Truth! There are times when it frightens me that just how rare this commodity truly is in this world. Even though the concept of Ethics, Integrity and Morality are lauded, praised and adorn the mission statements of corporations and governments alike, are they truly being practiced? In a world driven by money, greed and profits, do you think that Truth even permeates the world of corporations and governments?
Instead of analyzing this at a global level, let’s bring this concept down to the ground level. Let’s assume that I run a financial advisory firm. What would be the ideal approach to convince them to invest with me?
1. Liar’s Approach (Skim Cepat Kaya)
2. The Machiavellian Approach (Lies Intertwined with Truth)
3. The Truth (Are you Crazy???)
1. A Liar’s Approach
The Liar’s Approach is the simplest way to make money. Come in a flashy car all dressed up in designer clothes adorned with jewelry and accessories. Speak in pseudo mumble jumble and sell… ‘50% returns in two months. No risk, profits guaranteed. Don’t miss this once in a lifetime opportunity’. Of course, as more and more of your customers make handsome profits; more and more investors decide to invest without reading the fine print. Come to think about it, could this be what happened with the US Sub-prime Crisis?
2. The Machiavellian Approach
These days, people are becoming savvier. The majority of people can smell the liar’s approach a mile off. Some of them still get burned because they are blinded by greed. Most of them would walk away. Well, if that’s the case, the second approach would be to ‘massage’ the truth. Instead of a hard sell, you now have Chartered Financial Planners (CFPs) asking you for your hard earned money. They then start flashing you fancy charts, graphs and analyst reports. Since some of the investment vehicles they are asking you to invest is being offered by regulated financial institutions, the information presented is mostly true. However, I am sure it has been massaged to show fantastic returns, of course. Now, let me ask you: Does your CFP tell you how much commissions they are earning by selling you these products? Do they tell you the potential risk to your capital during times of recession? Do they tell you the fees charged by the financial institutions in managing the unit trusts?
3. The Truth
The Truth is plain and simple. No matter who runs the financial advisory firm, you can be ABSOLUTELY CERTAIN that no one can make profits all the time. Heck, if I were that good, why would I want you to invest with me? I’d borrow from the banks at a fixed interest rate of, say 10% per annum. Using that money, if I were able to generate returns in excess of 10% per annum, I would be filthy rich. Investing in stock markets these days are risky. Why? It’s because it’s a Big Boy’s game. They are privy to information that you and I do not have. They have the resources to move markets and share prices with a snap of a finger. So, if you invest with me, there are no guarantees of making a profit at all. There’s a very real risk of losing your capital. There’s a very real risk that I’m investing based on imperfect or false information. There’s a very real risk that the impending recession will wipe out the stock market and take decades to recover. I’m telling you now that the mantra of investing today is ‘High Risk, Low Gain’.
So, assuming that my competence and knowledge level remains the same, as a potential investor, which approach would you prefer to hear? Errr… do I hear a B? Truth be told, most Corporations don’t tell the Truth because it makes good business sense. Most consumers don’t want to be told the Truth because they just can’t be bothered with it. Telling the Truth will just drive your customers to your competitors.
What’s the morale of the story?
If something is too good to be true, it usually is. Educate yourself and remember ‘Trust but Verify’.
This series of posts labeled the ‘Age of Illusions’ are subjective, introspective in nature and based on my observations in life. My aim is merely to put to words the niggling sense of unease that all is not right with this world. It is an attempt to make sense of the NONsense that is this world.