Bank Negara today placed a full page ad in Star newspaper, warning the public about illegal investment schemes.  Such scams have been very rampant lately and many victims lost large amount of money.  This is mainly due to the lethal combination of greed and stupidity. 

Yes, greed is good but combined with stupidity, it will lead to financial ruin.

How to detect if an investment "scheme" is fraudulent? The tell tale signs include:

1. Promise of high interest over a short period of time.  This is very common for gold investment, which promises 10% return per month plus you get to keep the "real" gold bar.

2. Buy back promise, usually over next 3 to 5 years.  By then, the conman would have retired happily with your hard earned money.

3. You are given an interest in the property.  That is exactly what you get - an interest and not the property itself.  The certificate given to you is not the title of the property.  It is just printed on fancy paper, with no monetary value or legality whatsoever.

4. The return you are getting is from your own money.  Examples of such "scheme" usually involved investment in real businesses such as oil palm plantation, sea weeds, crabs farming etc (in fact, in can be any type of business). The "scheme" promises a fixed return of, say, 10% per year for next few years.  Thereafter, the return will be dependent on the market price / yield of the business.  If you invest RM100,000, the promoter will keep RM60,000 (10% per year for 6 years) with a Trustee, who will pay you promptly the 10% return every year. That RM60,000 is actually your own money.  What will happen on the 7th year onwards? Guess.

Be wise and invest prudently.  Before you invest, visit Bank Negara and Securities Commission websites on updates of illegal investment schemes.  Caveat emptor.

Analysts in investment banks and stockbroking companies have some of the toughest jobs.  They have to say something about the stocks, market and economy almost on daily basis - even though there is nothing to say. When market is up, they need a reason to justify it and when market is down, they need to say why.  The market consists of many buyers and sellers.  It is perfectly normal for it to go up and down, without any particular reasons.

Analysts have perfected the art of talking nonsense or talking without really talking. Here are some examples:

Nonsense #1: Trading in a range
Meaning: The stock market has not moved at all and they need something that sounds interesting to say

Nonsense#2: The market is likely to go either way
Meaning: The analysts have absolutely no idea where is market is moving, so bet on both sides

Nonsense#3: The market is in the process of bottoming out
Meaning: The market is going down but the analysts have no idea how low is low or how long it takes

Nonsense#4: We are cautiously optimistic
Meaning: Again, the analysts is betting on both sides - cautious and optimistic.  Either way, they are right

Nonsense#5: Macro volatility
Meaning: The market is uncertain but this phrase sounds smarter

Born in July 100 years ago, Milton Friedman was one of the most outspoken economists who supported free market economic system with minimal government intervention.  His famous quote: "if you put the federal government in charge of the Sahara Desert, in 5 years, there'd be a shortage of sand" clearly summed up his view "against government intervention".

Friedman won the Nobel Prize in Economics in 1976 "for his achievements in the fields of consumption analysis, monetary history and theory and for his demonstration of the complexity of stabilization policy".  

He was an economic adviser to US President Ronald Reagan.  The four pillars of Reagan's economic policy were to reduce the growth of government spending, reduce income tax and capital gains tax, reduce government regulation of economy and control money supply to reduce inflation.

To celebrate what would have been a century of Milton Friedman, here are some of Friedman's best quotes:

• The Great Depression, like most other periods of severe unemployment, was produced by government mismanagement rather than by any inherent instability of the private economy
• Governments never learn. Only people learn
• There is no such thing as a free lunch
• I am in favor of cutting taxes under any circumstance, for any excuse, for any reason, whenever possible
• One of the great mistakes is to judge policies and programs by their intentions rather than their results
• Nothing is so permanent as a temporary government program

If you are an employee, hold on to your job. Now is not the time to play "dare or truth" with your boss.  Try to supplement your income with a second job or earn some passive income.  If you are the boss, conserve as much cash as possible.  In all crisis, there are opportunities - only for those with cash.  

These are some selected headlines in 2012:
Sharp considering cutting 5000 jobs worldwide
Goldman Sachs Leads Foreign Banks Accelerating Job Cuts in Japan 
PepsiCo announces 8700 job cuts
Alcatel-Lucent to Cut 5000 Jobs After Reporting Loss
Deutsche Bank to Cut 1900 Jobs as Part of Savings Plan
Pharma & Biotech Job Cuts Mount in 2012
Hewlett-Packard to cut 27000 jobs
Nokia to Cut 10000 Jobs as Elop Tries to Stanch Losses
Cisco to cut about 1300 jobs
2000 jobs cut at Queensland Department of Transport