Mad Scientists, the Undead, and Investing
By Bob Boo-bala (TMFBobala)

I experienced some dark and scary days before discovering Fooldom. Raised in a family that suffered under the crunch of credit card debt and convinced that profit was something "The Man" did at my expense, I was pretty susceptible to the financial monsters that occasionally crept out from underneath the bed.

The two I remember most were these Wise guys who gave a seminar on "Personal Financial Management" at a place where I once worked. It was a well-attended and much-needed course for people in my company. Unfortunately, this one was taught by two guys who doubled for Dr. Frankenstein and his obsequious assistant, Igor.

Hailing from a true tomb of Wisdom, Dr. Frankenstein dressed pretty nice for a deranged doctor. Plus, he had a decent haircut and teeth so white he could have been a spokesman for Enamelon <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ENML)") else Response.Write("(Nasdaq: ENML)") end if %>. Slick outer appearance aside, he was mad to the core.

"I'm here to help each of you start an investment plan," he said as he unbuttoned his double-breasted suit. "I can promise you eternal returns."

"My Master speaks the truth," said Igor. The diminutive Igor had his own flashy business card and credentials, but he was clearly Dr. Frankenstein's advance man. He made all the arrangements, brought the cookies, distributed the handouts, dimmed the lights, and flipped the Doctor's overheads. When he wasn't needed, he sat hunched over in the back corner of the room with his nose whistling. Every so often, he would let out this unnerving high-pitched grunt, almost a squeal.

"We're here for you," Dr. Frankenstein said. "Even if you don't open an account with our firm."

"Not a requirement," squeaked Igor.

This went on for six weeks. I should have known better when the doctor tried putting those bolts on the sides of my head or when he gave that lesson on "Prime Real Estate Investments for the Undead," but I was a real newbie to all this financial stuff.

The bottom line was that the Doctor's insanity had turned him into a lousy investor. For example, he told us: "Whatever you do, you don't want to lose money. If you do, it will be that much more difficult to ever profit from your investments."

Today I find that to be a very reckless thing to tell new investors who might panic at the first sight of a downturn in their stocks and who aren't accustomed yet to the erratic nature of the daily market.

Another whacked-out idea he had was that of asset allocation. "More than anything else," he said, "your total returns are determined by asset allocation, not your choice of investment." He had fancy pie charts to back this up, too.

Apparently, according to him, it didn't make any difference whether I bought Boston Chicken <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: BOST)") else Response.Write("(Nasdaq: BOST)") end if %> or Microsoft <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MSFT)") else Response.Write("(Nasdaq: MSFT)") end if %>. Or, whether I bought an S&P 500 index fund or the "Get Hosed Even if You Don't Take a Bath Mutual Fund." My returns would be the same as long as my "asset allocation" was right.

Dr. Frankenstein was building the perfect beast for himself -- the confused, dependent investor who would call on his non-expertise again and again. However, little did we know, the pathetic Igor would turn out to be as evil as his maniacal Master.

I met with Igor alone during a free personal consultation. He brought no cookies this time, only his sour breath, which wheezed in and out of him as he leaned across the table.

"So, you're out of debt, and that's good for people your age. But you're getting a little bit older and you don't have much to show for it." He actually said that.

He fidgeted in his chair, then cracked his knuckles. "I can help," he said. "I know a mutual fund that is perfect for you."

"How so?" I said, beginning to sweat.

"It won't take much to get in, and it won't cost you anything until you sell your shares. It's what we call a back-end load. They're very popular these days."

At the time, I didn't even know what a back-end load was, but the whole thing sounded awfully ghoulish to me. "Why don't you just send me the prospectus and I'll get back to you," I said.

Drool dripped from his chin. "You don't need the prospectus. I think this fund is right for you."

He was extremely agitated now, pulling at his tie and then gouging his long fingernails into the table top. "Besides," he said, "if you don't buy this fund, Master will beat me!"

That was enough for me. I left him in a weeping heap, convinced there had to be a better way.

Sure enough, my story ends happily. The whole thing got me searching for better information on the Web and, lo' and behold, shortly thereafter I discovered some more investor-savvy mad scientists at www.fool.com.