A grim saver converts to buying on impulse
On the days that bonuses were awarded, in the era of Enron, the local BMW and Porsche dealers would park luxury cars in front of the head offices in Houston. The idea was that as the freshly bonused executives emerged from the building, their heads swimming with how much money they had just been paid, they might snap up a 911 or an M5 on impulse.
The bankers around Hong Kong who were lucky enough to get bonuses this year are more likely to be in the market for a second-hand Toyota or perhaps a nice new scooter. And it doesn't look as if any of the local car dealers have much interest in helicoptering any reasonably priced automobiles into the promenade at Exchange Square.
But obviously, the idea that anyone would stroll past a nice car and decide that they ought to buy it seems rather ridiculous. With the world in a recession and people cutting back across the board, this sort of approach is surely nothing more than wishful thinking.
Wishful thinking or not, there is one group in Hong Kong that certainly believes that this technique works. And I'm not talking about the relatively minor purchase of a car. I was walking through the IFC mall yesterday and a young guy in a badly fitting suit with an armful of brochures asked me if I was interested in buying an apartment.
'Sure,' I said. 'There were two things I was hoping to do before going back to the office this lunchtime. I was hoping to get myself a sandwich and buy a multimillion-dollar apartment.'
'This building has excellent efficiency,' explained the salesman handing me a brochure and completely missing what I thought was the obvious sarcasm of my response. 'Parking space, three bedrooms, 1,200 square feet,' he went on.
'Does this sales technique actually work?' I asked, genuinely interested.
'Does it work? What do you mean?' he replied.
'Do people you approach at random in shopping malls actually buy apartments from you? How often do you actually sell apartments this way?'
Now this is where things got really weird. His answer was: 'Yes, we have sold a number of apartments in this building to people in this mall.'
Now, I'm not sure what 'we' meant in his answer, but even if it's the entire staff at the real estate agency he works for, it is still amazing. People do buy apartments on impulse while walking through shopping malls!
I'm not one of them. Having worked fairly hard to save up my money, I tend to think fairly carefully about spending it. This seems to me to be the sensible attitude, although I understand that it is not universally accepted.
For example, about 12 months ago I received my last decent bonus and at the same time so did a good friend and colleague of mine, Gary. My approach to the money was to look carefully at which investment classes seemed promising and invest the bonus in a variety of sensible assets. I created a well-considered portfolio of bonds and blue-chip stocks as well as some more speculative commodity investments and hedge funds.
Gary was horrified at this, and told me many times that I should enjoy the money I'd earned. And in a demonstration of what he meant, within a few days of receiving his bonus he had bought a Porsche 911, a huge flat-screen TV, a fantastic stereo and surround-sound audio-visual system and a very inviting collection of French wines.
I pointed out to him that he really ought to be more careful with his money, that there could be an economic downturn any time. I even suggested that he invest whatever cash he had left over after all of his impulse purchases in the stock market.
Luckily he didn't take my advice. If only I had taken his. During the 12 months since each of us made our purchases, Gary has been driving around in a flash car, playing Blu Ray DVDs in high-fidelity sound on his huge TV and drinking some great Bordeaux. I, on the other hand, have spent the whole year sadly watching my investment portfolio lose most of its value. Neither of us has much cash left, but only one of us has developed a borderline case of depression.
So I'm determined to change my ways. I might not have much money any more, but what I do have I'm determined to blow on impulse.
