Sunday, August 18, 2013

Ah, high pressure salesmen...

I was a stockbroker before I got into academia, and still pay much attention to the financial world. This is ever more important in a world where it's no longer possible to buy a CD that pays even close to the rate of inflation, and where money markets can pay 1/20 of 1% and act like this is a good deal.

So, I'm always willing to learn more. I popped by the "Rich Dad, Poor Dad" guy's site. I'd heard his advice was often good. I didn't see any advice, but there was an option to "get a mentor", talk with what sounded like an investment coach.

Yeah, I clicked. I've been studying commodities carefully for 14 years, and I'm still basically ignorant.

A few hours later, I got a phone call to set up an appointment with a salesman to sell me on their program (they make it sound like you're lucky to get a coach and that you're being interviewed).

He calls, we talk, he ruthlessly uses all the sales techniques on me that I learned being a stockbroker. He thinks I should pay $5,800 to get a coach. One doesn't build a portfolio without asking questions, and I ask him what kind of things do I get out of this.

"Well, you're going to get advice on how to buy income producing real estate. Nobody ever loses money on real estate."

His chance of getting any money out of me, already very low, went to zero at this point, I know quite a few folks that have lost money in real estate (was this guy even alive in 2008?). So I tell him that I'm seriously concerned about the US economy and the dollar--holy crap am I concerned, in fact, which is why I started this blog. It could all descend into mud in short order, and I want to go out doing honorable work.

Anyway, I tell him that I invest in gold and precious metals primarily nowadays, and things related to hard assets.

"Gold? That's terrible, You heard they're closing mines in Australia, right? That's going to drop the price of gold."

I'm serious, the guy actually tried to tell me that cutting down the supply of gold will drop the price. I got him to admit that if the supply of water drops, the price will go up ("You need water."). I tried it with gold ("But you don't need gold."). So I tried it with cell phones ("Yeah, the price will go up").

He acknowledged that supply and demand relate to price in the usual way (i.e., dropping supply usually increases price), but just had a weird blind spot when it comes to gold, to the point that he couldn't even lie to a potential customer just for the sake of argument that dropping supply of gold would lead to higher prices. Funny thing is, I know a whole forum of people that feel the same way. They're probably still calling me an idiot for saying gold would someday go higher than $400 an ounce.

Anyway, this guy insisted that gold was going down to $700 or so in a few years. Anything's possible short term, I admit, but in terms of the big picture? The government is grossly increasing the supply of dollars so that, relatively speaking, the supply of gold to those dollars is dropping. Yeah, gold, really just a pretty rock, could drop relative to the dollar short term, but I kinda figure in the long run, gold will win, paper will lose. It'd be nice if I were to die a natural death before that happens, but I'm not optimistic.

Paper only beats rock in children's games, after all.

We finally ended the phone call, but if I recall the protocol for these types of sales properly, the salesman will call me back in a few days and re-try to seal the deal. He says he's been with the company 7 years now, and they have a 94% success rate of their students achieving financial independence.

Now I know he's an idiot. I mean, if I worked for 7 years selling a product that gave financial independence 94% of the time for a mere $5,000...I would have bought two of that product by now.

Ah well, tomorrow I go to a new institution, one with a solid reputation. Hope I can measure up.