Odds of getting rich quick

By DAVID MOON, Moon Capital Management, LLC
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 Chattanooga, authorities are looking for a self-proclaimed foreign guru expert who has disappeared, as has apparently millions in investor funds.

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, Ooltewah.

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.

Or is it?

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 10,000.

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 million.

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, too.

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 me?

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 quick.

David Moon is president of Moon Capital Management, a Knoxville-based investment management firm. This article originally appeared in the News Sentinel (Knoxville, TN).

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