If you have an email address, you will be the recipient of unwanted solicitations. These emails, while often masked as something else, have a common end game in mind – your money. Some are direct. The number of former members of the Nigerian government needing my assistance to cash a big inheritance cheque never ceases to amaze me. If the email starts out “dearest trusted honourable Mr. Jeffrey”, and proceeds to ask for my council, I’m pretty sure it’s not my council they’re after – unless ‘council’ is Nigerian for Visa. Others, of course, are legitimate and actually may have some value behind them. In particular, electronic solicitations requesting your consideration in whatever particular asset category the writer is selling.
Two industries come to mind – real estate and the stock market – and for no apparent reason I’ve found my way onto the mailing lists of the purveyors of both. A tactic that both like to use is attaching articles which support their position in an effort to lend credibility to their wares. Usually, articles from Business Week or Forbes Magazine are used to lend credibility to the pitch. (Whatever differences these two industries may have, they both subscribe to the same sales tactics.) If I were to believe the articles supporting investments in Mutual Funds or other stock market-based assets, we are living in the end times of a real estate bubble and I would be wise to divest myself of these holdings now before the coming melt down. If, on the other hand, I choose to believe the articles sent to me by those who are selling real estate investments, then inflation is right around the corner and there is no better hedge against inflation than real estate – either that, or gold coins I can bury in my yard and hope I remember where I hid them! While both make compelling arguments, one thing is clear – they can’t both be right.
What should the average person make of the conflicting information with which they are constantly inundated? Wouldn’t it be simpler for salespeople to start and end with the truth? It probably would, but it wouldn’t be good for sales. Consider, for a moment, whether you would purchase an investment from someone who said to you: “I haven’t a clue as to whether the value will go up or not – your guess is as good as mine.” After all, that is the truth. Regardless of what the articles, the fancy graphs and the charts may say, no one can tell you what the future holds. If they could, they would be long retired on a beach somewhere thanks to their earlier prognostications.
The best that we can hope to do is to learn as much about the product as possible, form an educated opinion, and act according to our convictions. That is what our schooling ought to help us with by teaching us how to think – not what to think. Most of us, however, rely solely on the advice of someone else, which always strikes me as a dangerous position. (The former friends of Bernie Madoff might agree.) To compound the problem, we seem to be preconditioned to side with the person who tells us what we want to hear, rather than what we need to hear.
A cynic’s guide to deciphering investment information (or, for that matter, all information) might include the phrase ‘cui bono’ – a Latin phrase meaning literally ‘to the benefit of whom’. In other words – if I choose to believe what is being said, who will benefit and by how much? A little something to consider before you send the secretary of the former interior minister of the Nigerian Government your bank account information. Just in case he’s not on the up and up.
Thanks for reading,