Let me tell you a short story. There once was an insurance company named Peanuts. Peanuts existed for the “mutual”benefit of its customers, so everyone that purchased a policy was considered an owner. Policy holders were paid fairly in accordance with Peanuts’ commitments, and employees worked hard and were rewarded fairly for their efforts.

Then Peanuts hired Bob. Bob wanted to be paid more than any other Peanuts boss. Bob took Peanuts public in 2000, and then the policyholders no longer owned Peanuts. Peanuts began being sued almost overnight by its former “owners” for fraud, failure to pay death claims, breach of contract, etc. Bob succeeded in being paid more than any other Peanuts boss ever had. His job done, Bob retired and became the boss of another american insurance group. Now Bob’s even larger paycheck is paid by the US taxpayers.

Since Bob has left Peanuts, 3 other bosses have succeeded him (Rob, Steve & Bill). Rob, unwilling to earn less than Bob, laid off thousands of US workers. Rob moved the positions to
India for a third of the cost, and then Rob raised his own pay before retiring on an enlarged pension.

The new big boss, Steve, was unwilling to earn less than Rob had. So Steve mortgaged Peanuts heavily to purchase the international operations from another failed american insurance group (the same Company that Bob was now in charge of). After the purchase, Peanuts did not do so well during a stress test of its financial health. So Steve reorganized Peanuts so he would not have to be tested again.

Finally, Steve put Bill in charge of convincing the public that Peanuts was financially healthy. Bill wined and dined several influential hedge fund managers and investment “experts” so they would say how great Peanuts was. Maybe the author of this article had dinner with Bill. Bill was told if he did a good job that he would be the big boss when Steve retired (i.e. Bill wanted to earn at least as much as Steve had).

The moral of this story is simply this…..when you invest in Peanuts you may end up getting what you paid for.