I’ll Flip You For It

In 1980 one of my neighbors was a senior vice-president at Dominion Securities. He told me a story about how some people understand neither the stock market nor what stock brokers do.

On a Monday morning a young woman appears in his downtown Toronto office and says she has $200 and she would like him to invest it so she can come back on Thursday and have $400.

Being a curious and pleasant man, he asks her how she came to decide on this goal.

“I want to buy a sports jacket for my husband’s birthday on Friday.  It costs $400 and I only have $200.”

It appears that she may have not fully understood transaction costs, reasonable investment yields, and long-term planning.

If you were he, what would you have done?

My friend’s reply:

“I will make you the fairest offer you will get on Bay Street today.  I’ll flip you for the $200.”

I wonder if much has changed since.  With all the talk about financial literacy, it would be interesting to know what people expect the entry behaviour of the prospective students to be.

Don Shaughnessy is a retired partner in an international accounting firm and is presently with The Protectors Group, a large personal insurance, employee benefits and investment agency in Peterborough Ontario.

don@moneyfyi.com  |  Twitter @DonShaughnessy  |  Follow by email at moneyFYI

One Comment on “I’ll Flip You For It

  1. With that kind of threshold, it would be “heads I win, tails you loose.”
    Like the stupidity rating in life insurance…..

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.

%d bloggers like this: