are on-topic and not abusive. For more information, please see our Terms & Conditions
Tagcloud:
20/20 American households Automotive News BMW Buick Cash for Clunkers Courage Dave Ramsey David Schwartz Eunice Shriver Forbes 400 Glen W. Bell Halloween IRS Jr Madoff Martin Luther King Jr. McDonald's Million Dollar Round Table Millionaire Mind Millionaire Next Door Millionaire Women Next Door Pizza Today Professor Kotlikoff Russian Americans Social Security Sotomayor Special Olympics Stop Acting Rich Swiss bankers Taco Bell The Magic of Thinking Big The Millionaire Mind The Millionaire Next Door The Oprah Winfrey Show The Wall Street Journal Toyota Uncle Sam Vanguard Veterans Day Wall Street Journal Washington Post William P. Barrett acting rich advice affluent athletes attorneys automobiles balance sheet affluent blue collar business broker career cash children college education commuting credit crisis customers disabilities diversification economic outpatient care economists entertainers entrepreneur excuses farmers financial independence financially independent freedom frugality fundraisers giving government great recession happiness hobbies hyperspending immigration income income statement affluent income tax inheritance investing joy marketing millionaire millionaire next door millionaires net worth networking noble causes opportunity other people's money perseverance pharmacist real estate research revenue enhancement sales sales professionals satisfaction saving selling success successful women survey tax evasion trade journals wealth wealthy white collar working writingMost Recent Posts:
- Finding Millionaires 03/09/10
- Live Chat with Michelle Singletary 03/03/10
- More than "Wishful Thinking" 03/02/10
- A Wealth Incubator 02/25/10
- Do You Have Chip's Courage? 02/23/10
Most Recent Comments:
- Tina on More than "Wishful Thinking"
- Paul @ FiscalGeek on Finding Millionaires
- Lee Maukley on Live Chat with Michelle Singletary
- Dutch Martin on More than "Wishful Thinking"
- Charles on More than "Wishful Thinking"
- Renee on More than "Wishful Thinking"
- Jamie on More than "Wishful Thinking"
- Benjamin on More than "Wishful Thinking"
- Chris Rosendahl on More than "Wishful Thinking"
- Barbara Friedberg on A Wealth Incubator
- michelle on Questions for The Millionaire Next Door
- bibledebt.com on Questions for The Millionaire Next Door
- Richard Wolfe on A Wealth Incubator
- Mike Angelo on Do You Have Chip's Courage?
- howard zugman on A Good Samaritan in Small Town USA
- Sandra on Questions for The Millionaire Next Door
- Sandra on Cars: More Opinions than Makes and Models
- Martin Caldwell on Cars: More Opinions than Makes and Models
- Darnell W, on Cars: More Opinions than Makes and Models
- TheDebtHawk.com on Questions for The Millionaire Next Door
- tehchad.com on Option 3 for Stop Acting Rich: Part I
- baltimorehealthcoach.com on Option 3 for Stop Acting Rich: Part I
- Richard on Option 3 for Stop Acting Rich-Part II
- ManishaThakor on In Texas, Do as Texans Do
- TheDebtHawk.com on Option 3 for Stop Acting Rich: Part I
- John Lemerond on Option 3 for Stop Acting Rich: Part I
- Chantel on In Texas, Do as Texans Do
- anne on Dan's Journey: 9 Jobs to Wealth
- Investor Junkie on Please Don't Ask; I Don't Have a List
- Daniel Tardy on In Texas, Do as Texans Do
- John on A Mentor with The Millionaire Mind
- beth on Being Frugal Has Its Limits
- Sandra on $1 Million: Something or Nothing? (Part II)
- Landon A on A Millionaire on Less than $60K
- get tips on Average Rich or Median Poor?
- WP Themes on The Money Pit and The Decline of Enhanced Millionaires
- matt noone on $1 Million: Something or Nothing? (Part II)
- John on Enjoy the Journey to Wealth
- Gary M. Freedman on Year 'Round Gifts: Clients for Life
- Debby Clark on Enjoy the Journey to Wealth
- eric on Enjoy the Journey to Wealth
- Kurt on Millionaire U.
- dr. juan i. espinoza on $1 Million: Something or Nothing? (Part II)
- Mike S. on Being Frugal Has Its Limits
- g on A Millionaire on Less than $60K
- Rick Francis on Being Frugal Has Its Limits
- Leif David on Being Frugal Has Its Limits
- IndianaTeacher on Being Frugal Has Its Limits
- Alfred Castillo on A Millionaire on Less than $60K
- american on Average Rich or Median Poor?
- Rich on What! No Jacuzzi?
- Rich on What! No Jacuzzi?
- Sandra on A Millionaire on Less than $60K
- Heather on Millionaire U.
- on Year 'Round Gifts: Clients for Life
- Paul @ FiscalGeek on A Millionaire on Less than $60K
- gary on Moving On to Success
- Sean Brunnock on Cars and Homes as Costumes
- edward wone on The Low Profile Millionaire Next Door
- Hunk Japanese on What! No Jacuzzi?
- ANMB on Millionaire U.
- I hope my wife and I can gravitate towards BA habits more so than IA ones! on $1 Million: Something or Nothing? (Part II)
- Suzanne on $1 Million: Something or Nothing? (Part I)
- Christine @ Money Funk on A Millionaire on Less than $60K
- Diamond on A Millionaire on Less than $60K
- Bohomme Richard on Average Rich or Median Poor?
- KK on The Low Profile Millionaire Next Door
- JoeTaxpayer on $1 Million: Something or Nothing? (Part I)
- Dan on $1 Million: Something or Nothing? (Part I)
- JoeTaxpayer on $1 Million: Something or Nothing? (Part I)
- Dan on $1 Million: Something or Nothing? (Part I)
- JatStraikarFan on Average Rich or Median Poor?
- mike on The Millionaire Life: Beyond Those Next Door
- LM on The Low Profile Millionaire Next Door
- David Grim on How to Live Like a Real Millionaire, Part II
- DoninVA on The Low Profile Millionaire Next Door
- mykcagent on The Low Profile Millionaire Next Door
- Diane on The Low Profile Millionaire Next Door
- Jeff B on Average Rich or Median Poor?
- Jeff B on The Low Profile Millionaire Next Door
- EM Lyles on Veterans Remembered. . .
- Aspiring Millionaire @ MyMillionairePlan.com on "Life Changing Experience"
- Dutch Martin on The Low Profile Millionaire Next Door
- Mark on The Low Profile Millionaire Next Door
- Dawn Rose on The Low Profile Millionaire Next Door
- Elena on The Low Profile Millionaire Next Door
- Glenda on The Low Profile Millionaire Next Door
- Nan on The Low Profile Millionaire Next Door
- Manisha Thakor on "Life Changing Experience"
- Ashleigh on The Low Profile Millionaire Next Door
- tia robertson on The Low Profile Millionaire Next Door
- Gary Freedman on The Low Profile Millionaire Next Door
- gps on The Low Profile Millionaire Next Door
- Brad on The Low Profile Millionaire Next Door
- Terry Terrell on The Low Profile Millionaire Next Door
- E Bedford on The Low Profile Millionaire Next Door
- Paul on The Low Profile Millionaire Next Door
- michelle edery on The Low Profile Millionaire Next Door
- DL on The Low Profile Millionaire Next Door
- Phil on The Low Profile Millionaire Next Door
- Beth on What! No Jacuzzi?
- forexst_ra_tegies on Average Rich or Median Poor?
- Dutch Martin on A Career In The Dirt
- Roupttype on Average Rich or Median Poor?
- Kay on What! No Jacuzzi?
- Mike Metheny on A Career In The Dirt
- Ben Grajeda on A Career In The Dirt
- Dutch Martin on Economic Opportunities Next Door
- Dutch Martin on Taking Risks: A Recipe for Success
- Dutch Martin on How to Live Like a Real Millionaire, Part II
- pauline k on A Career In The Dirt
- Ken on "Other People's Money" for Clunkers
- Ken Aten on Courage: Required and Admired
- SLawMan on Taking Risks: A Recipe for Success
- Robert Vest on How to Live Like a Real Millionaire, Part II
- Robert Vest on How to Live Like a Real Millionaire, Part II
- Frank Kelnhofer Georgia State University Marketing 1988 on Courage: Required and Admired
- Manisha Thakor on Taking Risks: A Recipe for Success
- Jim on All Stars of Consumption
- Rich on What! No Jacuzzi?
- Rich on Cars and Homes as Costumes
- Alice on Networking (and Saving) Advice for Entertainers
- Brett Graham in Atlanta on Costumes: Not Just for Halloween
- Chris on Average Rich or Median Poor?
- Sarah on Costumes: Not Just for Halloween
- Martina on All Stars of Consumption
- Linda on Please Don't Ask; I Don't Have a List
- Peter S. on How to Live Like a Real Millionaire, Part II
- Gary Foreman on All Stars of Consumption
- I'm on my way... on How to Live Like a Real Millionaire, Part II
- Lynn G on What! No Jacuzzi?
- Ukela on My First Encounter with a Millionaire
- Peter on The Millionaire Life: Beyond Those Next Door
- David @ Money Under 30 on The Millionaire Life: Beyond Those Next Door
- Marius Wilson on The Millionaire Life: Beyond Those Next Door
- Mike Metheny on What! No Jacuzzi?
- KL on A Most Extraordinary Sales Professional
- on Avoiding The Money Pit
- Ann on Avoiding The Money Pit
- Brian @ MyNextBuck.com on The Money Pit and The Decline of Enhanced Millionaires
- Sandra on Avoiding The Money Pit
- Lee Stutzman on Avoiding The Money Pit
- Joyce on Avoiding The Money Pit
- @FinancialPlanPro on Avoiding The Money Pit
- Norma on Economic Opportunities Next Door
- Katie S on Avoiding The Money Pit
- Phillip James on Avoiding The Money Pit
- annie on Avoiding The Money Pit
- @owingmoneysucks on Avoiding The Money Pit
- Chuck on Avoiding The Money Pit
- Erin on Avoiding The Money Pit
- To m Wilke on Avoiding The Money Pit
- wanda winters-gutierrez on Avoiding The Money Pit
- Kelley Boles on Avoiding The Money Pit
- John on Avoiding The Money Pit
- Marke Hooker on Avoiding The Money Pit
- Kelli Garner on Average Rich or Median Poor?
- jDeppen on Stop Acting Rich: Preface, Part I
- Joseph Cook on Economic Opportunities Next Door
- Ernie on More Storm Clouds on the Economic Front
- Rich Allen on Average Rich or Median Poor?
- James on More Storm Clouds on the Economic Front
- TonyT on Average Rich or Median Poor?
- TonyT on Average Rich or Median Poor?
- JM on A Most Extraordinary Sales Professional
- Chris Terry on Wealth is not Income; Income is not Wealth
- David J. on Greetings from the Income Statement Affluent Capital of America
- Sallie Barker on A Most Extraordinary Sales Professional
- chessiq on To Write or To Commute?
- Sky Minor on Greetings from the Income Statement Affluent Capital of America
- Torrey on A Most Extraordinary Sales Professional
- moneymonk.net on Greetings from the Income Statement Affluent Capital of America
- MoneyEnergy on Success Through Giving
- Brian Preston on Greetings from the Income Statement Affluent Capital of America
- Fausto on Greetings from the Income Statement Affluent Capital of America
- LaughingOutLoud on Please Don't Ask; I Don't Have a List
- Marc on A Networking Pharmacist...and Millionaire Next Door
- John M Tatum on Wealth is not Income; Income is not Wealth
- JJF on Keeping Up with The Millionaire Next Door
- Joshua on Keeping Up with The Millionaire Next Door
- J Wheeler on Are You a Threezy or a Millionaire?
- Rudy Nino on To Write or To Commute?
- jenn51 on A "Detailing" Millionaire
- Alan H. on A "Detailing" Millionaire
- Val on A "Detailing" Millionaire
- richguy23 on Keeping Up with The Millionaire Next Door
