The headline in today’s Wall Street Journal (December 20, 2010) is, “Auditors Face Fraud Charges.” It seems that New York State is ready to file fraud charges against Ernst & Young for their role in misleading investors in the Lehman Brothers scandal.
Over the last couple years a few of my friends and I have had discussions about the fact that no matter what we do investment wise, we are dealing with “dumb” money. The stocks, bonds and funds that we buy and sell are what’s left after what I hate to call smart money as it probably should be called “dishonest” money. The above is just another example of this.
And it’s not just the stock market. There’s insider information trading hands in real estate, commodities and other areas. It would be nice if all of these people subscribed to Rotary International’s Four-Way Test that starts out with, “Is it the truth?” I’m guessing, no, I know, we’d have a lot fewer problems in these areas if more people subscribed to a code of ethics.
So what’s the alternative? For those with the right skills and aptitude it may to own your own business. If you’ve got an idea and energy, start one. If you have management and leadership skills and capital, buy one (a mature, profitable business). If you’re in the middle and perhaps need some help on the business operations side, a franchise may be right for you.
There are really only two ways to build wealth with a business. One is to build a company with infrastructure, employees, etc. and sell it. The other is to maximize income because selling it is not going to get you rich. In either event, you control your destiny. In this way you really have “smart” money!