POM Wonderful: It Can Make You a Better Investor Too!
I first read about marketing wizard Lynda Resnick, the woman behind Fuji Water and POM Wonderful, a couple of years ago in The New Yorker. I was particularly struck by Resnick's efforts to find scientific evidence that she could use to promote the pomegranate juice in the "zaftig little bottle".
The 2008 article noted that at that time, Resnick and her husband had "spent $23 million looking at the effects of the pomegranate on conditions ranging from diabetes to erectile dysfunction, and have earmarked $7 million for future clinical trials." Two and a half years later, the Federal Trade Commission has sued POM Wonderful LLC for making "false and unsubstantiated claims" about treating or preventing heart disease, prostate cancer and erectile dysfunction.
This POM case reminded me of every hack investment pitch I've ever heard. Down deep, people know that the claims can't possibly be true, but many fall for the hope of "getting rich quick". Sure there are fraudsters like Madoff, but I'm talking about the more insidious nonsense peddled on late-night TV or online. Even Fox's Bill O'Reilly was duped!
Why do some investors still fall prey to these pitches? Because people want to believe that there's some sort of magic potion, some man behind the curtain who holds the key to mastering the markets. It sounds so much better than saying it takes time, energy and discipline to be an investor and even those don't guarantee success. Just as it would be easier to think that road to health can be found by drinking magic juice, instead of maintaining a good diet and sticking to your exercise program.
Whether it's pomegranate juice or investments, the catchy, too-good-to-be-true sales pitch should be your red flag.
Image by Flickr User richardmasoner, CC 2.0
