The Perfect Husband: One Joke Can Save Your Investments

Several men are in the locker room of a golf club. A cell phone on the bench rings and a man
engages the hands-free speaker function and begins to talk. Everyone in the room stops to listen.

Man: “Hello?”

Woman: “Hi, Honey; it’s me. Are you at the club?”

Man: “Yes, I am.”

Woman: “I’m at the shops now and I’ve found this beautiful leather coat. It’s only $2000. Is it okay if I buy it?”

Man: “Sure, go ahead if you like it that much!”

Woman: “I also stopped by the Lexus dealership and saw the new models. I saw one I really
liked.”

Man: “How much?”

Woman: “$90,000.”

Man: “Okay, but for that price, I want it with all the options.”

Woman: “Great! Oh, and one more thing. I was just talking to Jamie and found that the house I wanted last year is back on the market. They are asking $900,000 for it. They’ll probably take it. If not, we can go an extra eighty thousand, if it’s what you really want.”

Man: “Well, then go ahead and make the offer.”

Woman: “Okay. I’ll see you later! I love you so much!”

The man hangs up. The other men in the locker room are staring at him in astonishment, mouths wide open. He turns and asks, “Anyone know whose phone this is?

The moral of this story, as it applies to investing, is to beware of Wall Street and any other experts that have your trust. This is not to discourage you from seeking advice from the “experts.” Rather, we want to caution that investors should never take other people’s advice on face value. As stated above, each investor has different goals and circumstances, and often the advisors’ interests are not aligned with yours—the professionals, for example, are playing with OPM (Other People’s Money).

One example is the 2008 subprime mortgage crisis: banks repackaged bad mortgage loans (rated B or below) with clever financial engineering, and then resold the loans to investors
with triple-A (AAA) rating, the highest grade you can get. The banks themselves were not investing in subprime mortgages.

They make money when they are able to sell these products and earn a commission. They were playing with OPM. At times, the repackaged loans were incredibly complex. Many investors underestimated the risk that came with these triple-A-rated loans and suffered huge losses when the recession arrived. Not only were some of these bankers peddling products with grossly misaligned interests, they themselves did not understand how to properly analyze these toxic “investment” vehicles. Be careful when entrusting your money to the experts’
advice and their sophisticated products!

The Wall Street Journal and USA Today bestselling book “The Ten Commandments of Investing” dives deep you can learn from The Perfect Husband. You can grab your own copy here.