I have many times over the past 30 years experienced first-hand the birth, growth and eventual demise of collective delusions, be it in investments, religion or diets.
It seems to me that these three areas of the human condition lend themselves to such a phenomenon. It appears that we all want to be rich, thin and go to heaven, maybe even in that order.
As an investment journalist at The Star in the early 1990s I witnessed first-hand this collective delusion when I attended some meetings of two notorious pyramid schemes, the one called the Rainbow Investment Club and the other the Newport Multi-Level marketing scheme.
If memory serves me correctly the one meeting took place at an upmarket hotel in Sandton, Johannesburg, and was attended by hundreds of people, all arriving with wads of cash to hand-over to these fast-talking salespeople.
It was all lights, music and glaring testimonials from the “first-movers” in these schemes. Greed was dripping from the chandeliers and I saw, first-hand, how suitcases of cash were driven away in swanky cars by the perpetrators of the scheme.
My articles on these schemes did not, as I naively thought, bring forth thanks and gratitude but rather opprobrium, it was met with vicious attacks, threats of lawsuits and even threats of a personal nature.
In the end, tens of millions of rands were whisked out of the country by the operators in suitcases.
The same happened when I wrote a column on the Krion Investment scheme in 2001, originally called the MP Finance, named after Marietjie Prinsloo, the master-brain behind the scheme. Virtually the whole of Vanderbijlpark was sucked up into this collective delusion; people were resigning from their jobs to get hold of some money to stick into the scheme, with disastrous results.
On the Monday morning after I wrote my report on MP Finance I arrived at my office to be confronted with a bewildered secretary. The phone was ringing off the hook. Once again, the callers were not thanking me for the exposure, but rather I was accused of ruining the scheme, a man of the devil and all other kinds of accusations flung my way.
It once again, allowed me an insight into the workings of collective delusions. I spoke to several of the callers, explaining my problems with the scheme, but it was as if I was talking to someone in a trance, drugged by their firm belief of reality.
The same scenario played out about ten years later when the Sharemax, Leaderguard and Picvest investment schemes were in full swing. Mass meetings were organised around the country which, I was reliably told, were opened by scripture and prayers. We all know how that is going to end: billions will be lost.
When the late Deon Basson, initially, and later forensic auditor Andre Prakke and myself started warning investors about these schemes, we encountered the same kind of reaction: denials, delusion and the ever-present threats of legal action.
Collective delusions are typified as the spontaneous, rapid spread of false or exaggerated beliefs within a population at large, temporarily affecting a particular region, culture or country.
With money people want to become rich overnight, with religion people want a guarantee of heaven and with diets people want to lose weight effortlessly and without sacrificing too much.
The world is full of examples of Ponzi schemes, religious fanaticism as well as
We are now, once again, witness to another example of collective delusion: the Banting diet popularised, once again, by Dr Tim Noakes and his fellow LCHF-priests.
CHF stands for low carbohydrate high fat, the acronym now commonly used to refer to the Noakes or Banting diet. According to the folklore being propagated William Banting was an 18th century undertaker who, on the advice of his doctor, went on a LCHF diet, lost several stones and stayed slim for the rest of his life. Or that is what we are led to believe.
Carbs are OUT, are the enemy and will send you to an early grave, is the war-cry of the Banters. IN is fat, the former forbidden fruit of anyone concerned with weight-loss.
Tell this to almost three billion people in India, China and most of the Far East who rely on cheap rice and noodles to get them through the day.
Hallelujah, says our meat- and fat-loving nation, piling on the lamb chops, boerewors and grass-fed sirloin steaks.
Meanwhile Noakes and his band of fellow worshippers are spreading the word, heartily endorsed by certain editors and media personalities. Think wildfire, then you know what I mean.
Any attempt at moderation by other experts in the field of nutrition are shot down in flames.
Long-standing three-hour lunch companions recoil in horror when you stuff your face with some of the piping hot Italian loaf put in the table, or even worse, you order pasta. Pasta! You are going to die, they almost shriek, as they gulp away at their cauliflower bread at R85 a loaf.
Banting restaurants are popping up everywhere. Menus are being rewritten all over the country. Testimonials about weight loss appear in You Magazine and the diet has even made it onto Sunday night television show Carte Blanche.
Pasta and bread sales have collapsed while the sale of organic and free range meat, at 40% more than the normal price, is soaring.
At some point, perhaps in less than a year, some sense of normalcy will re-appear.
It’s like some madness has gripped the nation’s meat eaters, or at least those who can afford it. I’ll bet it’s the same crowd, who until recently were worried about climate change and the ozone layer.
Does the Banting diet work? I’m perhaps not the right guy to ask, but I think people put on weight when they eat too much and exercise too little. Kilojoules in versus Kilojoules out. But that does not make for a best-selling book does it?
Magnus Heystek is investment strategist at Brenthurst Wealth. He can be reached at email@example.com for ideas and suggestions.