Lasse-Peter Pestel – Avoid the Risks of Eurozone Bailout Fund
My Worst Investment Ever Podcast
Analyzing a Debt Restructuring Case and Lessons Learned
Discussion on the significant losses incurred by funds and pension funds due to the restructuring of US government bonds, emphasizing the need to not solely depend on past successes and the conflict between political and economic rationality.
Lasse-Peter Pestel is an Investment Strategist at Deka Investment in Frankfurt Am Main. He self-describes as having grown up between two cultures - Germany and Finland. He later added to this cultural mix by through extensive investing experience in Asia, in particular, Thailand and Taiwan. Starting his career as an intern at Georg Reisse GmbH CoKgin 2004, Lasse-Peter worked for over a dozen different companies including DE-Consult in Taipei City and Fidelity Investments in Frankfurt, Germany.
Lasse-Peter also earned an MBA degree focusing on statistical studies such as econometrics and its usefulness in banking, risk management, and portfolio management. His work has always been with companies active in capital markets. These companies have been focused on fund management, portfolio construction, and asset simulations regarding return and risks, and various tax issues in relation to stock returns.
In this episode, Lasse-Peter Pestel shares his investment experience venturing into government bond investments that are based on political rationality without knowing and studying the risk that comes with it, only focusing on the projected returns.
“Make your research then sit back. And let your common sense run a little bit. Just rethink if there are really irrationality on it or not.”
-Lasse-Peter Pestel
What do you want to hear from the My Worst Investment Ever Podcast?
Resources:
Topics Covered:
00:53 – Lasse-Peter Pestel’s professional and investment background
02:41 – The circumstances that lead to Lasse’s worst investment experience: venturing into government bonds under Eurozone bailout plans
03:08 – Troika’s patchy record on bailouts of distressed Eurozone countries
04:30 – Converting government bonds to the European Financial Stability Facility (EFSF) Bond that has a longer maturity period of 25-30 years
06:51 – Lasse’s Learnings from the experience
07:53 – Andrew summarizes the critical learning point from Lasse’s experience
08:51 – Hedge Fund Trade in the Credit Default Swap (CDS) Market
09:16 – Importance of investment risk management
Main Takeaways
- Lesson 1: If you think history repeats itself, don't follow the herd.Just because you see a pattern in the past, and it repeated itself three times or five times. It doesn’t mean that that pattern will repeat itself again. You could be the unlucky one at the unlucky time. If things worked two times as it did before, they do not necessarily work the third time.
- Lesson 2: Do not rely on politicians to provide your return. Because when things go bad, they’ll throw you into the open market. Political rationality is not the same as economic rationality. Once these two collide, economic rationality tends to win.
- Lesson 3: Be careful in following the market and the sentiment running around. Gather more information to cover instead of blindly running around the markets. Whenever we make a bad mistake in our investing, it usually does have to do with our lack of research that we have done or maybe just the idea of not stopping and thinking about the risks. And a lot of time we just think of the returns.
You can also check out Andrew’s books
- How to Start Building Your Wealth Investing in the Stock Market
- My Worst Investment Ever
- 9 Valuation Mistakes and How to Avoid Them
- Transform Your Business with Dr.Deming’s 14 Points
Connect with Lasse-Peter Pestel:
Connect with Andrew Stotz:
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