Every time we cross the road there is risk, and it deepens the wider the divide between now and reaching the other side. A brightly lit side street is a breeze, but crossing the south super highway at 10 am on a hot sticky day is no mean task.
It is no different when interpolating the chances of making an investment.
Blindfold is not the ideal way to cross any pathway, and additional allowances need to be made before deciding to swim alone across any river in life – who indeed amongst us would dare to plunge into the Pasig River in Manila Philippines that can look so placid and serene in the Bay sunset, but in reality is a suspect liquid that sludges and meanders unwittingly through deepest darkest Manila.
Massaging the Perfect Scam
It is simple – just “sign here” for a 1.5% ‘guaranteed’ monthly cash payment …in the long run though, the supposed ‘interest’ payment may get sucked out of ‘capital’ and the good-times run out when new money coming in to the so called ‘fund’, is not enough to keep up with the promises of ‘guaranteed’ monthly cheque (check) payments.
The deceit eventually implodes, and under carefully planned pressure the capital amount becomes the target for the operator, and the principal takes the worst option, and runs away with the investors money into the great blue yonder…..does this sound familiar?
Sludge is a nasty connotation that raises its ugly head even in the investment world and appears with uncanny regularity. In mid 2007 it finally came to light that many sophisticated people in Manila had evidently miscalculated on their IQ factor, and instead been drawn into an investment scheme that was structured to the thrill the EQ factor.
The Emotional Quotient is a familiar trait in this part of the world, and it appeared to be brilliantly engineered by a Makati based company. The group existed in several Asian countries, but slack Philippine regulations and blinkered understand, coupled with a flimsy but fanciful “guarantee” of a monthly return, marketed by well known and well respected family names, all backed up by the glitter of fancy sales commissions, wove a web of intrigue that eventually disappeared down the proverbial plug hole.
Sucked into oblivion without apparent recourse, were hundreds of wealthy individuals who had plunged into a withering sludge that decidedly disappeared into a black hole.
The Slick Face of Disgrace
At the end of the day no self respecting investor would step forward to challenge the outcome, since a rich mix of embarrassment, tax implications, and social forces ruled the roost, all stirred into a stew sprinkled with that local spice of religious fatalism that is amicably nursed by the tropical sun.
That page of a ‘perfect scam’ seems to have been simply turned over and the ailing mob have slipped back into the bowels of easy living.
No doubt back-office intrigue rolls on, but will PIPC and a certain gentleman calling himself Mr Edward Liew ever be brought to task?
Back on the Investment Skyway
Ah well…….. it is best not to get stuck in the mud for too long. 2009 is well underway and the big world of investment has plenty of proven old, as well as new and fresh opportunities…Look at India, it is cruising in overdrive, and fund returns in 2007, and very recently have been storming vertically upwards!
On the other side of the spectrum, the conservative ends of the investment markets have been stalled in the sub prime chaos that is crippling the US and reverberating throughout the big proud international banks and tip top financial institutions worldwide. All the big names are putting out smoke screens and putting on a brave face while the brush fires rage frantically behind the darkening hills of north American commerce.
Elsewhere commodities, the smart hedge funds, and non-equity investments are still poised to sizzle in 2009 and 2010. Not forgetting our equity brotherhood steeped in Asia, as well as the Middle East and North Africa.
The lessons learnt (soon to be buried and forgotten) are painfully obvious – in any contract “read the small print”. Patience and perseverance can never quite supplant the 2Gs -Greed and Gratification.. Modern life has locked us all up, in part, in the fast-food society swirling in the urban stew. Take time to assess the investment yourself, and don’t rely on the best intentions of your friends. There is always a catch at some level, but don’t catch a cold and get completely fleeced…it is more common than you think!
Check that Small Print – Don’t be fooled by the Big Print
The big print is the marketing material which aims to please, stroke and soothe. A ‘guarantee’ always has a sidebar of sorts that can be sidestepped in any awkward event.
(Article published in The Rogue Trader, a publication serving the Philippines investment community.)