Who’s Information Can You Really Trust?

There’s one particular fund manger around town who loves a microphone, preferably a megaphone, and if there’s a camera in front of him, all the better.

For the sake of this post, I’ll call him ‘Polish’ because that’s exactly how he comes across – all clipped and correct without ever tripping up.

Polish is a real 70’s style salesman whose strategy is what I call ‘Spook and Spruik’ and it works like this…

Spook and Spruik
Step 1 – Bag the opposition. Polish has done lots of this lately because his own funds are under performing and investors have started to question his expensive fees. But desperate people do desperate things and now’s he’s resorted to bagging the opposition instead.

Step 2 – Spooking. Polish puts doubts in the buyer’s mind with phrases like, ‘blue chip stocks are no longer blue chip stocks’. E.g. CBA

That statement is analogous with saying ‘vegetables are no longer vegetables’. But it’s too late, the seed of doubt has been planted.

Doubt is a big part of his secret sauce because it leaves the buyer wondering, ‘Well what should I be buying?’

Step 3 – Spruiking. Polish now has his audience right where he wants them and suggests they should consider green chip shares instead, the stuff he specialises in. The smaller mid-cap stocks like Carsales.com

Buying green chip shares is akin to eating fruit. But if you’re vulnerable and you don’t know any better, Polish will eventually convince you to cut out all veges and load up on fruit only.

By the way, Polish is not a competitor of mine, but he would be a supplier of mine if I used his funds. And to be fair, I don’t mind Polish because at least he’s willing to stand on his own research. I just think he needs to try a different tact. He’s better than that.

But Polish is not on his own. The second type of spruiker uses a strategy I call…

Scream and Scare
Screamers are extremists. They reside on the fringes and get their attention by scaring the daylights out of people. Spooking isn’t enough for them.

In political terms, screamers exist on the far left or right. They’re buried in extreme self righteousness and generally are not amenable to anyone’s views except their own. Some on both sides of the media fall into this class as well. Religion is the same.

In finance, the screamers are hedge fund managers. They evoke fear and scare the hell out of investors by suggesting things like…’the financial system is on the brink of collapsing and you need to sell everything and buy gold’.

Hedge funds make their money when the market goes up and down. Hence the reason they like to scream and scare people. They seem like really caring people by screaming but they’re not. They’re profiting from your fear.

Personally, I don’t like screamers. But each unto their own I guess.

The last type of spruikers is where I draw the line.

Slippery and Sly
Right now there is a major institution on TV promoting ‘goals based advice’. Its a noble idea and one that’s been around for ages. So the other week I decided to check it out. It’s not goals based advice at all, it’s just another ‘hook’ to flog product. It’s slippery and sly.

That‘s why I would never refer a client to bank for a home loan. I only ever use brokers. It’s the difference between the butcher and the dietician.

The butcher will only sell you whatever is in front of him, the dietician will sell you what’s best for you.

I reckon working for a bank would be spiritual suicide.

Agenda’s
The one thing all of the above have in common is they each have their own agenda. We all have agenda’s and if you find that hard to believe it’s only because your agenda is hooked into someone else’s.

There’s nothing wrong with agenda’s, as long as you understand what they are. Don’t just take everything as gospel because every commentator will have a motive and a bias of their own.

Even this Moowsletter has an agenda. At the moment it’s just to help educate clients, one very thin layer at a time. And slowly it accumulates. It also gives Suncow a nice point of difference and in a few months we’ll throw the doors wide open and use it to promote the business.

You don’t have to be suspicious of agenda’s, just aware of them. E.g. SMH vs The Telegraph.

And once you understand that, you can then decide who you should trust to get your information from because not everyone wants the same thing.

Have a great weekend!

Adam

Back paddock – One night over Christmas it was Mum’s turn to choose a movie on Netflix, so she chose ‘The Help’. She said she’d read the book and it was very good but when I read the summary on Netflix, all I could read was two hours of pain because it read like another chick flick.

Anyway, Mum was right (again) and it was one of the best movies I have seen in ages. I highly recommend it. Its on channel 7 tonight at 8.30 pm.