One thing that I believe has contributed immensely to my financial success is this simple rule:
Know the people behind the business
It’s astonishing to me how many well-meaning investors will do some or any of the following:
- Buy a share of stock in a company without knowing whom the CEO or Chairman of the Board is,
- Subscribe to an investment newsletter without knowing who publishes it and what their beliefs, values, and track records are, or
- Hire a financial advisor to manage their investments without knowing whether the advisor successfully manages his OWN investments
If I am going to trust someone with my hard-earned dollars, whether it’s a company whose stock I am buying or a high-priced newsletter I’m considering subscribing to, I want to know whom I am dealing with.
This is because I don’t do business with businesses—I do business with people. And this holds particularly true in the investing world where most newsletters, financial advisors, and brokers are not well-established household name brands with 50-year proven track records of ethical behavior and success.
Just who exactly is this newsletter guy promising to tell me the secret of “How the strange disappearance of element ‘107’ could make me a fortune” or promising to “Double My Money in 2011 Guaranteed…”?
Well, I actually go find out. I am inherently skeptical and the beauty (and the curse) of the Internet is that there is a vast array of information available on any person whom you wish to find out about.
A quick google search will provide you with volumes of information about someone, and many times these authors have been interviewed by text or even better by audio or video so you can actually get a real sense of who they are as a person.
You can find out what they believe in, whether or not they know what they are talking about, whether or not they have similar values to you, and whether or not they are ethical. You can also find out their track record and history, and what other people think of them.
Even Bruce Lee was a skeptic, saying,
“There are lots of guys around the world that are lazy. They have big fat guts. They talk about chi power and things they can do, but don’t believe it.” — Bruce Lee
A healthy dose of skepticism, particularly when entrusting your money to someone, is a good thing.
Your job is to do the hard work of sorting out the wheat from the chaff, the Bruce Lee’s of finance from the Bernie Madoff’s, or as they say in Texas, those with cattle from those with “all hat, no cattle”.
And I find that focusing on people is an important part of that equation. When I look into the “guy behind the newsletter” I get a very, very good idea of the entire newsletter empire.
Important questions I ask myself before forking over my money are,
- Who is this guy? (In the investment newsletter business, they are all guys!)
- What is his background?
- What is he trying to sell me?
- What is his track record?
- Will he take the time to educate me or does he only care about selling newsletters?
- Do I believe he is ethical?
- What can I glean about his personal values and beliefs?
- Does anyone whom I trust or know personally endorse him or think well of him?
That may sound like a lot, but again, with the Internet you can find out volumes about a person in just a few minutes.
The sad truth though is that many people will never bother to do so! Please don’t be one of them… Before you fork over your hard-earned money to someone, first see what you can find out about them.
It’s not that hard, and your wallet will thank you tremendously!
To your financial success,
—Kung Fu Girl