Daily Commentary

MarketMinder’s View: Ugh. This is our least favorite kind of news you can use. We wish it weren’t a thing. Nevertheless: This is the story of an 81-year-old gentleman who lost over $1 million in a romance scam … then got targeted by a scam lawyer who claimed he could help recover it. Thankfully, his son was overseeing his finances by that point, determined the lawyer was a fake and kept money from changing hands. But this is an increasingly common occurrence. “This type of fraud is known as a recovery scam, a common ruse used by cybercriminals who try to exploit the victims’ desire not only to get their money back but to reverse, or somehow rewrite, this often dark and devastating chapter in their lives. Given the enormous sums that victims are increasingly losing in individual scams — $16.6 billion in losses were reported in 2024, at minimum — they are more likely to shell out even more money in hopes of a recovery.” Sometimes it is the same criminal group. Sometimes, they sell the pertinent info to a different group, which executes the recovery fraud. They will impersonate lawyers, law enforcement and the government. So advertise fake “recovery firms” online; others pepper their contact info in social media comments. If you are contacted by someone offering assistance, take a page from the victim’s son: “He was fairly convincing, but Mr. Jonas asked for more proof. Could Mr. Solis send him photo identification with his legal credentials? That was when any distant hope was quickly shattered. ‘The credentials included an A.I.-generated image of a man meant to look like the guy on the video call,’ Mr. Jonas said, ‘and that’s when I immediately knew it was a scam.’” As for practical steps to head this off, changing all of your contact information if you have been scammed appears to be a big one. Beyond that, the usual tools apply: Don’t accept solicitations outside normal official channels, go directly to law enforcement as needed and don’t take someone’s word for it if they say the government sent them.

MarketMinder’s View: When Japanese Prime Minister Sanae Takaichi and her Liberal Democratic Party (LDP) won a surprise supermajority in February’s snap election, headlines claimed big fiscal stimulus would swiftly follow, then couldn’t decide whether this was a big economic positive or a debt crisis in waiting. We took a different view, noting Japan’s economy was recovering from last year’s weak patch without big stimulus and Takaichi was already talking down the prospect of quick, broad tax cuts. One month on, that measured approach is holding. Instead of ramming through a consumption tax holiday on food and drink and new refundable tax credits, the LDP is going through the standard process: studies, committees and deliberations. The consumption tax cut is already meeting resistance within the LDP. While tax credits are more popular, “There are numerous obstacles to implementing refundable tax credits, such as verifying people’s income and assets. … The issue had barely been discussed within the LDP before the prime minister signaled her support, and the reality is that they ‘are starting discussions from scratch,’ in [LDP Research Commission on the Tax System chair Itsunori] Onodera’s words.” We remain bullish on Japan, but stimulus isn’t why.

MarketMinder’s View: This long feature on an odd California real estate investment, where a few hundred individual investors are faced with potentially losing everything they put in, illustrates a classic principle: If it sounds too good to be true, it probably is. In 2021, rapper Kanye West bought a rare house designed by a celebrated architect … and gutted it, leaving its concrete interiors exposed to the elements. He later sold the crumbling husk to an investment company that had solicited individual investors to buy fractional shares in the home—marketed as a way for normal people to get in on the high-end real estate game. The plan was to restore the home to its former glory in luxurious Malibu and flip it, with a quick 20% return seemingly penciled in for the shareholders. But all has not gone according to plan. Construction stopped a year ago, and the developer is facing foreclosure on a complex loan he took out to assist with the financing. This piece delves into the main players’ backgrounds, including various criminal allegations that have been settled or are pending in court—we don’t comment on any of that and simply present the broader story, which contains numerous red flags the individual investors now see in retrospect. At one point, the developer “told investors that he planned to refinance and then restart construction, but investors were puzzled, since he’d raised millions from them. ‘Why was he overleveraged?’ [one of them] said. ‘It’s still unknown.’” (The developer claims that after pre-paying interest on the loan, which was about $10,000 a day, he needed extra for construction costs.) Now, as the house heads to the auction block, the developer is attempting another fundraising round and “saying that any additional investment would yield a 30% return. ‘Unfortunately, time is not on our side,’ he wrote. ‘The risk of losing this opportunity is very real.’” Meanwhile, the existing investor base is mentally writing off its losses and moving on, based on the interviews here. Now, it is entirely possible that everything here was above-board and it was just a bad investment decision. No allegations here—that isn’t the point. Rather: Real estate projects like this are complicated, undiversified and high risk, especially high-end properties that need a lot of work. Quick pie-in-the-sky return projections are often unrealistic, grounded more in hype and hope than reality. That simple reality check can save you from years of frustration and financial heartache.