ADVERTISEMENT

ADVERTISEMENT

It's no way to do business

To the Telegram: Many years ago my father stopped at a local store for groceries. The merchant had just received a new supply of peaches; the merchant was selling them in crates. The merchant had one crate open (top was removed) and on display. M...

To the Telegram:

Many years ago my father stopped at a local store for groceries. The merchant had just received a new supply of peaches; the merchant was selling them in crates.

The merchant had one crate open (top was removed) and on display. My father looked through all the crates and discovered that the one on display was the best crate of the lot. So, my father put the cover back on the crate and proceeded to the check out.

The merchant intercepted my father before he checked out and grabbed the crate out of the cart. The merchant's response was, "you can't buy that one." Of course, a confrontation ensued and in the end my father left the store without peaches; and other items too.

So why wouldn't the merchant sell that one crate of peaches that was on display. Yup, you guessed it; it was loaded up with the best peaches available. The display crate was presented to be a representation of what the other crates would contain. Of course, nothing was further from the truth.

ADVERTISEMENT

So now we have a Wall Street firm that put together a portfolio of securities (peaches) and presented it as a good investment. However, rather than load up the portfolio with the best securities they put many of the highest risk securities into the crate. Next the firm relied on their reputation as a trustworthy financial concern and offered the crate for sale. At the same time, the firm took a position (a hedge) against the portfolio. It's the same thing that farmers do when they enter the futures market. They hedge their bets. It's just smart business.

Now, I know just enough about Wall Street to be dangerous. However I ask you, would you do business with someone who displays a great looking crate of peaches (securities) and then tries to sell you one that isn't so great? I would not!

If this country continues down the path of lowering ethics and integrity; then God helps us all. Maybe it's time to return to the super market and convert all your investments into canned goods. Invest wisely! To quote Thomas Tusser, "A fool and his money are soon parted."

Chuck Pleski,

Foxboro

What To Read Next