The Most Hurtful Are Those We Trust

In recent weeks, instead of news about floods in Hat Yai, the major story has been the "epic scam of friends' money" involving a group of celebrities and over a hundred million baht. It looks like a typical fraud scheme deceiving many people, but this case is especially shocking because the deceiver was a close friend of over 30 years, who cheated without remorse, nearly ruining their friends financially without concern for their hardship.

Reading this news reminded me of what Dr. Trin Poraraksa, a criminology and justice expert from Mahidol University, once said: "Most people who deceive us are those we know, because if we don't know them, the chance of being deceived is much lower." The closer the friend, the higher the chance of being deceived, because of one word: "trust."

If a stranger invites us to invest, we might refuse, fearing fraud. But when a close friend invites us, a complex psychological conflict arises between emotional trust in the friend and a rational financial analysis. Almost always, emotional trust wins over rational analysis.

This kind of case isn't new; it happens frequently in our lives. Simple examples include lending money to friends or acting as guarantors. Almost 100% of the time, the money isn't returned, or the guarantor ends up paying off the debt. I myself have been left to pay a friend's debt. The lesson I learned is this:

When a friend asks to borrow money or requests a guarantee, we have two choices.

1. Lose the friend: refuse to lend or guarantee, which may upset or lose the friend, but you keep your money.
2. Lose both money and friend: lend or guarantee, possibly preserving friendship, but if the friend defaults, you lose money and the friendship anyway.

So what should we do when friends ask to borrow money or invite us to invest? We should learn psychological principles of finance and decision-making steps to handle such situations as follows.

1. Identify and Separate Biases.

Investment decisions prompted by friends are often influenced by biases or emotional beliefs such as:

• Familiarity Bias: Feeling comfortable and trusting someone we know, leading us to overlook flaws in the investment opportunity.
• Conformity/Bandwagon Bias: Fear of missing out (FOMO) or the desire to belong to a group of friends doing the same thing.
• Affect Heuristic: Letting positive feelings toward a friend override objective evaluation of risks and returns.

What we must do is stay calm and distinguish whether our decision is based on "friendship" or "financial rationale."

For example, if a friend offers an investment with a 6% monthly return, we should consider its feasibility, risks, thoroughly research all information, consult experts, and verify documents (as in the reported case, where document forgery occurred), rather than relying on trust alone. Some may say this is "troublesome," but choose which is harder: verifying while the money is still with you or regretting after it leaves your pocket.

2. Set Boundaries.

After separating "emotion" from "reason," before deciding, change your role from "close friend" to "investor assessing an opportunity."

• Clarify roles: Explain to your friend that this evaluation is about "business/investment," not "friendship," so if the investment fails, the personal relationship won't be affected.
• Request official information: Don't accept verbal explanations alone; ask for all necessary documents such as business plans, financial projections, legal papers, risk disclosures, and verify their authenticity.
• Assess the friend's role realistically:
• Is the friend an expert or advisor? Do they have relevant licenses or experience?
• Is the friend a co-investor? Are they risking their own money?
• Is the friend a recruiter or referral? Are they compensated for bringing you in? (This is a major conflict of interest.) I was once invited by a friend to invest in a Ponzi scheme promising 6% monthly returns (the friend didn’t realize they were a victim). Initially, I thought the friend meant well, but after investigating, I found the friend earned 10% commission on recruited investments, so I became more cautious.

3. Objective Evaluation.

Evaluate the investment as if it were an opportunity you encountered independently, using unbiased principles:

• Study risks and returns: Assess possible losses and gains, and compare with other market options like mutual funds or regular stocks.
• Due diligence: Examine documents carefully (e.g., who manages the business, business model, use of funds, regulatory approvals).
• Assess compatibility with your portfolio: Is this investment suitable for your risk tolerance and financial goals?
• Ask tough questions like "What if I want to withdraw?", "What is the exit strategy?", "What are the worst-case risks?"

4. Prepare for the Worst.

Accept potential loss: If the investment fails, are you ready to lose the money without blaming your friend or damaging the friendship? If not, decline the investment.

Constructive refusal: If you decide not to invest, you can decline by explaining:

"This project doesn't fit my diversification plan right now."

"I'm limiting my investments in this asset type."

"After due diligence, the risks seem too high for my acceptance."

In conclusion, "Don't trust blindly." Separate personal feelings from financial facts and use a systematic decision-making process to ensure your investment choices are prudent, not influenced by obligation or closeness.

Writing this, I recall the song "The Most Hurtful Are Those We Trust" by Namcha Chiranat, especially the final verse.

"Those we trust, in the end... are the most hurtful! You are the cruel one. You are the one we trusted, in the end... the one who hurts the most."