Pall-bearer of bad news

“Shooting the messenger” is a metaphoric phrase used to describe the act of blaming the bearer of bad news and while theoretically we all love to be told the truth, the reality is that we fear the truth that does not appear appetizing to our view of the world.

Every week (in fact, every day), most newspapers carry a column where a “Astrologist” predicts the future for the zodiac signs. If you were to read through them, you will find that none have a bad day ever. At worst, one needs to be cautionary in a otherwise life of good things that keep coming.

While am no believer in Astrology, the fact is that if the column predicted something really bad, the probability is that you will stop reading the said column and while at it, may actually change the news paper. Which newspaper editor would want that anyways 😉

The world of finance is one such where we would love to be lied to than accept the reality. We know that Insurance is not a investment, but love the fact that some one is offering a product where you get the amount invested back and heck, even get a Bonus above it while all the time being secured.

ULIP’s got sold big time not just because it gave the agents big commission but also because investors felt that they were getting more buck for the rupee without understanding either the risks of the product or how much of a conflict of interest there was for everyone other than the Buyer of the said product.

Finance is one field where there is tremendous amount of historical data that can help one make the right choices and yet, more investors fall for “True Lies” than be willing to hear the real truth and the real truth is that there is no “Free Money”.

Recently I was privy to a friend’s portfolio which contains Insurance (Endowment / Money Back / ULIP) policies dominating to the extend of 70% of his non business / non real estate networth. But was he upset about buying policies given that the returns hasn’t been great ? Hell, No. On the contrary, he was and is still happy with his Insurance broker for enabling him to invest in those policies and while he knows that the agent gets a commission, has no clue about how much it is and its impact on his returns.

Most people I interact with already have strong opinions that are unlikely to be changed no matter what evidence I can come up to discredit the same. Of course, its not surprising since that behavior is known as the “Backfire effect” where dis-confirming evidence strengthens than weaken one’s belief. The only common factor I have experienced is that I have been avoided – why bother with the guy who tries to show us the Mirror or so the thought I assume it is.

Just like you can find very few Sell reports when it comes to Stock Recommendations, so too are advisers who try to provide you with a alternative view that is not palatable to one’s own views. Rather than dismiss it off-hand , the least you can do is take a serious look into the data with a open mind since mistakes in the world of finance can turn out to be very expensive on the long run.