Saturday, May 06, 2017

Fear-based selling

There's a lot of fear out there. Everytime you switch on the news, out of 10 news, perhaps 8 are bad news. Maybe some air plane crashed, some terrorist attacks somewhere, some murders elsewhere. Then comes the commercial interval selling things. It's known that fear can trigger emotional buys (for certain items), so is this the way to pre-suade consumers to part with their money?

A typical example would be that of a insurance agent. The sales pitch is that you don't know when you're going to die, and there'll be huge medical costs, and you must be responsible for your family and so on. That's fear based selling. It can be for a tutor too. Oh, your child is going to fail his O'lvls because his foundation is so weak. There's only 4 months to the major exams and he's so weak in his foundation, so do you want to increase the number of lessons during June? Fear based selling. How about a furniture seller? This special promotion is only valid until today, if not it'll revert back to the original price which is 20% more than the current. Oh, this is the last piece left, and someone just called me to ask me about it. Do you want me to reserve it for you (by paying a deposit) so that the other caller don't be able to have it?

Fear sells. But it leaves a bad taste in the consumer's mouth after buying it.

In the stock market, there's also fear based advice. This stock is going to run if you don't get this. Or I've a whatsapp group that offers great advice for people because there are so many people in there with eyes on the market 24/7, and I'm offering you at this great price for only a limited period of time. Everyone is making big bucks in the chatgroup, so why don't you join? Fear of missing out is also a fear based selling.

As STI marches past 3200 and still moving upwards, beware of more and more people doing fear based selling for all sorts of things. If memory serves me right, in the last major bull run, there are a lot of gurus offering crazy returns by attending this workshop and that, a lot of cheating incidents and a lot of funny ways to make crazy returns in oil, land banking, crabs, trees or what have you. You see it everyday in the newspaper, sometimes with ads like these taking up a quarter of the page. You don't see such things when the market is depressed.

Look at this piece of news back in 2007 here. It talks about university undergraduate making huge money in the stock market, so they are chasing grades and trades. Or this one, also in 2007, here (courtesy of musicwhiz). This one is a memorable case study of a student who made up to 80k per month trading in the height of the bull run. Just a few months later, he lost all and more, including his parent's life savings of 300k. I just want readers to be aware of such emotional battles. When people are making huge money and you have a lot of cash rotting in the bank, are you able to withstand the pressure and all the fear based selling and NOT commit to mistakes?


CreateWealth8888 said...

The other end is Greed selling

temperament said...

In the stock markets, people sell FEAR and buy Greed

A person who can,"Buy Fear, Sell Greed: A Simple Phrase to Make Money"

Another words a contradictator in the stock market usually makes money.

Incidently last week, i just kenna from a young sale lady tryingto use the fear tatics on me:-

"This is the last piece on offer, you know".

"Oh really" - me in a tone she could feel i understood her fear tatics.

Ha! Ha!

"Old dog maybe can't learn new tricks but can recognise any old tricks one.

Actually it doesn't matter; if i like the unit i will buy regardless.

Anonymous said...

Fear of losing and fear of losing out (greed).

I have a cousin who apparently has made a habit of saving 90% of the time and only buying stocks and properties during recessions. His main buying activities happened during 1997-1998, 2001-2003 and 2009. However he also seems to have some personality defect e.g. bad at social interaction, poor EQ, emotionless, etc etc. Not a very nice person to be with, and anyway almost never join in family gatherings or CNY. I remember Warren Buffet saying he was also bad socially in his younger days, but made efforts to improve & also helped greatly by his wife. I wonder if such personality / emotional "defects" actually help in making astute investing decisions???

la papillion said...

Hi bro8888,

Now that you mentioned it, it seems fear of missing out is actually greed at play haha! So they are intertwined in many ways, this ballet between greed and fear!

la papillion said...

Hi temperament,

That 'last piece' trick works pretty well for my wife though! She is likely to buy things because it's the last piece. I guess if we rationalise why, it's because firstly this shows that the item is high popular. Secondly, this means that the item is going to run out soon so that's fear in missing out too. If there's 10 pieces left, going to 9 pieces, the feeling is different from 1 piece left, going to zero. Once it reaches 0, it's really no more.

I should know more...I use some of these tricks myself lol

la papillion said...

Hi anonymous,

I know what you mean...I've seen pple with 'personality defects' being very good at certain things. Maybe they don't follow the crowd and hence are able to think outside of the box. Who knows? That being said, I'm not sure if your cousin is made richer by his unqiue exploits of the market or made poorer because he can't connect well with people.

temperament said...

You are right to a certain extend.
But only to a certain extend.

A person who feel uncomfortable to be a loner in a crowd when he has to be, shouldn't be in the stock market.

A loner in a crowd will usually makes good friend with another loner in the crowd.

Never a good friend to a Herd.

But can be just one of the Herd too, on special occasion.

Especially when he had no choice.

Like once caught in a foot-ball crowd's stampede, trying to gate crashed National stadium.

Go with the flow (forward & backward & vice versa) of the stampede or got stamp lol!

And finally gate-crashed lol into the stadium.

Do you think there is really a lot of difference in investing in the stock market?

Or for that matter, living life itself?

Singapore Man of Leisure said...


Right after this post, we got an insurance website coming out with a post on Shield Plans.

Classic fear tactic.

And twist the bayonet some more...

Don't buy you not smart!


It makes me wonder. Who watches a TV channel with only commercials?


Home shopping TV channel!!!

Yup, that's their target audience.