Getting a Leg Up
If you’ve known me for long or read this blog for long, you know that I have a hot-button for finding the truth in our world. Too often, between a media who is not compensated to tell the truth, and a willing public looking for an easy answer to a complicated situation, we end up believing things that just aren’t true. Yet knowing the truth can gain us great advantages in the financial world.
It also doesn’t help that we’re inundated with information on a constant basis. Long gone are the days when we can turn to Channel 7 and watch Walter Cronkite for a half-hour and find out what is going on in the world. Information comes at us at lightning speed, requiring us to make snap opinions on the world around us.
Typically when I discuss this issue of perception and reality, it is in regard to the various investment markets. Just because everyone is buying X does not mean that buying X is the right course. Often, everyone is just following what they saw in a headline on their electronic device of choice. Not a whole article. Not an article plus a good bit of research regarding the article’s validity. Just the headline.
For instance, I had a conversation recently with a friend regarding the various companies run by Elon Musk. My friend was absolutely gushing about how successful his companies were.
Musk is an amazing guy. He’s the PT Barnum of his generation. He’s a showman. But his companies, financially, are not terrifically successful. Well not yet anyway. Although according to my friend, and many others who are looking to the media to give them that easy answer, these companies are beyond successful.
It reminded me of a catalog I received a few months ago. It’s been sitting on my desk because I can’t bring myself to throw it away.
Now, when you read this blog, I’m betting you don’t look at the picture at the top much. You glance at it. Many times, we anguish for an hour or more about the photo we use.
Take a moment to look at the photo. It’s the front cover of a Land’s End catalog I received. Zoom in if you need to.
Let me ask you – what's up with the legs of the woman on the left? How many people at Land’s End had to approve that catalog photo? How did they miss that?
I’m still not sure if the angle is just wrong (forced perspective) or the artist retouching the photo used a composite of several images and never looked at the legs or they intentionally made the legs that way because they wanted that exact pose despite it appearing physically impossible.
Ninety-nine out of 100 people would look at that photo and never notice it. The worst that might happen to them would be buying a bathing suit that may only fit misshapen people.
My friend? He was prepared to invest in various companies based on some hype he was caught up in. He had no idea if these companies were profitable. He had no idea of their projected growth. He basically knew nothing more than he thought they were cool.
In the long run, he might actually make money. He might even make a lot of money. But the story he’s being told and the reality of the financial successes is vastly different. And the “bet” he is making is speculation – and no different than the bets one makes at a casino.
The short lesson for today is to do your research. Make sure that simple story being fed to you is the right one. Your money is riding on it.
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