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Don’t Believe the Hype

June 11, 2009 | My Ramblings | 1 Comment

Want to make a lot of money? One good way is to convince people that you have a fail-safe secret plan on how to make money.  Tell them that for a few hundred or thousand dollars you can teach them how to “easily” make money in real estate, network marketing, affiliate marketing, the stock market, the Internet, etc. with just a few hours per day of work.  In your advertisement show pictures of yourself sitting in an expensive car, on a yacht, before a mansion, with beautiful people around a pool and with you holding up a check with a huge amount of money!  You’ll persuade a lot of people to buy your services.   On the other hand, the savvy consumer will not buy into the hype and will first do some research.  They may then be surprised to find out that the get-rich-marketer doesn’t own the car, yacht or mansion.  The check maybe legitimate, but it’s deceiving because the get-rich-marketer doesn’t reveal how he really made the money.  

Training Seminar Hype
The reality is most training seminars are fraudulent, deceiving, or just not worth the money.  Many get-rich-marketers don’t tell you the full story about what they are selling.  For every 1 person that maybe successful, 1,000 will fail.  However, the 1 successful person will be shown as proof that their system works.  The reality also it that most of the information get-rich-marketers try to sell you can be found on the Internet for free or in books at the library and/or book store.  Get-rich-marketers know that when it comes to money, people get emotional, so they can be easily convinced to sign-up and spend their money.

There are stories about get-rich-marketers advertising their classes by showing a big check from an affiliate company.  When people see the image of a $96,000 check they immediately think to themselves, “This guy must know what he’s doing.  I’m buying whatever he’s selling.”  Who wouldn’t want a $96,000 check?  Well, in reality the $96,000 check was gained by spending $120,000.  Here is how it works. The get-rich-marketer advertises an item on Google where he will receive a commission for each sale made at an affiliate website.  This is called affiliate marketing (read more here).  However, for ever $1 spent on advertising he makes $0.80 in commission.  So he loses $0.20 per $1 advertised.  That’s okay because he plans on making his money back later.  So when he spends $120,000 he makes $96,000 in commissions with a loss of $24,000.  He then creates a training class with books and videos (that he may outsource) and sells the training class for $99.99.  As proof he the show’s off the big check.  People seeing the $96,000 check are impressed and quickly sign-up with their credit cards.  Within a few days the get-rich-marketer sells a million dollars worth of training classes and laughs all the way to the bank!

CEO Hype
Over the years I’ve watched the financial markets, which include watching interviews with CEOs. As a result, I’ve come to the conclusion that many CEOs are deceitful or outright liars.  Most are salesmen who focus on telling you the positives while hiding the negatives about their companies.  After all they don’t want their company stock prices affected by negative news, which will affect their bonus.  I’ve watched CEOs tell the public that the future of their company is bright and that things are going well only to then release horrible earnings results a few weeks later.  I’m certain if you researched CEO statements for many of the companies currently in trouble (Countrywide, GM, AIG, Citigroup, etc.), you will hear the CEOs giving glowing statements about their companies.  Remember WorldComm and Enron?  Their CEOs got in trouble for misleading investors with their hype. Never buy a stock based on the CEO statements!  Let the company’s financial statements and market research do the talking for you!

Revenue Hype
Have you ever read magazines articles about entrepreneurs who launch companies that have revenues in the millions?  You may have thought to yourself, “Wow, that’s great.  This guy must be rich.”  Well, not so fast.  Revenues mean very little in giving you a complete picture of a company’s financial health.   Most magazines will not even state if the company is profitable or not.  To get a good feel of how a company is doing, you need to know at least their cash flow, net income and debt.  

There are many companies with revenues in the millions or billions (GM and Chrysler are examples) who go bankrupt.  The next time you read an article about some young guy who started a company with revenues of $10 million dollars, don’t be envious, jealous or impressed because it maybe just hype.  You really don’t know the full story.  You may look closer and realize that the company spent $12 million to make $10 million in sales and the company only has enough cash to last 6 additional months.  At night the owner is up sleepless, worrying about his company going bankrupt.  Most of these new companies you read about will not exist 5 years from now!

Lifestyle Hype
Never envy a man who drives a big car, lives in a big house or have a big job.  You may look closer and realize that you would never do what he did to attain these items or do what he’s doing to maintain them. You may realize that he’s working 80 hours per week in a very stressful job.  He may travel a lot and as a result is never home to spend time with his family.  His wife may be unhappy and is threatening divorce.  I know of people who make a lot of money, but when I ask them about their jobs, I realize that I’d rather make less and have more free time and less stress.  For me the hours worked isn’t worth the money!  The reality is that more money and “stuff” will not make you happy!  After a while the “stuff” looses its appeal.  Have you ever purchased a new car and it felt great, and in a few months the car looses its appeal and it’s just a car?  

Career Hype
I’ve seen many people get better paying jobs or promotions only to have it backfire on them.  I’ve had friends and co-workers who took new jobs, which sometimes required relocating, only to regret it and end up quitting.  The job ended up not being what they expected.  Sure they were making more money, but now they were working more hours, had conflicts with the new boss, hated the new city they relocated to or the job was very boring and not challenging.  

I’ve learned to not always believe the hype.  There are advantages and disadvantages to pretty much every situation.  Before getting emotional about making more money, take a step back and think about it rationally.  Do your research and then proceed with caution.   Many times we as people will deeply desire something, but when we finally get it, we quickly realize it wasn’t worth the effort and that it didn’t make us happy.  So don’t always believe the hype!





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One Comment to “Don’t Believe the Hype”

  1. Rick Vaughn
    10:30 am on June 14th, 2009

    Awesome post!

    There is all kinds of “hype” out there. Many times when you make fast money it often leaves that much faster. Good Stuff!
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