How to Smell a Rat: The Five Signs of Financial Fraud

Investors who lived through 2008 and 2009 watched history unfold. Major financial firms collapsed like a house of cards. And one of the largest Ponzi schemes ever came crashing into the open.

But as Ken Fisher points out in How to Smell a Rat, scammers don't only exist during bear markets or financial crises. As he explains, "bear markets reveal scams, but bear markets don't cause scams. Madoff did it for decades—2008 just popped him out into the open when he couldn't keep it going any longer, as bear markets and recessions do for many scamster rats. If a scamster successfully avoids detection long enough to get enough money from victims, big volatility simply unmasks deceptions—for a few reasons. First, downturns make it harder to bring in new money. Also, investors in general, even in perfectly legit investment vehicles, tend to get fearful and redeem shares during downturns, putting additional pressure on fraudsters... This is why, in a bear's depths, scams get uncovered."

About Ken Fisher’s How to Smell a Rat

The years 2008 and 2009 will be remembered for bear markets, a global credit crunch and some of the largest investment scams ever recorded. But did you know that nearly every financial scam, including Bernard Madoff's $65 billion-dollar Ponzi scheme, could have easily been avoided?

Scams are nothing new. From Charles Ponzi to Robert Vesco to Bernard Madoff, they've been repeated throughout history, and there will certainly be more to come. The good news is fraudsters often follow the same basic playbook. Learn that playbook, know ways to ask the right questions, and financial fraud becomes easy to detect and simple to avoid.

Bernard Madoff may be a criminal, but the greater crime is that investors keep getting swindled for no reason. In How to Smell a Rat: The Five Signs of Financial Fraud, trusted financial expert Ken Fisher gives you an insider's view on ways to spot potential scams before you commit your money.

Drawing on recent and historic examples of fraudsters, how they operated and how they could have been avoided, How to Smell a Rat shows you quick, identifiable features of potential frauds and arms you with questions to ask when assessing money managers.

With this knowledge, you can learn to spot warning signs, such as:

• Advisers with direct access to investors' funds
• Firms with numbers that seem "too good to be true"
• Managers with fees that are too low. Madoff didn't charge any fees at all. He simply charged for trading!

There should be a premium for integrity. Asking the right questions and doing your due diligence goes a long way toward finding a firm that can help insulate you from financial fraud.

Ken Fisher's New York Times best seller, How to Smell a Rat, can help you better identify and avoid the financial scams that could instantly destroy the wealth you've worked so hard to build.