Episode 61: The performance enhancing drugs of the finance world and how to avoid them

Sep 24, 2019 | Podcast Episodes

Man taking financial risk

The issue of performance enhancing drugs in sport has recently been highlighted in the media. Some athletes look for the quick fix to achieve their goals, and it is no different in the world of finance.

This week Louis kicked off the discussion with the topic, ”In finance, what are the methods that people talk about to try and get ahead that actually lead to disaster?”

In finance, the equivalent of a “performance enhancing drug” could mean a promise of getting ahead without the fundamentals. They might be performance enhancing but if you get caught doing it or if certain things happen you could lose everything.

Spruikers can often be found delivering finance versions of performance enhancing drugs. The quick fix remedy that promises big returns. So, how do you identify a spruiker and how do you determine if the offering is legitimate?

There are four elements to look out for 1. If it only considers one factor without the fundamentals (e.g. guaranteed to work, get rich quick). 2. Are you being presented with only one option. 3. If there is no independent umpire or the ability to consider someone outside of the sphere 4. What is their motivation?

Listen in for more great suggestions.

This Week’s Investor Exchange Round Table Covered:

  • Brett discusses where to find the best property investment yields. In the top 100 rental suburbs around the country, 42 were in Queensland. This is a result of a combination of the job market and the duration of the population moving through. The majority of the high yields are regional rather than metropolitan and these are not the areas with the highest capital growth. The research showed 62% of suburbs were houses and 38% were units (13.57)
  • Joel provides an economic update and discusses some recent IPO’s and one failed IPO. The US Federal reserve has cut interest rates again down to 2%. Joel believes this could lead to a powerful rally to the upside beginning sometime in the next 3 to 6 months. He also discusses the correlation with the late 1990’s when new technology IPO’s were hitting the market and the distinct number which had poor fundamentals. Joel provides an example of the recent IPO debacle with WeWork, valued at 10 times its closest competitor despite losing US$900 million in it’s recent filling (21.32)

You Cannot Be Serious:

Last week a lady literally landed in someone’s lap aboard a paddle wheeler on the Brisbane River. The Kookaburra was involved in a crash with the jetty and on impact threw a lady from the deck into the lavatory below, unfortunately, the lavatory was in use at the time giving the lady below quite a fright. Luckily nobody was seriously injured.

Dozens of containers of frozen bull semen have been destroyed by a fire at the Victorian cattle facility, a huge blow to the farming industry.

A tiny fish has made a full recovery after radical surgery to remove a growth from its stomach. The owners paid one hundred pounds to save the life of the fish during a 40 minute procedure.

In France, there was an anniversary for a certain after-hours entertainment venue that decided to use robots as pole dancers.

Listener Questions:

Write in to get your investment and wealth management questions answered by Joel, Brett and Louis.

Ask a Question: https://theinvestorexchange.com.au/ask/

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The post Episode 61: The performance enhancing drugs of the finance world and how to avoid them appeared first on The Investor Exchange.

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The Investor Exchange

The Investor Exchange is weekly podcast where the expert panel share banter, tips and insights on how to grow and manage wealth.

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