By DAVID MOON, Moon Capital Management,
June 15, 2008
The Securities and Exchange
Commission accused the principals of a Knoxville financial company of using a
labyrinth of businesses to mask a fraud in which they misappropriated millions
of dollars of investors' money for their personal use.
A Knoxville man was
sentenced to three years in prison for lying to investors about millions of
dollars in losses.
Just down the road in
authorities are looking for a self-proclaimed foreign guru expert who has
disappeared, as has apparently millions in investor
These examples are from
the past month.
In each of these
situations people were attracted by the lure of fast, easy and extraordinary
'investment' returns. Folks thought they had found the holy grail of capital
allocation, a secret shared only by a select few in Knoxville and, perhaps,
Get-rich-quickly is a
concept many of us learned at a very young age. I regularly hear the parents of
elementary school children talk about the millions their little Michelle Wie or
Peyton Manning is going to make as a professional athlete.
Sure, Peyton makes $23
million a year, but the odds of playing football in college are small. Making it
to the NFL is an even steeper climb. Becoming the league's most popular player
is like winning the lottery.
There are 1,696 players
on the 32 NFL rosters. There are roughly 22 million males of football-playing
age. (We'll be politically incorrect and ignore girls.) Based on these simple
numbers, fewer than eight one thousandths of 1 percent of the age-eligible young
men in the U.S. are playing in the NFL. The odds
of being an NFL starting quarterback are less than 3 in
As tough as that sounds,
it's still better than the lottery. The Tennessee Lottery website reports that
the odds of winning a five-number Powerball jackpot are 1 in 146
That's almost bad enough
to make phony currency trading sound attractive.
All of these silly scams
' including lotteries and hoping that Junior will provide for your retirement by
winning Wimbledon ' are a function of jealousy,
short-term thinking and the suspension of basic common sense. We want it now. My
neighbor has it, and he has it right now. So I deserve to have it right now,
Besides, someone is
going to make a zillion dollars trading currencies (or win the Super Bowl or
find a wallet with $10 million on the sidewalk). Why shouldn't it be
There are more than nine
million millionaires in the U.S. Most of them got there by saving and investing
over a long period of time. It's a fairly simple formula, but not very sexy or
David Moon is president of Moon Capital Management, a
Knoxville-based investment management firm. This article
originally appeared in the News Sentinel (Knoxville, TN).