Recently I came across the story of the Wall Street shoe shine boy. A story of an event that happened a long time ago. It is such a shame I got to hear of it just recently. Anyway, it is better late than never.
It happened that one day a Wall Street mogul was having his shoes shined. Along the line, a casual conversation sparked off between this businessman and the boy who was cleaning up his shoes . Unexpectedly, the Shoe Shine Boy began to intelligently discuss various stocks and their potential to generate great profits.
At that very moment, the stock market was the hottest thing in town . Everyone from Cobblers to Gardeners to Plumbers to Taxi drivers were all thinking, talking, buying and selling stocks. They were all also giving tips. At that moment, he knew it was time to get out.
Mr. Joseph Kennedy immediately withdrew his investments from the Stock Market. Shortly afterwards, the Stock Market Crashed in 1929 . Everyone including Businessmen, Stock Brokers, Bankers and even Cooks, Taxi Drivers and Shoe Shine Boys, lost all they had put in. This culminated in the Great Depression which affected not just the United States, but the rest of the world.
It’s just about knowing when to get out many would say. The stock market and the ponzi scheme has got a few things in common, but hold on a second! I have never been involved in any ponzi scheme and would never advise anybody I know to join one. The similarities could be in the area where a crash looms the moment the “shoe shine boys” start getting in.
I remember the MMM crash of 2016, prior to the crash even people who were initially sceptical about the whole scheme had started putting in their money into the scheme. Bankers, the clergy, housewives, students, practically everyone now wanted to cash in and out of the new “miracle” money. The risk part was gone as people had seen others get paid over and over again. Then came the crash.
I could write down a few things as to what the red flags for a bad business could be as a result of the number of lessons this story holds.
- Once the obvious risks are gone, the business opportunity may also be gone. Every good business possesses some good risk.
- If you must take a business risk, take it very early.
- Watch out for the “shoe shine boys.”If every Tom, Dick and Harry are now getting into a business line, just know that that field may now be saturated.
- Pay attention to what you hear and observe.
- If a deal is too good to be true, then know that there are likely hidden heavy consequences.
In the end you have to be cautious before getting into any business deal, if really it’s a business. Gather enough information as you can, ask enough questions . You can also consult the experts in the field.
Experts are important, but it is also important to keep an eye on them.