Needful Things

Satanic_Leland_Gaunt

Mr. Gaunt steepled his fingers under his chin. “Perhaps it isn’t even a book at all. Perhaps all the really special things I sell aren’t what they appear to be. Perhaps they are actually gray things with only one remarkable property—the ability to take shapes of those things which haunt the dreams of men and women.” He paused, then added thoughtfully: “Perhaps they are dreams themselves.”

–Stephen King, Needful Things

If your job is to sell people stuff, the path of least resistance goes something like this:

1)      Sell cheeseburgers to fat people

2)      Sell advice on giving up cheeseburgers to fat people

The point here isn’t to poke fun at fat people. The point is that “fat person” is an identity with a lot connotations attached to it. One might go so far as to call those connotations “baggage.”

Other identities with a lot of connotations attached to them include: “retiree,” “former executive,” “doctor,” and “little old lady who wants a good rate on her CDs.”

We’ve all got identities. We’ve all got baggage. We’ve all got cravings.

Salespeople know this.

I opened this with a quote from Stephen King’s novel. Needful Things. In the novel, Leland Gaunt sells trinkets. The trinkets take the form of something that matters to you. Whatever triggers your deepest desires and fears. And, of course, Leland Gaunt’s willing to give you a deal on that particular item. All he asks in return is a little favor…

You go into Leland Gaunt’s shop thinking you’ll shell out some cash for a trinket. A rare baseball card. A lampshade. A religious relic. But the true cost is your soul.

Investment products, too, are things that matter. They trigger powerful emotions. You come to associate them with your aspirations, hopes and dreams.

People who sell financial products know this. People who sell deals know this.

“Oh, so you’re a Little Old Lady Worried About The Market? We’ve got an equity indexed annuity for you.”

“Sophisticated allocator? I see private equity co-invests have caught your eye.”

“Tech entrepreneur? Have you ever looked at crossover biotech funds?”

The Leland Gaunts of the investment world traffic in symbols and memes:

Yield!

Diversification!

Innovation!

Security!

Sophistication!

Tax Breaks!

Deals!

I hate to break it to you purists, but most investments aren’t sold on the basis of future expected cash flows. Most deals are sold as little gray things that will satisfy whatever cravings you’ve got as a retiree or endowment CIO or little old lady looking for the best rate on a CD. Whatever matters to you, there’s a broker out there who will sell it to you.

And you’ll probably get a deal.

Caveat emptor.

 

(major h/t to Epsilon Theory for inspiring this post)

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