The art of avoiding apologising, even when you say sorry

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The recent slump of China's stock market has caught out a lot of fund managers, leading to some soul-searching and apologies from some of the most prominent money managers in the country. Among them is a private equity fund called Niufeng, which suffered a loss of 63% in just three months' time.

You would assume Niufeng's fund manager should feel a little humbled, admit its mistakes and make sincere apologies to its investors. Instead, the fund manage issued an open letter which doesn't sound apologetic at all. It turned out to be a very good example of how to apologise without really saying sorry. If you want to apologise and save face, here are some pointers.

1. Find some unlucky peers

The letter says: "We built up positions in early June, which happened to be very bad timing. But all the funds that built up positions at that time suffered a lot. Almost no one is exempt."

So, when you did badly, try to find as many others as possible who did equally as bad. Remind your audience that you too are a victim and are in good company.

2. Sound triumphant with (blind) optimism

The letter says: "We are confident that Niufeng is a wrong victim of the market rout. It will shoot up back in the same way it nose-dived."

There is no evidence or data or logic to back this up.  Never mind, there are always people who buy into this type of blind optimism.

3. Quote a big name

The letter cites George Soros's "uncertainty principle" to find excuses that no one could accurately predict where the stock market is going to.

Hang on, to be precise, Soros has never established anything like the "uncertainty principle". It is a concept from the quantum mechanics that dates back to the 1920s. But so what? Soros is a name too big to challenge. By aligning himself with Soros, the fund manager was effectively trying to take some pressure off himself. Even Soros couldn't predict the market, what do you want me to do?

4. Insist the investment is really right

The letter states the shares that the fund has bought are all those of high-quality companies. It also claims that the very reason why the fund didn't sell in the slump to cut loss is because of its long-term view as a value investor. "We feared that we might lose those high-quality companies if we did cut loss".

To the fund manager, it seems to be a good strategy trying to persuade the investors to hold a long-term view so as to divert their attention away from the key question of damage control. At the same time, try to convince that the companies it bought into are good ones. It would be stupid to part with these good companies just because of a short period of slump. Good luck with that.

5. Canonize the internet

The letter explains that the fund will keep focusing on companies in the internet and e-commerce sector.

Internet is a buzzword in today's China. When the whole nation is encouraged to show some entrepreneurship, and the easiest and quickest route to fame and wealth seems to be the internet, you may imagine some investors may let off the fund manager this time for getting the buzzword right.

But wait, this may not include Alibaba - China's leading e-commerce company and one of the nation's role model of internet companies. Its share price dropped almost a third in the past three months.

6. Tie up with the Premier

In one instance, the letter refers to Chinese Premier Li Keqiang's government work report earlier this year and quotes Premier Li's grand strategy of "internet +".

In China, policy plays an extremely crucial role. Any announcement or change of policy can potentially become a booster (or killer) to the stock market. Investors would assume that anything supported by government policy could only go up. A psyche of "what the Premier said can't be wrong. So don't blame me."


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