Don't Follow the Stampede
henever you see a stampede, you need to stop, get out of the way and run the opposite direction.
Don't follow the stampede, don't follow the crowd, don't follow the groupthink. What am I talking about?
This happens all the time, but most recently was the FTX crypto fiasco – the fraud that was committed and perpetrated on a lot of intelligent, sophisticated people. The same thing happened with Bernie Madoff. It happened with Enron.
The list of investment scandals that made it into the big public arena goes on and on.
What frequently happens in these scandals? Well, a lot of it is greed. A lot of it is money paid off to regulators to not oversee, or to overlook what's happening down beneath.
With FTX, a couple of young kids utilized their spunk and knowledge of technology to create, out of thin air, what a lot of people thought was big money and big yields. A lot of people jumped on the opportunity to make money – even Kevin O'Leary from Shark Tank, a supposed sophisticated investor, was a big endorser.
We're all fallible.
I'm not pointing a finger at Kevin O'Leary and saying he's dumb or stupid. That's not my point at all – we've all fallen for this stuff. I've done it myself.
What this tells me is that they, investors of FTX, did not go deep enough into the due diligence. You can get financial reports on publicly traded companies like FTX or those on Wall Street, but who's really digging underneath to see what's going on?
That's the real problem.
The same thing happens in the smaller, inefficient marketplaces like real estate. Now real estate is not a small market, but for individual investors, it can be a small playing field. It’s an opportunity, really, and that's how we look at it in Freedom Founders because we can get down in the weeds, and choose what we invest in and who we invest through.
However, the same kind of fraud happens in real estate. There's been, in the last few years, a stampede of people who have been allured by making big money in real estate. Because when the markets go up, everybody's a genius. It doesn't matter what the asset class is.
I've seen this over and over again and I see it out there today, everywhere. People who have no business raising capital (other people's money) and investing it for them in some asset class, some syndication, just because they can get the money.
Yes, they may be good marketers. They may have a website with some kind of credibility on it and some PR. They can get their name out there on Forbes or wherever they can buy some claim to have some credibility.
This is why you have to dig deep to go underneath that.
Just this week we had someone trying to come into the Freedom Founders group, who was what I call “A syndicator of all things,” meaning he sells people whatever the deal of the day is. He's got the website, the “authority”, and says he’s been doing this for X number of years – but you have to dig beneath the surface (which we do).
He wanted to get inside Freedom Founders.
A lot of people want to get inside Freedom Founders because they know we have a lot of educated, sophisticated money. But we vet… and we vet really, really hard.
This particular person was put off by his inability to get directly through to me or to come inside and speak at one of our events; it’s the type of person who says, “Let me do a webinar for your people, and I'll pay you a percentage of what I raise.”
We do not do that. I don't play that game at all. We take our members' safety and capital preservation very seriously.
We dug deep on this guy, and he's the syndicator of everything but he's never done anything himself. See, he's just what we call a promoter. A promoter is not the actual sponsor or manager. A promoter just promotes and will promote anything, anywhere, to make a dime. That's all they do.
There is no due diligence.
We looked at one of the deals he was doing and the actual sponsor (not the promoter but the sponsor) is an absolute con artist and has a reputation for being one. This promoter either didn't do the due diligence or just overlooked it and said, “I don't care. I want to make money. I'm not liable. I've got all the disclosures. These are accredited investors and they're just gonna take their lumps.”
…just like all the people that put money into FTX. It's no different.
So before you go out there, following the stampede to the bright shiny object of the day, and your greed glands get going because someone's promising you big returns and blah, blah, blah… you better stop, take a breath and ask yourself:
Do you know what you're doing? Do you have people around you that can help you source and sense what is true and what's not?
I'm seeing it in the world of dentistry. I'm seeing young dentists who have been bitten by the allure of real estate, and they are “bullish” on real estate right now. I tell them, “This is the worst time in the world for young people, novices, to get involved in equities.”
Learn about it, study it, but don't jump in right now. It’s the wrong time, wrong place. You haven't seen a full cycle and that's the problem. When you haven't gone through a full cycle, you have no idea.
Whatever you do, please don't follow the stampede. It will serve you well to head in the opposite direction.
To your freedom!
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