Good Greed And Bad Greed

In the corporate world, it is good to have some amount of greed. It is a source of motivation to aspire and perform better.

The greed to earn enough money to be able to live comfortably and not be bogged down by simple day-to-day and monthly expenses is good to drive creativity and innovation.

But when one starts to become obsessed with accumulating wealth at the expense of not being able to enjoy the fruits of labour, then the greed turns bad. Initially, bad greed drives better performance.

Eventually, however, it tends to have a huge impact on the personal lives of individuals. Extreme greed can damage the careers of individuals and their lives.

Companies tend to go down the drain if a person of extreme greed manages it. We have seen countless examples in corporate Malaysia. The high and mighty eventually fall when they try to take on more than they can chew.

In the aftermath of the 1997/98 economic crisis that saw the meltdown of the local stock market, more than 100 listed companies needed to be restructured or delisted. Audit investigations into most of these companies revealed that the owners had bought assets such as land and property at inflated prices.

Risk management was thrown aside. Accumulation became the focal point, as their vision was blurred by sheer bad greed.

In the current economic slowdown, individuals who have amassed several properties in search of wealth are feeling the heat. Most affected are those who had bought high-end condominiums in prime areas hoping to make a bounty from the resale of the property or the collection of rent.

Prices have come down and so have rental rates. In most instances, rental rates are not enough to cover the monthly loan payments. The owners, in reality, are subsidising the tenant. Ask any property agent in town and they will tell you that owners are only waiting to dispose of their high-end units as long as they don’t make a loss.

Bad greed in most instances is due to the excessive accumulation of assets. It comes to the point when there is no real sense of reality on what the value of assets would fetch in future.

Now, there is another class of greed – foolish greed. Foolish greed takes the cake because there are no assets involved.

Foolish greed is when people are motivated by hope, sheer trust and dreams of super returns on their investments. The dreams are in most cases shattered.

Foolish greed is what is prompting thousands to put their money in so-called investment schemes that promise lofty returns. In some instances, there is a guarantee involved.

In the past, thousands of investors had lost their savings in gold and forex schemes. The schemes promised lofty returns, but in reality, nobody knows for sure if the books are well-managed.

In the case of Genneva Gold, when the offices were raided and the books seized, the amount the company owed investors was more than the assets it owned.

The latest set of investors to lose their savings are the people who had put their money in the JJ Poor-to-Rich (JJPTR) scheme.

Ironically, the police have so far only received one report when the scheme is said to have collected hundreds of millions. So, the hundreds and thousands of investors are just hoping that without lodging a report, they would be able to recoup the money.

In reality, the chances are almost nil!

Investors of Genneva Gold are still waiting for their money, and so are the investors in many other schemes that had offered lucrative returns.

It is perplexing how people can put their hard-earned money into investment schemes without thinking for a minute how the company is generating the super returns.

Don’t any of these investors sit back and think that even the best of funds or money managers in the world are not able to give a return of more than 10% per annum consistently?

If the schemes were so good, then why would the promoters want to share their hefty gains of more than 20% per month with others?

Even illegal money-lending or better known as “Ah Long” activities cannot promise returns of more than 15% per month because sometimes, defaulters can go missing.

The stock market occasionally gives returns of more than 20% per annum, but it involves a lot of homework in selecting the correct stock and patience of up to five or sometimes 10 years. And there are no guarantees.

Greed is a complex feeling. It is an emotion that is good when one has small amounts of it. It turns bad when it becomes an obsession.

However, when one becomes blind and overwhelmed by promises of super returns, it is sheer foolish greed. Those who are ruled by foolish greed have only themselves to blame for their losses and not even the central bank.