Greed, the essence of any financial product sale

My Professor Limligan at the Aisian Institute of Management when discussion the case of Mike Milken and his junk bonds gave us a very important lesson.  He said that the way to sell such products which have a dubious by nature is to appeal to a persons greed, not reason.

Some years ago my mother was a victim of a ponzi scheme. She had heard that someone was offering 36% interest  and paying it on a monthly basis. Wow imagine struggling 9 to 5 and making nothing, here was a God sent opportunity, ofcourse the narrator had a good experience, he was paid on time every month.  So promptly my mother joined the soon to realize that they were duped. Sure enough once the scheme reached a critical mass, the operator raised his hands. The lucky ones who had invested early got away lightly, hopefully having learned their lesson.

The next time I heard the greed bait had struck was when a friend mentioned that he lost heavily in a similar get rich scheme. Apparently his wife’s hairdresser was the harbinger of the good news. For 5000/- an investor was given a packet of powder which had to be boiled for seven days in a liter of milk and thickened. They also gave a set of bottles in which the paste had to be put and returned to the office for onward sale to a European cosmetic concern. For their troubles they would be paid 7500/- or some such no. By the time the proverbial  s*&% hit the ceiling there was a whole lot of milk left around and some very broke folks. None of the effected had even thought of cashing in ie taking the 7500/- and running. All of them opted to take 2 or 4 or 6  or more packets more by paying the difference after each visit. So they simply sank deeper.

I had seen the “Speakasia” advertisements on the Times of India and even saw one outside the Goa airport.  I did think of checking it out but forgot about it later. I was reminded about it again when I saw huge advertisements once again claiming innocence and blaming all kinds of rivals for the false propaganda. The ads promised payment as soon as the company could complete formalities which would allow then to make payments in India. The strange thing about these ads was the fact that they were devoid of a name or address other than the website. Something’s brewing I thought to myself.

Sure enough the Economic Times carried the now familiar story. Pay money do some odd job, in this case carry out some survey and they returned an equivalent of 10% per week. By the time some smart alec  decided to complain the value of the con is in hundreds of crores. Guess with internet the whole of India was the target market, no need to set up physical, these guys operated out of Singapore.

You will notice that while the ploys changed the basic ingredient greed stayed the same.