Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Why President Trump Has NO Real Power - Deep State Military Industrial Complex - 8th Nov 24
Social Grant Increases and Serge Belamant Amid South Africa's New Political Landscape - 8th Nov 24
Is Forex Worth It? - 8th Nov 24
Nvidia Numero Uno in Count Down to President Donald Pump Election Victory - 5th Nov 24
Trump or Harris - Who Wins US Presidential Election 2024 Forecast Prediction - 5th Nov 24
Stock Market Brief in Count Down to US Election Result 2024 - 3rd Nov 24
Gold Stocks’ Winter Rally 2024 - 3rd Nov 24
Why Countdown to U.S. Recession is Underway - 3rd Nov 24
Stock Market Trend Forecast to Jan 2025 - 2nd Nov 24
President Donald PUMP Forecast to Win US Presidential Election 2024 - 1st Nov 24
At These Levels, Buying Silver Is Like Getting It At $5 In 2003 - 28th Oct 24
Nvidia Numero Uno Selling Shovels in the AI Gold Rush - 28th Oct 24
The Future of Online Casinos - 28th Oct 24
Panic in the Air As Stock Market Correction Delivers Deep Opps in AI Tech Stocks - 27th Oct 24
Stocks, Bitcoin, Crypto's Counting Down to President Donald Pump! - 27th Oct 24
UK Budget 2024 - What to do Before 30th Oct - Pensions and ISA's - 27th Oct 24
7 Days of Crypto Opportunities Starts NOW - 27th Oct 24
The Power Law in Venture Capital: How Visionary Investors Like Yuri Milner Have Shaped the Future - 27th Oct 24
This Points To Significantly Higher Silver Prices - 27th Oct 24
US House Prices Trend Forecast 2024 to 2026 - 11th Oct 24
US Housing Market Analysis - Immigration Drives House Prices Higher - 30th Sep 24
Stock Market October Correction - 30th Sep 24
The Folly of Tariffs and Trade Wars - 30th Sep 24
Gold: 5 principles to help you stay ahead of price turns - 30th Sep 24
The Everything Rally will Spark multi year Bull Market - 30th Sep 24
US FIXED MORTGAGES LIMITING SUPPLY - 23rd Sep 24
US Housing Market Free Equity - 23rd Sep 24
US Rate Cut FOMO In Stock Market Correction Window - 22nd Sep 24
US State Demographics - 22nd Sep 24
Gold and Silver Shine as the Fed Cuts Rates: What’s Next? - 22nd Sep 24
Stock Market Sentiment Speaks:Nothing Can Topple This Market - 22nd Sep 24
US Population Growth Rate - 17th Sep 24
Are Stocks Overheating? - 17th Sep 24
Sentiment Speaks: Silver Is At A Major Turning Point - 17th Sep 24
If The Stock Market Turn Quickly, How Bad Can Things Get? - 17th Sep 24
IMMIGRATION DRIVES HOUSE PRICES HIGHER - 12th Sep 24
Global Debt Bubble - 12th Sep 24
Gold’s Outlook CPI Data - 12th Sep 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

The Tragic Investing Tale of "Big Al" Clifton

InvestorEducation / Learning to Invest Jun 04, 2012 - 08:25 AM GMT

By: Money_Morning

InvestorEducation

Best Financial Markets Analysis ArticleBy William Patalon III writes: One of our core messages here at Money Morning - and one that we tend to repeat over and over - is that it is crucial for you to take control of your own financial destiny.

To underscore just how important this is, allow me to share a personal story I guarantee will drive this point home.

I've massaged the biographical details on this one a bit to protect the folks who are involved. But the rest of the facts are true.


This is the story of Alvin "Big Al" Clifton, the much-loved stepfather of a boyhood friend of mine. Big Al (who I always addressed as "sir") was the longtime manager of a highly successful paint-and-body shop in my hometown.

He knew everybody, and everybody knew "Big Al."

He was boisterous and colorful - an acquired taste for some, I guess. But he also had a heart of gold - as I well knew.

In the mid-1980s, just after I started my newspaper career at a small weekly (and was very poor), I stopped in to see Mr. Clifton after I'd banged up my Chevette - my daily transportation, and the only vehicle I had.

Although Mr. Clifton was in business to make money from precisely this kind of situation, I watched as he picked up his phone, dialed a buddy and within five minutes had arranged for me to get the hood, radiator-core support, grill and bumper that I needed - all for free.

Some years later, when the body shop was sold to a new owner from out of town, Mr. Clifton was unceremoniously dumped from the only place he'd ever worked.

They gave him a lump-sum distribution - a pension and severance - that amounted to about $140,000.

That wasn't even close to being enough for a guy who was only 59, and had enough health problems to keep him from starting a second "career."

And Mr. Clifton knew it.

"William," he said to me one evening when I was at his house for a visit, "you know a lot about investments, don't you? Well, here's my situation. I have 140 grand from my retirement and buyout. I need to double that in a year. And I can't afford to take any risk."

At first I thought Mr. Clifton was pulling my chain: After all, this was the colorful "Big Al"- a man who liked a good laugh.

But I immediately saw he was serious.

"That's not possible, sir," I told my buddy's stepdad. "To even try for a return like that, you're going to have to take on so much risk that you could actually end up with nothing. Please don't do it. I'll help you find someone good to work with, and we'll get a good plan worked out for you."

I argued pretty hard, as I recall, and even resorted to begging. I left that night believing I'd made my point.

Unfortunately for "Big Al," there are brokers out there who are only too happy to tell their "clients" what they want to hear. A young broker from one of the discount houses did just that.

"Sure, Mr. Clifton," the young broker assured him, "we can double your money."

Even more unfortunate: It was 2000, the height of the "dot-com" era - which made it seem possible to get the kind of returns Mr. Clifton was hoping for.

That young broker put Big Al in all sorts of dot-com stocks, "unit investment trusts" (UITs) that were focused on the Internet, and some other tech-focused investments that actually assessed penalties for early withdrawal.

The risk levels on each of the individual investments were huge. And they all faced the same risks, meaning that if one of the holdings got clobbered, chances were good that all the investments would get clobbered.

And that's exactly what happened...

Mr. Clifton was late to the Internet-bubble party. When it burst, his Internet-fueled portfolio blew up.

And the shellacking he took was magnified by the penalties he had to pay when he tried to extract some of his money from the high-commission investment products the broker had put him into.

By the time Big Al extricated himself from the smoking crater that used to be his retirement portfolio, he'd lost about half his money.

Sadly, he never recovered.

One day about four years later, the man they called Big Al told his wife that he felt lousy and was going to take an afternoon nap. Mr. Clifton never woke up.

Although he'd lived in Maryland, Mr. Clifton's funeral was held in the tiny Pennsylvania town where he grew up. The line at the viewing was so long that folks had to wait for two hours just to pay their respects.

I've thought about the sad case of Big Al often in the ensuing decade. And what I realized is that there are at least five lessons to learn from it all. They are:

  1. First and foremost, take charge of your own financial future. If you don't, no one else will.
  2. As part of Lesson No. 1, if you are going to invest, understand what it is that you're buying. Mr. Clifton didn't, and the hair-trigger booby trap that stood between him and his retirement savings proved to be disastrous.
  3. There are many good, professional people at work in the financial-services industry. But you have to watch out for the passel of jackals that are terrific at sensing weakness and vulnerability- the kind of vulnerability created by a lack of knowledge or understanding.
  4. Never try to "make" the money you need in the stock market. If you need $5,000 for a down payment on a car in six months, don't try to make it in the market. Mr. Clifton committed that sin, too, and it cost him.
  5. Be honest when you assess risk. Don't take on more than you're comfortable with, or that doesn't mesh with your financial goals.
Take these lessons to heart.

Embrace them as the "second chance" that "Big Al" Clifton never received.

[Editor's Note: Since its launch in August, Bill Patalon's Private Briefing has been an overnight success.

With his 24/7 access to stock market gurus like Martin Hutchinson, Keith Fitz-Gerald, Shah Gilani and Dr. Kent Moors, Bill is able to provide Private Briefing subscribers with an inside look at some of their key recommendations.

To learn more about Private Briefing,
click here.]

Source :http://moneymorning.com/2012/06/04/the-tragic-investing-tale-of-big-al-clifton/

Money Morning/The Money Map Report

©2011 Monument Street Publishing. All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Monument Street Publishing. 105 West Monument Street, Baltimore MD 21201, Email: customerservice@moneymorning.com

Disclaimer: Nothing published by Money Morning should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investent advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication, or after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Money Morning should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Money Morning Archive

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in