My Worst Investment Ever Podcast Vincent Deluard – Know the Difference Between a Trade and an Investment
BIO: Vincent Deluard is the global macro strategist for StoneX Group Inc., where he authors weekly commentary on global macro topics and advises pension funds on asset allocation.
STORY: Vincent decided to overleverage an ETF during the financial crisis of 2008 in the belief that the economy would bounce back. Interest rates, however, fell, and he lost 70% of his investment.
LEARNING: Take into account falling yields and falling inflation. Understand the difference between a trade and an investment.
“The more volatile something is, the more likely it will lose its value over time.”
Vincent Deluard
Guest profile
Vincent Deluard is the global macro strategist for StoneX Group Inc., where he authors weekly commentary on global macro topics and advises pension funds on asset allocation. Prior to joining StoneX Group Inc., Vincent served as Europe strategist for Ned Davis Research, where he created the firm’s Europe product. Before that, Vincent was executive vice president for TrimTabs Investment, where he headed the firm’s quantitative research. Vincent is frequently quoted in the Financial Times, the Wall Street Journal, and Barron’s and is regularly on Bloomberg TV and CNBC.
Worst investment ever
During the great financial crisis of 2008, Vincent had just started working and decided to get into investing. The interest rates at the time were stable at 5%—which seemed like a good number to Vincent.
Then in a matter of a week, the interest rates went all the way to 2.5% in the wake of the Lehman Brothers panic. As the interest rates went down, bond prices went up. Vincent believed the situation would reverse, so he leveraged an ETF that gave him access to shorting the US Treasury prices. This worked at the beginning.
The economy came out of recession, the yield curve steeped, and interest rates increased. Vincent thought they would go higher and back up to the 5% range, so he didn’t sell his position. Unfortunately, the interest rates didn’t go back up, and Vincent lost about 70% of his investment.
Lessons learned
- The more volatile something is, the more likely it will lose its value over time.
- Take into account falling yields and falling inflation.
- Understand the difference between a trade and an investment.
Andrew’s takeaways
- Avoid leverage.
- Be careful about treasuries and Forex. Because basically, you’re fighting against the Fed, banks with a massive balance sheet, and a limited buyer who can move in any direction.
- Don’t overestimate the genius of the Fed and other bureaucrats.
Actionable advice
Make your mistakes when you’re young, and learn from them to become a prudent investor.
Vincent’s recommendations
Vincent recommends signing up for his weekly reports, in which he addresses risks that people may have missed and other overlooked things. Sign up on his pinned tweet to get a two-month free trial.
No.1 goal for the next 12 months
Vincent’s number one goal for the next 12 months is to do what matters to him and live a more meaningful life.
Parting words
“This was fun, and I like your humility. I think we all need some of that.”
Vincent Deluard
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Connect with Vincent Deluard
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
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- Valuation Master Class
- The Become a Better Investor Community
- How to Start Building Your Wealth Investing in the Stock Market
- Finance Made Ridiculously Simple
- FVMR Investing: Quantamental Investing Across the World
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- Transform Your Business with Dr. Deming’s 14 Points
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