For reasons that may not be obvious, wealth-creation seminars are popular. The advertisements are invariably the same, utilizing radio and television, as well as full-page ads in major newspapers displaying the smiling faces of known personalities who will divulge their secrets to those present. Zig Ziglar, America’s #1 Motivator, will reveal how to become and remain employable in every economy; Suze Orman, America’s #1 Personal Finance Expert, will explain how to create a game plan for financial success; Tom Hopkins, America’s #1 Authority on Selling, will share his seven secrets of persuasion—and all for a relative pittance. Is it possible that anyone not certifiably insane actually believes a word of it? Apparently so, as the GET MOTIVATED Seminar, scheduled September 5th and 6th at Arrowhead Pond of Anaheim in Orange County, California, will draw more than fifteen thousand persons.

In case anyone wonders what this event is really all about, it’s a marketing operation. Those in attendance will not learn anything of value from the program. Instead, they will be recipients of a series of pitches for such products as books, tapes, videos, workshops, catalogs, consulting services, and instructional courses costing in the thousands of dollars. The guest speakers, who in seminar after seminar deliver their standard spiels, are handsomely paid for their participation. Many of them are truly famous and accomplished: Former Secretary of State Colin Powell, Former New York Mayor Rudolph Giuliani, entrepreneur Donald Trump, basketball great “Magic” Johnson; the list goes on. As you see, self-improvement and motivation is big business, grossing billions per year.

Although the aspiration by many for fame and fortune is understandable, there is more to the popularity of these seminars than a simple desire for self-improvement. As you might have guessed, the draw is the magnetic influence of celebrities. For reasons unknown, the perceived benefits to the purchaser of a complex investment fund seem more credible when endorsed by an aging television talk show host or illiterate sports figure. But perhaps even more basic is the human instinct to be in the presence of or associated in some way with famous persons. Might it be that somehow the fame will rub off a little through proximity?

A concluding thought:
If you choose to attend a gala performance, listen to speakers with worldwide reputations, all at a modest price, I’ll not urge that you avoid these seminars—provided you’re not induced to buy the high-priced merchandise that will be peddled. But above all, never forget this fundamental rule: When you aspire to rub elbows with the elite, there is one thing you are certain to get: patches on your elbows.

This title of a recent USA Today article attracted my attention: “You don’t have to be a millionaire to invest like one.” The article, by columnist John Waggoner, described sensible mutual fund investment, expounding on such matters as sales and load charges, annual Roth IRA limits, and automatic reinvestment programs. But search as I might, I found no information on how to invest like a millionaire.

It then occurred to me that the author of an article seldom selects its title. That’s assigned to a newspaper employee, not for describing the column’s contents, but for attracting attention. Apparently I was not about to discover secret investment techniques of the wealthy. Perhaps it’s just as well, for the mere possession of wealth is no basis for ensuring that its holder will invest wisely. Possibly that thought seems sacrilegious—the line from the Broadway musical Fiddler on the Roof sums it up for many persons: “When you’re rich, they think you really know.”

With that said, you’re entitled to a glimpse at how many millionaires actually invest. Consider no less a personage than TV celebrity Larry King who, in November 2007, filed suit against an insurance brokerage, claiming to be tricked in a sophisticated insurance sales transaction that proved financially catastrophic. Neither his wealth nor celebrity status prevented the misfortune.

You may add to the list of victims many sports personalities, such as NBA legend Jerry West and Dodgers third-baseman Nomar Garciaparra—whose assets are legendary—who accused their prominent Los Angeles investment advisor of gouging them out of millions of dollars in excessive commissions on bond trades. Admittedly, sports figures are notoriously naïve on monetary matters, but certainly their wealth did not protect them.

Even well-to-do individuals, astute in the ways of Wall Street, are not immune to a swindle. George L. Forbes, one-time President of the Cleveland City Council, who sat on the state commission overseeing hundreds of millions in assets, fell victim to a scam that bilked dozens of wealthy investors out of some $300 million. His financial prowess proved to be no defense.

This gets us to the nub of it all. Your possession of substantial net worth will not guarantee you favorable investment results. It’s your personal involvement and analysis of each opportunity that makes the difference. Remember that your most reliable investment advisor will be the face in the mirror.

The debate goes on as to whether the housing market is due for a massive collapse. For every analyst predicting a bursting bubble are those with diffferent views, such as Scott Simon, mortgage group head of Newport Beach-based Pimco, who visualizes that the market will “slow under its own weight,” but that the strong job market will insure a soft landing as “bubbles only burst when there is a lot of unemployment.” Similar sentiments are echoed by Mike Englund, chief economist of the global bond and currency consulting firm Action Economics, who contends that the recent rapid price gains in the housing market “doesn’t mean it’s a bubble.”

Though we cannot ignore the economists’ broad expertise, I invite you to view matters from my perspective, to see where the bodies are buried. Consider this recent transaction. A 3-bedroom house, acquired October 2005 by an investor for $420,000, was sold April 2006 for $490,000. Terms of sale: no cash down; $392,000 adjustable rate first mortgage, initially at 7%; $98,000 fixed rate second mortgage at 10%; $10,000 seller creditback to buyer at close of escrow. New owner’s monthly payments: first mortgage $1,306.67 for one year (remaining $980.00 added to principal as negative amortization), plus second mortgage, taxes, and homeowner’s association fee, all totaling $2,803. After one year, payments increase to include full amortization at then-market interest.

Note the buyer’s position in a year if market interest is 8% (today’s prime rate). Total monthly payments will increase by 61% to approximately $4,510. Will the homeowner will be ready to assume this burden? If not, what will happen? These are not hypothetical questions, for what I’ve just related is an unhappily common method of home acquisition in many parts of this country. Even a modest slowdown in the economy will translate into hundreds of thousands of foreclosures just waiting for a time and place to happen.

A concluding thought:
Who is the loser? Not the investor, the real estate agent, nor the loan broker. Neither is the homebuyer, who is in for free with modest payments for a year. The real losers are participants in funds—mutual, hedge, and pension—which purchase these loans from investment banks in packages. These unsuspecting lenders-of-last-resort provide the funding for these inherently unsound mortgage loans. It’s likely that when Joe Doaks discovers in 2010 that his 401(k) is half its 2009-value, he’ll never know why.