Consumerism: how we get trapped

I have had a realization as I spend my money (hard earned?) on things like Pizzas and movies on really what keeps the world going around. Its the fact that nine out of ten people on the planet are thinking about ways to make you part with our money with our own consent.

All the wisdom throughout the ages have today ended up into a strategy which makes each and every one of us part with our moolah. One wisdom that I heard on convincing anybody was to make the person "feel" empowered. Just make him feel that he is doing the right thing or rather the smart thing.

The best form  of marketing thus is to make a person believe he is a winner when in actuality the case is that he you are making him/her buy something he/her does not actually need.

Another wisdom is a theory on guilt augmentation. Whenever a person feels guilty he will "invent" reasons on why he did it. The reason may be lame but he will do it in order to sleep peacefully. So a good marketeer simply needs to give a consumer excuses to avoid guilt and he will buy whatever you sell him.

Buying in itself demands that a consumer spends two different assets- time and money. Think about it as consumers these are the only two assets that we as consumers have and nothing else. Interestingly people only want our money they don't want our time.

The traps in order of lesser to bigger evils:

1. The first trap laid was Debit cards- withdraw cash from ATMs anytime you want- No need to stand in queues of bank- get your cash soon and spend it soon.
2. Second trap- Direct shopping through debit card- Don't withdraw cash we will do it for you and pocket it neatly.
3. Third trap- Credit cards- Spend now pay later- We take your future money. Since its money in future only don't feel guilty about it now.
4. Fourth trap-Online Shopping- Sit at home and while enjoying the comfort of your own making spend money on my products. Since you are not putting too much effort please go through a whole lot of useless catalogs and spend money on things you don't need
5. Final trap: Reward points- Get rewarded for your shopping- I am taking your money but you should feel good because I am rewarding you (insignificantly- 0.007% of your spend)

All these traps make you feel smart, alleviate guilt and save time. You end up spending more and most probably on things you don't need.

Best way of saving money- Go to a bank withdraw cash and commit to not spending more than that. Food for thought.

Disclaimer: The author of the above piece is definitely never going to follow his own advice and keep wasting his much loved earnings.



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A company= Goose that lays Golden eggs

This post will be a digression from my previous posts. Just that my recent passion for stock markets has made me think about what a company means to an investor. So my analogy is this- A company is like a goose that lays golden eggs. The analogy goes like this:

A goose (company) is typically reared (managed) by a farmer who takes care of it day to day. The goose requires to mate with other gander (customers) in order to lay golden eggs(Profits). To lay good eggs the goose should be healthy (Healthy company-operationally) and attractive (marketing/positioning). In order to ensure the same the farmer has to keep the goose in best condition through regular supply of fodder (working capital) and other upkeep(governance, processes etc.) to keep it attractive and healthy (day to day management). Also the gander are pretty finicky and unfaithful. The gander easily get bored and are ready to move to new goose(competitors) in the vicinity. To remain attractive the goose needs to stay healthy, take on new look (restructuring)etc. Goose may even find new ways to attract Gander (diversification). All this is a heavy task for the farmer and he needs money.

So to raise his goose the farmer can either borrow money (debt) or raise money by selling ownership of goose (equity). So a farmer goes to other people (investors) and says that he is willing to forgo a fraction of his future earnings to someone provided he gets reasonable money for it. Now these other people are supposed to make an assessment of the number of future golden eggs they can get and value the price they should pay (valuation).

This in short is my analogy of a company and the goose that lays golden eggs.

Zen master in Communicating through hollywood

I once incidentally saw a movie on HBO. (ohhh.... I love watching movies)-Charlie Wilson's war. Following is a dialogue in the last scene  of the movie


Gust Avrakotos: There's a little boy and on his 14th birthday he gets a horse... and everybody in the village says, "how wonderful. The boy got a horse" And the Zen master says, "we'll see." Two years later, the boy falls off the horse, breaks his leg, and everyone in the village says, "How terrible." And the Zen master says, "We'll see." Then, a war breaks out and all the young men have to go off and fight... except the boy can't cause his legs all messed up. and everybody in the village says, "How wonderful." 
Charlie Wilson: Now the Zen master says, "We'll see." 


Reference: http://www.imdb.com/title/tt0472062/quotes?qt0436729

Probably it may not sound so powerful while just reading it, however in the movie (based on US' covert support for Afghan rebels during Russian occupation) it is masterfully placed and conveys a very serious and thought provoking message.

Summary of the message was thus : You may think yourself to be doing good while in the end the result is f**ked up beyond recognition. Similarly you may be messing up and suddenly there is a heap of rewards in front of you.

I wouldn't go too much further in this post because probably zen master explains it the best.
Just  simple questions for you whenever something positive happens to you: What just happened was good? really? should i rejoice? or maybe should i not?

Probably this positive may lead to something not really positive or something real bad.

Similarly for every negative outcome: Is it bad? really? Should i be sad? or maybe not. This negative may lead to something positive which you might have not thought of before or considered possible.

In short be a little skeptic when good happens and little content when something bad happens. It is a natural course of life and what happens is how it is meant to be.