Inadvertent Truth in Advertising

Some inadvertent truth in advertising from HSBC’s promotional magazine, Red and White (random font sizes and colours all sic, boldface added):

In life, there are always simple options.

For investments, there are also simple solutions.

It’s understandable that the world of investments may seem complicated at times. Good news is, just like everything else, there are always simple options. At HSBC, we offer solutions that are either simple to invest in or understand.

Apparently you can’t have both. And the empirical evidence supports HSBC’s lapsus calami:

Shares: simple to understand, but not simple to invest in;

First-to-default credit baskets securitised by a AA-rated CDO mezz tranche: not simple to understand, but very simple to invest in (even if you didn’t really want to).

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One Response to Inadvertent Truth in Advertising

  1. Tobe Freeman says:

    What a find! I just love bad corporate communications… They are sailing close to the wind with any kind of reference to Simple/not simple.
    I recall a brilliant lecture by Andrei Shleifer (Harvard University) presenting analysis of the composition of advertisements for financial products in the magazines Money and Business Week spanning the period of the dotcom bubble.
    The study considers the relationship between consumers’ pre-existing beliefs and advertising content. Shleifer’s hypothesis is that advertisements aim to foster positive associations between a product and existing beliefs while avoiding direct challenge to those beliefs.
    The analysis revealed support for this hypothesis. Shleifer finds that when the dotcom market began to falter, advertisements for growth funds become sparse and are replaced by advertisements for other kinds of financial products including bonds and other low-risk investments. Advertising content also shifts from growth themes to themes of protection. At the point when the market moves into decline, Shleifer shows that references to relative investment returns disappear; even for funds with positive performance! This indicates an avoidance of messages containing good news at a time when beliefs are likely to have shifted from a growth mentality to a mentality focused on protection.

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