Follow the Money! Isn’t it just Common Sense?
There’s a very easy way to sort through all the clutter and noise these days, whether from flickering ads or news snippets, investment advice or technology choices. In the spirit of sharing my passion for making the business of life more understandable, I’ll let you in on my secret—one that has helped me succeed, both professionally and personally.
Follow the money. It’s as easy as that most of the time.
Admittedly, the money trail may challenge even the savviest Sherlock Holmes among us, but that should tell you something, too. If the true nature of the transaction isn’t transparent, you should be very, very suspicious. Let’s look at a few examples.
“Free public Wi-Fi” is anything but. Private companies pay for the network backbone and equipment to run it. Governments, in turn, provide tax subsidies and/or other favorable treatments for said companies, which ultimately means your sales, property and income tax dollars indirectly pay for your “free” use. So, really not free at all—just hidden.
The same goes for “net neutrality” which, for some unknown reason, has come to mean “free internet service” instead of a fair way to pay for an uneven traffic load from some users without compromising the integrity of the network for us all.
“Buy this stock!” screams the headline. Who’s giving you this advice? A columnist trying to attract you to read the whole story so he’ll get paid for an ad click? A Wall Street analyst selling the idea in hopes you’ll bid up the stock price? Your broker, wanting to make commission on your trade? Really, do any of these people have your best interests in mind, or their own?
The marketplace of stocks is no different from your local farmer’s market at the very basic level. Do you buy every piece of fruit offered to you? Sample veggies that look questionable? Or do you wait until the end of the day and negotiate bargains from vendors staring at excess produce? The basic concepts of supply and demand apply to ideas, money, and products.
Look at the trajectory of a typical IPO, cryptically labeled a “liquidity event.” The company’s owners and their bankers want your money so they can make their stock “liquid,” by converting it to cash for their business (and to pay their bankers a hefty percentage of the total proceeds from the IPO). Those privy to pre-IPO shares will almost always cash out—after you buy in, of course. Best to wait, and buy low to later sell higher. That’s what the pros do. If they can’t get their hands on pre-IPO shares, they delay until the stock settles back down to earth, months or more after the IPO.
“Free eBooks from the library” may cost you your reading history, if you use an Amazon Kindle. Apparently, Amazon feels they have a right to capture which eBook you check out from your local library, even though many libraries have made it clear they will not keep borrowing records on file to protect freedom of ideas. So why does Amazon get involved after you’ve purchased their device? Presumably, because they find value in knowing which books are “popular” by library patrons around the country, and may use that information later to set the retail price, or negotiate with a publisher. How much is your privacy worth?
There are a few questions to ask in order to understand any situation involving money. They are:
• Who is paying out and receiving the money for the service or product? Everything costs something, including political favors and preferential media coverage. Money really doesn’t grow on trees.
• What are their motivations, and do they match yours? Before you put your money into something, make sure it is also worth your time and name, because these days, they are all interconnected.
• When will the money be earned for that transaction? Sooner or later? There is a time-value of money, so if someone is using yours for too long, he should pay you for that privilege. Who gives out interest-free loans without a catch?
• If it comes to negotiations, who controls the money? That generally carries more power.
Bottom line: Is there a transparent and fair swap of value for value in your transaction or business relationship? If not, run for the hills, with your money stashed in your own wallet. Otherwise, it will certainly end up in the other guy’s.
(This article originally appeared on Balcony 7 Media & Publishing’s SaucyJaw.com)