“ It’s claimed that the people who got rich in the California gold rush in 1849 were the people who sold tools to the miners. Apparently 94% of the gold miners failed to find any gold, approximately 4% of the gold miners found some gold, but barely managed to make a living from it and less than 1% found enough gold to get rich. In contrast many of the non-gold miners, became rich by selling the picks, shovels and tools the gold miners needed in order to prospect for and mine gold. I suspect a fair few made their fortunes selling food and alcohol to the miners too.”
I decided to find out more about the California Gold Rush that took place in 1849 so I googled Wikipedia and read the following
“ The California Gold Rush (1848–1855) began on January 24, 1848, when gold was discovered by James Wilson Marshall at Sutter's Mill, in Coloma, California.[1] News of the discovery soon spread, resulting in some 300,000 men, women, and children coming to California from the rest of the United States and abroad.[2] Of the 300,000, approximately 150,000 arrived by sea while the remaining 150,000 arrived by land.Please note that
These early gold-seekers, called "forty-niners," (as a reference to 1849) traveled to California by sailing boat and in covered wagons across the continent, often facing substantial hardships on the trip. While most of the newly-arrived were Americans, the Gold Rush attracted tens of thousands from Latin America, Europe, Australia, and Asia. At first, the prospectors retrieved the gold from streams and riverbeds using simple techniques, such as panning. More sophisticated methods of gold recovery developed which were later adopted around the world. At its peak, technological advances reached a point where significant financing was required - increasing the proportion of corporate to individual miners. Gold, worth billions of today's dollars, was recovered, which led to great wealth for a few. However, many returned home with little more than they started with.”
“ gold worth billions of today’s dollars was recovered which led to great wealth for a few. However, many returned home with little more than they started with”Do you find it strange that of all those people who immigrated to California to change their fortunes, only a handful of people actually striked it rich, the rest went even more broke than they had actually been before even they went to California. Actually it is claimed that the people who became rich from this were the people selling digging tools to the miners.
Lets look at a few local similar incidents that have taken place in Kenya
1.The so called “ Pyramid schemes”e.g DECI
When Kenyans heard of how easy & fast they could make money with the newly introduced investment schemes without much effort, many people rushed to join the schemes without caution. They did not know that they were actually being swindled. By the time they got to know that they were being conned, it was already too late. There were people who lost all their money to those fraudulent schemes e.g savings, Pensions, retirement benefits while others had even taken loans.
2.The Sachangwan Fuel Tanker Tragedy
When the Fuel Tanker transporting highly inflammable cargo i.e Petrol overturned at Sachangwan, people rushed to scoop the free fuel so that they could sell probably to other motorists. Despite the people knowing the serious deathly risks associated with such activities, they ignored that fact coz of the thought of selling the free fuel to make fast cash easily. When the Fuel Tanker exploded hundreds lost their lives while others got serious burns & injuries.
3.The Safaricom I.P.O
When the Safaricom I.P.O took place, many Kenyans thought that they could speculate & make a kill from the I.P.O. Many people flocked their stock brokerage offices to purchase the shares. Generally the people’s plot was to offload Safaricom's shares at a higher price after they were listed in the Nairobi Stock Exchange. People even borrowed money to purchase the shares me included (I took a salary advance from work but now I am wiser) We all know what happened as we keep complaining about it. The share price right now is way below the price we purchased it at.
Now the reason why people did not succeed to make it rich in this incidents I have mentioned in this post is because of GREED. In our quests to become happy,wealthy and successful individuals, then let us not be greedy to become rich overnight. Money does not grow on trees we have to toil legitimately for it so that we may enjoy the fruits of our labour peacefully.
Finally WHEN THE DEAL SEEMS TO GOOD TO BE REA. THINK TWICE ABOUT IT.
2 Responses to “WHEN THE DEAL IS TOO SWEET TO BE TRUE, INDEED THINK TWICE”
everybody will always rememeber the safaricom IPO as the most infamous of share floatations. What i am wondering is whether there are investors that made a substantial amount of cash from the IPO, i mean apart from the brokerage houses and the investment banks. I recently finished reading a book called the intelligent investor and the author says that a value investor who knows what he is doing would not touch an IPO with a ten foot pole unless after a lot of analysis of the fundamentals of the business finds it very strong and further more finds that the shares are selling for much less than the calculated book value. He said around 60 BELOW PAR. He said that with this and other stringent measures, the value investor would pass up most IPOs and if he were to find one that fits all the requirements, the measures would greatly reduce his risk for loss and not to mention a wide margin of safety. While at the time of the offering i was not in a position to buy the shares(thank God), i know of a million people that lost a lot of cash in it and the thing i learnt is never to get into an investment if you do not know everything there is to know about it. So my new game plan is to get as educated as i can in the way of stocks, bonds and mutual funds and any other type of investing before i get any more cash into any investment. I have also decided to take a value approach to investing since i am young and impressionable enough to change my mentalities to better ones :)
Kenyantykoon.
I will do a post about your comment. There are some lessons to learn from this.
Post a Comment