The sorry tale of Sir Roger
I think one can gain some insight into the reason people constantly fall for such stories by examining the sorry tale of Sir Roger Tichborne. Like many a well-heeled young Victorian Englishman, Sir Roger went gallivanting around South America. Eventually he boarded the Bella in Brazil. Four days later, wreckage of the Bella was recovered, and all souls were declared lost. Lady Tichborne (Sir Roger's mother) refused to believe that he had perished. Encouraged in her beliefs by a medium who kept telling her that she couldn't find Sir Roger in the afterlife, Lady Tichborne posted regular advertisements in newspapers around the world offering a reward for information about her lost son.
Some 10 years after Sir Roger's disappearance, Lady Tichborne received word from an Australian solicitor claiming that her son was alive and well and living in Wagga Wagga, working as a butcher. Lady Tichborne was ecstatic, and sent funds to cover her "son's" repatriation to the U.K. Upon his arrival, Lady Tichborne declared the man to be her son and instigated a £1000 stipend.
Not everyone was quite so convinced that the new arrival was in fact Sir Roger (see Exhibit 1). Now it is perfectly possible for a man's weight to change over the years (trust me, I know). However, Sir Roger spoke both Greek and Latin, the claimant spoke neither. Sir Roger had a working knowledge of chemistry, the new arrival couldn't tell his sodium chloride from his calcium carbonate. It is, of course, possible to forget things over time; perhaps a bump on the head during the wrecking of the Bella resulted in memory loss. However, it is rare that tattoos disappear of their own accord, even in the extreme sun of Australia. Sir Roger had some, yet these had mysteriously disappeared from the new arrival. It is even rarer that a person's eyes change colour. Sir Roger had blue eyes, the new arrival had brown eyes! It was only after Lady Tichborne's death that the rest of the family exposed the Australian import as an imposter.
The moral of this story? Never underestimate the willingness of people to believe in the most outlandish of things if it suits them. Just in case you think this example has no relevance for the world of investing, consider the returns of the mystery fund shown in Exhibit 2.
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