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Friday, September 20, 2013

Purple Unicorns can make you RICH!

Ken Fisher, Jonathan Pond, Suse Orman, Jim Cramer the list goes on of financial entertainers who propagate enough truth to be useful and alluring but also enough myth to be devastating.  All of them lost their readers/clients tons of money in the last crash and will do so again in the next one coming up.  Like a lot of questionable politicians who are inexplicably voted back into office over and over, they benefit mightily from a highly distracted populace with very short memories.  They are what I call Financial Pornographers.  None of them hold themselves to a fiduciary standard like I do.

I know that initially this sounds harshly cynical, a glaring violation of Dan Pink's well-documented ABC sales principles (Attunement, Buoyancy & Clarity).  But bear with me.  We're in the Attunement phase here.  I'm attempting to connect with and deconstruct the magical thinking Wall Street has injected into our culture.

One aspect of this magical thinking is how investors decide to whom to give their money.  When I meet with potential clients I ask them why they picked their current adviser and why they are leaving.  I do this to dispel any delusions about their attraction to me, and, to avoid the mistakes the former adviser made.  Almost invariably they were attracted by the adviser's "success", as evidenced by $1000 suits, expensive cars & high-rent office.  (Wes Rhodes is a classic local example.  Bernie Madoff is an infamous national example.)  I ask, "Well who do you think paid for all that?".  Even if they don't come right out and say it I can see the wheels turning, "We did.".  (The mythological belief is that the stock broker has been a great success with his own money and now wants to share that success with little ol' you.)  And almost invariably my new clients left their broker because of excessive fees and performance that's worse than unmanaged indexes.

The complicated, circuitous narrative the entertainers propagate for risk-taking versus safety might as well be:  Well, in the back room we have a team of very skillful gnomes feeding magic mushrooms to our herd of purple unicorns, which then excrete the gains you'll experience.  Wow!  That's exciting just to make up!  I almost want to say, "Uh huh.  Ok.  Sign me up!"  Unfortunately, in most cases there are no purple unicorns, just ordinary bulls eating ordinary hay and excreting ordinary . . .ahem.

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