Before Investing...Read Pile
I’d estimate that our office receives an average of two phone solicitation attempts per day. Although our policy is to intercept telemarketing calls as soon as possible, I do find myself on the phone with various telemarketers from time to time. Generally, those telemarketers who successfully sneak through to me do so by falsely implying they already know me or that they are getting back to me in some fashion. To one particularly aggressive telemarketer, I recently heard an exasperated associate say, "Alright then, mail something to us." The next day Fed Ex brought us an impressively thick package. Since the sender spent so much money to send the package I felt obligated to give it at least a cursory look.
Before discussing this particular investment opportunity any further, let me first outline my routine for reviewing such "opportunities." As a first step, I separate all documents into two piles – piles "A" and "B". All glossy or heavily colored documents go into pile A. Also placed into pile A are any documents that include testimonials, quotes, bold face type, or large exclamation points. As a third step, I discard everything in pile A. Everything else then becomes pile B which at least has the possibility of being read.
More than likely, pile B will consist of technical text that is smaller and more densely packed. In general, pile B is not often fun to read, but that’s where the important stuff is. If I’m tired, I sometimes employ an additional step: If pile B weighs more than, say, my sandwich, I throw that pile away, too. The theory for this last step is grounded in the simple notion that laziness is better exercised on missing good opportunities than by getting sucked into bad ones.
Back to that recent investment opportunity. Apparently, some medical information company was set to revolutionize the manner in which health care information will be shared among various healthcare providers. Ostensibly, this company’s technology would result in fewer medical mistakes, lower healthcare costs, and in general, make those who invested in the enterprise wealthy.
What did I find in pile B? This company, which wanted me to invest my clients’ money in it, apparently felt that preparing its financial statements according to generally accepted accounting standards and having those statements audited by an independent entity was not worth the effort. It also hadn’t paid its vendors in quite some time. I’m pretty sure that none of that would have been disclosed in pile A.
