Nassim Nicholas Taleb once said, “You may never know what type of person someone is unless they are given the opportunity to violate moral or ethical codes.”
Greed has always been a part of human nature but the demand for trustworthy leadership remains just as vital.
As Charlie Munger put it, “Hard work, honesty, if you keep at it, will get you almost anything.”
Honesty isn’t just a virtue—it’s the richest legacy that shapes the future of companies and their relationship with investors.
Finding management you can trust is rare and very difficult. The best leaders treat a company as if they own it, making decisions with long-term success in mind.
Sadly, we’ve seen too many examples of greed overpowering good judgement.
Take the case of Wirecard, the German Fintech company that forged client details to defraud investors. It committed one of the largest financial frauds in Germany before its collapse.
Similarly, WorldCom, once the second-largest telephone company in the U.S., used fraudulent accounting techniques to hide its losses from investors to support the CEO’s lavish lifestyle before its bankruptcy in 2002.
These aren’t isolated incidents. They reflect a deeper issue in leadership. When management resorts to unethical behaviour—like cooking the books to inflate share prices—they’re jeopardising the long-term health of the company for short-term gains.
This only creates a vicious cycle of lies and manipulation to keep investors happy and bonuses flowing.
What if, instead of these short-term accounting tricks, management focused on building something meaningful and lasting?
Imagine a world where more energy was spent on innovation than on artificially inflating the stock price.
Unfortunately, some leaders can’t face reality, fearing they’ll disappoint investors and tarnish their company’s image.
A great example of this is Super Micro Computer. Activist short-sellers like Hindenburg Research exposed their accounting manipulation and undisclosed related-party transactions, which led to a significant loss of share price and investor trust.
Super Micro spent years building its reputation, but now, investors are questioning whether they can ever trust management again.
I first encountered Super Micro in 2021 while researching data centre companies. After seeing the company’s delays in filing financial statements and past violations with the SEC, we decided to terminate the research.
When their stock soared by more than ten times, there was some kind of regret in missing the opportunity but their lack of transparency made it impossible to invest with confidence.
As Warren Buffett wisely said, “Don’t get caught up with what other people are doing. Being a contrarian isn’t the key but being a crowd follower isn’t either. You need to detach yourself emotionally.”
It’s easy to get swept up in the hype but long-term success comes from disciplined, rational decision-making. Sometimes it’s a difficult thing to do but I guess life is about doing the difficult things. This is why we only invest in businesses we can trust and admire.
Human nature often drives us toward instant gratification but the best businesses are built on transparency and honesty.
Take Elizabeth Holmes, who once claimed to revolutionise blood testing with a simple finger prick.
In 2015, Forbes named her the youngest self-made billionaire, valuing her company at $9 billion.
But by 2022, she was sentenced to over eleven years in prison for defrauding investors.
Her story is a powerful reminder of how greed can destroy even the most promising ventures.
If you have not watched her documentary, it’s called ”The Inventor: Out for Blood in Silicon Valley.” I highly recommend it.
Interestingly, her father Christian Rasmus was a vice president at Enron, a company infamous for its accounting scandal and one of the largest bankruptcies in US history.
The problem is most people are in a hurry to get rich and famous or satisfy their ego by joining a billionaire club, forgetting that building sustainable wealth takes time.
Too many leaders see life as a zero-sum game, driven by ego and greed, instead of listening to customers, creating a great culture that will last and building innovative products that benefit society.
Those stories are a testament knowledge that an unending desire for more can come at the expense of others.
In my experience, greed and short-term thinking may bring quick gains but leads to inevitable downfall. The most successful businesses, like those led by Warren Buffett (Berkshire Hathaway) and Mark Leonard (Constellation Software), are built on honesty, transparency and integrity. They innovate, add real value to society and are rewarded in return. Once we find these exceptional companies, we stick with them as long as they stay true to their values. In the end, it’s honesty that drives lasting success—and that’s what truly stands the test of time.
Awet Ghirmay, Head of Investment Research
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Risk warnings
The value of investments and the income derived from them may fall as well as rise. You may not get back what you invest. This communication is for general information only and is not intended to be individual advice. You are recommended to seek competent professional advice before taking any action. All statements concerning the tax treatment of products and their benefits are based on our understanding of current tax law and HM Revenue and Customs practice. Levels and bases of tax relief are subject to change. This blog is based on my own observations and opinions.
