39 Fen End Lane.
Spalding, Lincs. PE12 6AD.
I mentioned in the first blog on marshmallows that I’d start introducing some ideas on behavioural finance. As a subject it can get quite complicated, but to start with I have two stories about shopping for trousers that will give you an idea of what the topic is all about – basically we’re not as rational as we, or some economists, like to think we are.
The first concerns a guy in the States looking to sell a pair of unused trousers on Ebay. The list title says it all, ‘DKNY Men’s Leather Pants I Unfortunately Own’. He bought them to impress a woman, but he never got the girl – just the trousers. As he puts it, ‘you either have to be very tough, very camp or very famous to wear these pants and get away with it’.
Very true. As I don’t match any of those criteria, I’ve never had a pair of leather trousers – but I have had an expensive Coogi jumper. It was bought some time ago as you can tell from the picture. I was shopping alone at the time and thought I’d look ‘cool’ in it – you know, the same way that some guys think that a yellow lining in their suit jacket is cool. Thankfully, my wife tactfully convinced me to wear it less and less until it was only brought out at Christmas….and come to think of it, I haven’t seen it in a long time.
The second trouser tale concerns a former London-based colleague. At the time of this unfortunate incident I was working in Tokyo and at the end of every day we’d have a conference call with our team in London. On this particular afternoon, this colleague, who we’ll call Bob – not his real name – called me before the call was due to start and sounded troubled. The conversation went something like this:
‘Chris, I had a bit of problem yesterday that I wanted to let you know about before the others get on the line for the conference call,’
‘Have you lost money on a trade?’
‘No, no trading error. I….er…made a bad mistake’
‘What have you done?’
‘I spilt something on my trousers and had to go and buy another pair at lunchtime.’
Now you might be thinking, what could go wrong?
He goes to Marks and Spencer, buys a new pair of grey trousers and returns to the office. I should point out that the office floor where he worked was open plan with about 100 traders and salespeople on it. It’s designed that way so that people can communicate really easily.
He puts his new trousers on. He’s pretty happy with his new purchase and stands up and says,
‘What do you think of these trousers? These new fashions are weird aren’t they – with the zip at the side and pockets at the back?’
Then, after a pause, one of the 100 said,
‘They’re women’s trousers!’
How, you ask, could a guy not notice he was in the women’s section at M&S, or that the labelling and sizing is completely different? But, it’s worse than that, there was another clue. He actually asked at the changing rooms if he could try them on and the lady attendant said, ‘No!.’
Perhaps, the person on the till could have saved him. While waiting to pay he apparently said, ‘these European sizes are strange aren’t they?’, but, alas, the lady serving him said nothing.
On the upside he does now know he’s a long leg size 12.
So there you have it: always, without emotion, check the label and if you’re not sure what it says, find someone who does.
This is particularly true in the world of retail investing, where the labels are becoming more difficult to read and there have been some notable fakes. There is a steady growth in ever more esoteric investment funds and products offering different specialities – everything from smart beta funds and etfs to structured products. And we wonder, especially in the case of the latter, whether most advisers even understand what the label says and what the product contains.
So, if you need the financial equivalent of a personal shopper, we’re here to help.
- past performance is no guide or guarantee of future returns;
- the value of stock market investments can rise and fall over time, so it is quite possible to get back less than what you put in, depending upon timing;
- if you’re a guy and put your shirt on and look down and the buttons are on the left, you’re wearing a blouse.