1912: Gold and Glitter
What can the Polish teach us? Well quite a lot I’m sure (as can every culture). However, I’m referring to the current Amber Gold financial scandal that has rocked Poland. Long story short, lots of people invested lots of their money into a fund that appears to have invested into a single asset class – gold. As if that weren’t bad enough in itself (all your eggs in one basket) then matters seem to have been compounded by the fact that this was in fact a scam, another pyramid ponzi scheme, whereby the new invested money was used to pay out the original investors. This apparently fooled investors into believing that the scheme “worked” and that the double digit returns were as marketed “guaranteed”.
As some of the media rush to chastise the Polish for their lack of regulation, financial education etc, I cannot help but point out that “there but for the grace of God…” (and by this I am not implying that we are somehow “blessed” and other nations are not…) what I mean is that, put simply, we can all fall for this trap and frankly many do on a daily basis, its simply that the scam is a little better hidden.
These sort of financial products play into people’s fears about the uncertainty of investing, offering “guarantees” and suggesting that they are nothing to do with the stockmarket. To their huge credit the Polish regulator black-listed Amber Gold almost from its outset, but lacked the clout to close the company. I know several Polish people and am always struck by how hard they work. I mustn’t get into sweeping generalisms, but suffice to say I like Polish people.
So what can we learn? be very wary of anything that promises a guarantee. The only guarantee in life is death – and some would say that even that certainty is open to interpretation. It used to be said that there are only two certainties – death and taxes. We know the latter is not at all certain. Don’t put all your investments into one asset class (shares, property, gold, commodities, cash) history has taught the wisdom of diversification and those that suggest otherwise are not typical investors, but gamblers. As for the criminals like Marcin Plichta, one can only hope that justice will eventually prevail. As for the rest of us, well be guarded against believing what you want to believe and make sure that a proper assessment is conducted and don’t forget that a criminal rarely looks like a masked man carrying a bag with “swag” written on it. I cannot guarantee the translation, but try this in a translation site: wszystko, co się świeci, nie jest złotem.
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