The latest news and articles from Financial Poise.
Thursday, May 26, 2022
Getting to Skip the Line is Not a Reason to Invest. What B.S.
We have written many times in the past about why most people would be ill-advised in investing in ‘alternative investments’ and, when it makes sense to do so, it usually makes more sense not to do so with purveyors of such investments who advertise to look for investors.
Look at this ad for MasterWorks that LinkedIn served up to our publisher:
What waitlist? If there is a waitlist, why is MasterWorks also advertising on the radio and in other media? We did an internet search for the MasterWorks website and another ad popped right up. And guess what we saw when we clicked over to the website? The ability to skip the waitlist. Huh. So going to Penn didn't really make a difference. How surprising.
Remember the part of the Bernie Madoff story where he made people feel like he was doing them a favor by allowing them to invest? As John Millen has written, “[p]eople want more of what they cannot have or something that’s hard to come by. Not just anyone could pick up the phone and call Madoff. The supposed size (billions and billions) made it appear to be a very exclusive club. However, the more exclusive its appearance, the more people wanted in. How would you feel if you knew a business only took on a limited number of new clients each year, and you were one of the few they were considering? People jumped at the chance! That’s a quick overview of the psychology Bernie used to gain investors and facilitate massive theft. Hindsight is 20/20 so maybe we think we’d never be fooled in such a way.”
We are not suggesting that MasterWorks is a Ponzi Scheme or any other type of fraud. We’re just pointing out what looks to us to be similar sales psychology.
MasterWorks brags on its homepage that its track record is “14.3%, net of fees, since inception (Sep 27, 2019) through Mar 31st, 2022” but footnotes that statement. What does the footnote say, you ask? Among other things, it says that the “track record” is not calculated based on actual sales but, rather, on its own “internal estimate of the performance … assuming an investment of a constant dollar amount in each offering [and that] … Masterworks may have potential conflicts of interest.”
These hour-long webinars dive deep into a variety of topics, each delivered by a panel of experts in the respective fields. Each webinar comes with a complimentary slideshow PDF. All on demand webinars are $19.99.