In investment, as with all economic decisions, we must often pick between hopes and probabilities. The asset management industry uses this to trick us, here is how.
Recently, my older son told me a joke. It was simple and naive. It seemed innocent. It was not.
Toto the boy is playing cards with his grand-mother. After a few turns when he keeps winning, he is busted cheating by his grandmother.
– You are cheating Toto !
– Indeed I am !
– This is unacceptable ! Do you know what happens to cheaters in real life Toto ! ?
– Ummm yes… they win !
This simple joke, albeit deeply cynical, is actually pretty representative of what sadly happens in the grown-up world, on a regular basis. Cheaters often win. Misrepresentation often win. And even liars, often win.
In my very specific field, investment, this behavior is actually widespread, consciously or not. Part of the industry is, with very different degrees of awareness and gravity, “cheating” to win the money game…