Advertisement

What Othello teaches you about investment scams

Investors should be on guard for treacherous scams by modern-day Iagos.

898-Othello-634
Othello: beware of treachery

William Shakespeare's tragedy from 1603 is a tale of jealousy, suspicion and revenge. It tells the story of Othello, a Moor who is put in charge of the Venetian army.His decision to appoint Cassio, instead of the more experienced Iago, leads to Iago taking revenge by coming up with a plot to convince Othello that his new wife, Desdemona, is having an affair with Cassio.

Advertisement - Article continues below

Eventually Iago's treachery is exposed, but not before Othello has killed his wife. The play ends with Othello committing suicide and Iago being arrested.

The key moment

Othello isn't the only one who is taken in by Iago's schemes. Roderigo, a wealthy gentleman and one of Desdemona's unsuccessful suitors, is also tricked into selling his land and giving Iago a large sum of money.

By act two, Roderigo is nearly bankrupt and is about to throw in the towel. However, Iago convinces him to keep going by arguing: "How poor are they that have not patience!/What wound did ever heal but by degrees?"

The lesson for investors

Beware of scam merchants they can be very persuasive, making convincing appeals to your vanity and fear of missing out. You should be very wary of anyone who tries to sell you an investment scheme or trading system.

The UK financial watchdog, the Financial Conduct Authority (FCA), has an easily searchable website where you can find data on enforcement action or warnings of scams. If a firm or manager has been involved in dubious schemes before, it goes without saying that you should give them a wide berth.

However, new scams come up all the time, so there's no guarantee that the FCA will have any record of them. So always hang up on cold callers, and never forget the golden rule if it sounds too good to be true, then it is.

Other financial wisdom

Iago is a manipulative crook, but his point on patience is valid. Investing in stocks for the long run reduces your chances of losing money. The longest period of negative real returns has been 22 years in Britain (1900-1921) and 16 years (1905-1920) in the US. And the odds of returns on shares failing to beat those on bonds falls sharply over time, from roughly one in three over a year, to nearly one in 200 over three decades.

Advertisement
Advertisement

Recommended

The MoneyWeek Podcast: how to age well and profit from the “longevity dividend”
Investment strategy

The MoneyWeek Podcast: how to age well and profit from the “longevity dividend”

Merryn talks to economist and author Andrew J Scott and discusses how we can profit from the "longevity dividend" as we live longer; why we need to re…
6 Aug 2020
Three mistakes to avoid when investing on Aim
Small cap stocks

Three mistakes to avoid when investing on Aim

Investing in Aim shares can produce spectacular returns. But as Michael Taylor of Shifting Shares explains, you have to have your wits about you.
5 Aug 2020
Too embarrassed to ask: what is “real return”?
Too embarrassed to ask

Too embarrassed to ask: what is “real return”?

MoneyWeek's latest "too embarrassed to ask” video explains what a real return is and why it's so important for investors.
5 Aug 2020
How safe are your dividends?
Income investing

How safe are your dividends?

Dividend investing can be a great strategy. But how can you avoid the stocks that are liable to cut your income? Phil Oakley explains.
4 Aug 2020

Most Popular

Don’t despair on dividends – these companies could be set to bring them back
Income investing

Don’t despair on dividends – these companies could be set to bring them back

The value of dividends paid out by UK stocks has plummeted this year as companies “rebase” their payment policies. But things could soon start to look…
6 Aug 2020
Gold hits the big $2,000 level – are Aim miners about to play catch up?
Gold

Gold hits the big $2,000 level – are Aim miners about to play catch up?

With the price of gold shooting through $2,000 an ounce, the yellow metal looks unstoppable. Things are so bullish, even Aim-listed junior gold miners…
5 Aug 2020
Platinum: the precious metal that looks set to play catch-up with silver and gold
Silver and other precious metals

Platinum: the precious metal that looks set to play catch-up with silver and gold

Gold and silver continue to soar, but there's still time to get in. And there's another precious metal that looks set to go on a bull run too, says Jo…
7 Aug 2020