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Greed or No Greed

March 3, 2013 by Lazy Man 19 Comments

Jeff Rose
Jeff Rose
Today’s guest post comes from Jeff Rose who is an Illinois Certified Financial Planner and co-founder of Alliance Investment Planning Group. He is also the author of Good Financial Cents, a financial planning and investment blog. You can also learn more about Jeff at his website Jeff Rose Financial.

On NBC you may have seen the game show called “Deal or No Deal” starring Howie Mandel and 26 wonderful ladies with their respective briefcases. The premise of the show is for the contestant to select random briefcases holding dollar mounts from $.01 to $1,000,000, trying to eliminate cases without picking the higher amounts. As the cases dwindle and depending on what amounts are left, the “banker” will offer the contestant a dollar amount that contestant must accept (Deal) or not accept (No Deal). If the contest chooses “No Deal”, they keep selecting cases that will either increase or decrease the banker’s offer. Pure entertainment flourishing at its finest.

The Greed That Lies Within

What I find appealing of the show is that it brings out the greed that exists in most all of us. I have seen contestant after contestant fumble their way from a sum of money that would have literally changed their life to an amount that barely made the whole experience even worth it.

My most memorable contestant was the single mom whose only goal was to win enough to pay for her son’s college education. She was cruising right along and the highest offer was well above $150,000.00; far exceeding her goal before the show. All she had to do was say “Deal” and her life would have been forever changed. She did not and ended up walking away well under $10,000. It’s a sad story, but how do you really feel sorry for somebody like that?

Are Stock Buyers Greedy?

Relating the show to stock investors is quite easy. Many times I have had clients that have purchased a stock with the goal of making let’s say 20%. When the 20% is reached, they want to hang a little bit more to get to 30%, 40%, or maybe even 100%. The outcome is usually not pretty.

Instead of locking in the gain, we’ll watch the stock drop back to its original purchase price. Upset that they didn’t lock in the gain, they decide to wait it out until we get back to the 20% gain and then they are “definitely getting out“. Then the stock drops below the purchase price. Even further upset, the client decides to wait to hang on and wait till they can sell to break even. I think you see what direction we are heading.

Remember Your Goal

Sometimes we have to remember what our goal was in purchasing the stock. If your goal is to make 10% then that’s when you sell, no matter what. If you can’t stand to lose more than 10%, then the same rule applies. Get out when you said you would get out.

Can’t Control What Happens Afterwards

Sometimes the stock will go up in value after you sell it. It just happens. Do not get frustrated about what you “could have had”. It’s impossible to predict when the exact time to sell it. Be grateful that you actually made money, especially with the recent crummy market. And always remember that selling a stock at a profit, no matter how small, is a better “deal” than going home with an empty briefcase.

Filed Under: Psychology Tagged With: certified financial planner, deal or no deal, greed, investment planning, stock buyers, stock investors

Erin Burnett: Why I Would Not Impress CNBC’s Anchor

December 11, 2008 by Lazy Man 26 Comments

For a variety of non-financial reasons, I like to read Men’s Health from cover to cover each month. I know it’s not as entertaining as Maxim Magazine for a lot of people, but I still like it. Though it has a ton of advertising and is one of the few magazines where it’s impossible to get cheap, the content is usually well worth the cost. I’ve even found the articles about money fairly interesting. In the Jan/Feb edition, I found one such interesting article. Unfortunately, I can’t say it’s very helpful to their target audience.

On page 123, there is an article 8 ways to impress me by Erin Burnett. Let’s go through them one by one and look at why Men’s Health would put this (with other articles) under a page titled, “Let Your Money Grow.”

1. “Any guy who can plan a trip to an exotic locale… would impress me” – That doesn’t sound pretty cheap does it?
2. “Buy me a new atlas and globe… I love to travel and hope to eventually set foot in 100 countries.” – An atlas and a globe, I can handle that. Stepping in 100 countries, well that could get pricey.
3. “…round-trip business-class tickets to Australia and New Zealand for my parents would earn you big points” – Assuming they live near NYC, that’s probably more than $5,000 gift for just the airline tickets. That sounds like a good way to “let your money grow”
4. “…I’d be impressed if you thought to send a yoga instructor to my apartment for private sessions.” – In NYC that’s got to cost at least a $1,000 a month right?
5. “Finding an exercise bike at my door would be great…” – This is something that’s a pretty reasonable one-time cost. Of course, getting exercise equipment for a woman you want to impress is always smart idea. If you can’t smell the sarcasm in that last sentence, I can’t help you.
6. “Reading is a passion of mine, so a gathering with some of my favorite authors… would make for an exceptional evening.” – When she started with reading, I thought it would surely be a way to earn some major points on the cheap. That was one big curve-ball she threw though.
7. “Hiring a personal chef to prepare meals… would be unforgettable.” – You know I really would love to do this. While I’m at it, let me get you one for your new yoga instructor.
8. “A long weekend spa getaway for my sisters and me would be perfection” – My money is multiplying just reading this…

I realize that Erin Burnett probably makes a great income. As part of her career she rubs elbows with CEOs who have multiple millions of dollars. It seems that this is poor choice for the average reader of Men’s Health – especially if you going to run the article on a page with other tips about helping your money grow.

Filed Under: CNBC Tagged With: erin burnett, greed, magazines, maxim, men's health, menshealth, Money

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