Follow the Money

Hedge funds per CarlHal Holbrook had a wonderful supporting role in the Watergate saga All the President’s Men, a 1976 Alan J. Pakula film based upon the book of that name by Pulitzer Prize winning reporters Bob Woodward and Carl Bernstein of The Washington Post. Holbrook played the conflicted, chain-smoking, trench-coated, shadowy source known only as “Deep Throat” (over 30 years later revealed to have been senior FBI-man Mark Felt). Woodward’s meeting with his source when the investigation had bogged down is a terrific scene.

Sadly, Holbrook’s iconic line – “Follow the money” – was never spoken in real life and doesn’t appear in the book or in any Watergate reporting. Still, Woodward insists that the quote captures the essence of what Felt was telling him. “It all condensed down to that,” Woodward says. More importantly, it provides a profound truth. Indeed, when asked 25 years later on ”Meet the Press” what the lasting legacy of Watergate was, legendary Post editor Ben Bradlee replied with the words of screenwriter William Goldman, if not Mark Felt: ”Follow the money.” It provides good guidance for reporters generally and really good guidance when one is looking at the financial advice business.

With this important touchstone at the forefront, it’s crucial to recall that the financial advice business generally builds products and portfolios for marketing purposes rather than investment purposes. For the industry as a whole, “results” relate to sales far more than to what investor-clients end up getting. Accordingly, the idea is to play to people’s hopes, fears and prejudices rather than speak the (less marketable) truth. Moreover, if something can be positioned as new, novel or complex — and thus offering a plausible justification for a high fee — so much the better.
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“The Americans” teaches confirmation bias

The AmericansThe Americans, the 1980s Cold War spy drama from FX about two Soviet spys living as Americans in suburban Washington, DC, is the best show on television, even if not a lot of people are watching. Of course, what it is really about is life, family, and the intersection of role-play and reality to each. As Emily Nussbaum of The New Yorker explains, it’s “a show about human personality as a cruel performance, even (and sometimes especially) with the people we claim to love. It’s about marriage as much as it is about politics.” In any event, on a recent episode, the FBI agent played by Noah Emmerich is asked about his backstory — three years undercover with white supremacists — by another agent.

“What did it take to fool them?”

“Telling them what they wanted to hear over and over and over again.”

“That’s it?”

“People love hearing how right they are.”

People love hearing how right they are

How right he is.

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