The Meb Faber Show - Better Investing
Jim Chanos & Bethany McLean on Lessons from Enron, Financial Fraud Throughout History, and the Fall of FTX, SVB & Wirecard | #479
May 6, 2023
01:14:56
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Quick takeaways
- Investors should prioritize conducting thorough due diligence to avoid making flawed investment decisions
- Charismatic CEOs can overshadow red flags and cloud judgment, leading to investment risks
Deep dives
Challenges in Due Diligence and Investment Decisions
Professional investors facing an atmosphere of fear of missing out coupled with a reluctance to appear uninformed often fail to conduct thorough due diligence or challenge questionable investments. This phenomenon is exacerbated by a reliance on the due diligence of others, leading to mistakes, as illustrated by the flawed investment decisions surrounding FTX. The concept of due diligence by proxy, where investors trust in the judgment of others, even when wrong, further highlights the risks of such practices.
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