Wim Steemers's guest appearances

Wim Steemers

My Worst Investment Ever Podcast

Questioning Behaviour

Meb Faber

Neil Patel

Karen Briscoe

David Allen

Johnny FD

Kara Goldin

Adam Carroll

Daniel Ramsey

Clayton Morris

Scott Smith

Jeff Bezos

Andy Hill

Joe Saul-Sehy

Dennis Mortensen

John Lee Dumas

OwlTail

Finding Wim Steemers: Rosevalley family funds: https://rosevalleyfunds.com/about-us/ Linkedin: https://www.linkedin.com/in/wimsteemers/?originalSubdomain=au    Links mentioned: “The End of Behavioral Finance” by Richard H. Thaler: https://www.jstor.org/stable/4480205?seq=1   Questioning Behaviour Socials: Facebook: @QBpodcast (https://www.facebook.com/QBPodcast) Insta: @questioningbehaviour (https://www.instagram.com/questioning...)Twitter: @QB_podcast (https://twitter.com/QB_Podcast) LinkedIn: @Questioning Behaviour (https://www.linkedin.com/groups/8928118/) Music: Derek Clegg “You’re the Dummy” https://derekclegg.bandcamp.com/

<p>Finding Wim Steemers:</p> <ul><li>Rosevalley family funds: <a href="https://rosevalleyfunds.com/about-us/" rel="nofollow" target="_blank">https://rosevalleyfunds.com/about-us/</a></li> <li>Linkedin: <a href="https://www.linkedin.com/in/wimsteemers/?originalSubdomain=au" rel="nofollow" target="_blank">https://www.linkedin.com/in/wimsteemers/?originalSubdomain=au</a></li> </ul> <p> </p> <p>Links mentioned:</p> <p>“The End of Behavioral Finance” by Richard H. Thaler: <a href="https://www.jstor.org/stable/4480205?seq=1" rel="nofollow" target="_blank">https://www.jstor.org/stable/4480205?seq=1</a></p> <p> </p> <p>Questioning Behaviour Socials: <br>Facebook: @QBpodcast (<a href="https://www.facebook.com/QBPodcast" rel="nofollow" target="_blank">https://www.facebook.com/QBPodcast</a>) <br>Insta: @questioningbehaviour (<a href="https://www.instagram.com/questioning" rel="nofollow" target="_blank">https://www.instagram.com/questioning</a>...)<br>Twitter: @QB_podcast (<a href="https://twitter.com/QB_Podcast" rel="nofollow" target="_blank">https://twitter.com/QB_Podcast</a>) <br>LinkedIn: @Questioning Behaviour (<a href="https://www.linkedin.com/groups/8928118/" rel="nofollow" target="_blank">https://www.linkedin.com/groups/8928118/</a>) <br><br>Music: Derek Clegg “You’re the Dummy” <br><a href="https://derekclegg.bandcamp.com/" rel="nofollow" target="_blank">https://derekclegg.bandcamp.com/</a></p>

Ep 22. Behavioural finance (ft. Wim Steemers)

Wim Steemers has a 30-year career working in over 40 countries around the world, of which the last 20 years were spent in funds management at AllianceBernstein, Macquarie, Colonial First State, and AL Capital. While educated at the University of Chicago’s Booth School of Business, he always had his doubts about the  Efficient Market Hypothesis, and he followed the development of Behavioral Finance over the years with keen interest. While he has a traditional fund management role at AL Capital, he spends his free time with his Rosevalley Funds, where he puts into action what he suspected for a long time: there has to be a way to take advantage of the systematic biases that exist in human behavior.   “People do not always behave rationally. They make errors in a particular direction, and if you’re aware of these behavioral biases, you’re gonna make money.” Wim Steemers   Worst investment ever New technology rouses his curiosity In 1999, a new technology of doing laser operations on eyes to correct vision piqued Wim’s interest. Wim had been wearing glasses since he was four years old, so anything to correct his vision was bound to interest him. Though the technology was relatively new, it had been proven to work, but it was still quite rare and expensive. Wim, however, decided to do it. Falling in love with the product The laser procedure took about 15 minutes, and voila Wim had perfect vision. For 30 years, Wim had not been able to see further than a meter ahead without glasses. When he walked out of the room, and he could see perfectly. It was literally as if the sun had risen for the first time in his life. The machine used for the laser procedure was big and cost a million dollars at the time. It was made by a Canadian company that was listed in the stock exchange. When Wim walked out of that operation, he was so impressed and believed that this machine was going to take the world by storm. So he bought shares in the company that made that laser equipment. The company wasn’t as good as the product Within about a year, Wim lost all his money after the company went bankrupt. Wim had done no research and simply thought that the laser machine was so great the company must be doing well. So it turned out that there were competitors that had cheaper products and better laser machines. So the company just couldn’t compete, and that’s how Wim lost all his money. Delving into the Korean investment market In the year 2000, while working as a junior analyst, Wim got a chance to delve into the Korean stock exchange. At the time, Asia was just getting out of the 1997  Asian financial crisis. The crisis caused widespread bankruptcies as banks in Asia continued to fail. Banks now had to find new ways to attract customers. The credit card revolution Banks in Korea discovered credit cards. Credit cards hadn’t existed in Korea before, and the only credit card as we understand it, which means you can rollover the balance and borrow money, was Citibank’s. What existed were charged cards that were automatically debited at the end of each cycle. You couldn’t use them to borrow money, so they weren’t actual credit cards. Credit cards hence became a nice source of income for the banks. The government loved the idea too The Korean government saw this as an opportunity to stimulate the economy. But more importantly, when people pay with credit cards, the government could track those transactions making it easier for taxation purposes. So the government put in measures to promote the credit card idea. The government made it mandatory for businesses to accept credit cards. Also, every credit card receipt was automatically a lottery ticket. So numbers on each credit card receipt were put in a draw, and a car would be won every Friday. Also, for people paying taxes, they could deduct 10% of all their credit card receipts from their taxes. These were significant incentives for people to use credit cards. The banks, of course, loved it too, because it was good business for them. As the credit cards became popular, companies grew bigger and bigger, and some even got listed. Looking into investing in banks As a junior analyst, Wim had prepared a research package, and his recommendation was to buy the shares of Kookmin bank. Kookmin bank was one of these banks that had a rapidly growing credit card business. The bank had a separate entity called Kookmin credit card, which they had listed on the stock exchange. Wim liked the idea of investing in this bank because it was more diversified with a business bank and a deposit business. Following due diligence As a professional analyst, Wim was not quick to make the recommendation. He did his background research first. He had a few doubts, but it happened that every objection he would make in his analysis and every risk factor he would flag, mostly, there was an answer for that. Buying into the stocks anyway The company went ahead and bought Kookmin bank shares. Shortly after, credit card arrears started to rise rapidly, then they became relentless, and soon the share price started to go down. Now all the credit card companies in Korea were releasing monthly arrear stats and aging profiles. Cutting the losses fast As the analyst responsible for the stock, Wim did his research and was able to predict that things would only get worse. Shares prices had now gown down by 50%. When a window of opportunity showed up, Wim went to the chief investment officer and the portfolio manager. He told them it was time to cash out. Wim explained to them that they would make all their money back in the next 18 months; however, when the shares start going up, Kookmin bank would take out the minorities and keep all shareholding inhouse. Thankfully, the bosses listened and sold the company shares before that happened. Unfortunately, the company had lost about 50% of its investment money. Lessons learned Liking a product doesn’t make the company a good investment Buying a stock in a company because you love the company’s product is not a good strategy. Stand up for your convictions As an analyst, always fight for and state your convictions unapologetically. Also, avoid groupthink because it is a potent but dangerous thing. Be wary of something that seems too good to be true If something seems too good to be true, it probably is. And if something feels risky, it probably is. So before you invest in it, take a step back and see what’s happening here. Culture doesn’t trump cash Cultural biases are not a guarantee of the success of an investment. Put culture aside and do your usual due diligence when conducting your research. Andrew’s takeaways Risk management is not always straightforward The job of risk management, ultimately, is to say, we know the risks, and we’ve got them covered. But the reality is, it just doesn’t happen that way. Make your buy-sell decision after your research It’s imperative from an analyst perspective when analyzing a situation that you do not make your buy-sell decision until the end of your research process. Actionable advice Avoid groupthink at all costs. However, to be successful at investing, you need a team approach, but make sure that the team is set up properly. No. 1 goal for the next 12 months The company Wim is working with has a grand vision of turning the small idea they have now into something bigger. Wim’s number one goal for the next 12 months is to see that through. Parting words   “Don’t learn from your mistakes; learn from somebody else’s. So please, listeners learn from these mistakes.” Wim Steemers   Connect with Wim Steemers  LinkedIn Website  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  Andrew’s online programs  Valuation Master Class  Women Building Wealth  The Build Your Wealth Membership Group Become a Great Presenter and Increase Your Influence  Transform Your Business with Dr. Deming’s 14 Points  Connect with Andrew Stotz:  astotz.com LinkedIn Facebook Instagram Twitter YouTube  My Worst Investment Ever Podcast 

<p><a href="https://www.linkedin.com/in/wimsteemers/" rel="nofollow" target="_blank"><strong>Wim Steemers</strong></a> has a 30-year career working in over 40 countries around the world, of which the last 20 years were spent in funds management at AllianceBernstein, Macquarie, Colonial First State, and AL Capital.</p> <p>While educated at the University of Chicago’s Booth School of Business, he always had his doubts about the <a href="https://www.investopedia.com/terms/e/efficientmarkethypothesis.asp" rel="nofollow" target="_blank"> Efficient Market Hypothesis</a>, and he followed the development of <a href="https://rosevalleyfunds.com/behavioural-finance/" rel="nofollow" target="_blank">Behavioral Finance</a> over the years with keen interest.</p> <p>While he has a traditional fund management role at AL Capital, he spends his free time with his</p> <p><a href="https://rosevalleyfunds.com" rel="nofollow" target="_blank">Rosevalley Funds</a>, where he puts into action what he suspected for a long time: there has to be a way to take advantage of the systematic biases that exist in human behavior.</p> <p> </p> <p><strong>“People do not always behave rationally. They make errors in a particular direction, and if you’re aware of these behavioral biases, you’re gonna make money.”</strong></p> <p>Wim Steemers</p> <p> </p> <h2><strong>Worst investment ever</strong></h2> <h3><strong>New technology rouses his curiosity</strong></h3> <p>In 1999, a new technology of doing laser operations on eyes to correct vision piqued Wim’s interest. Wim had been wearing glasses since he was four years old, so anything to correct his vision was bound to interest him.</p> <p>Though the technology was relatively new, it had been proven to work, but it was still quite rare and expensive. Wim, however, decided to do it.</p> <h3><strong>Falling in love with the product</strong></h3> <p>The laser procedure took about 15 minutes, and voila Wim had perfect vision. For 30 years, Wim had not been able to see further than a meter ahead without glasses. When he walked out of the room, and he could see perfectly. It was literally as if the sun had risen for the first time in his life.</p> <p>The machine used for the laser procedure was big and cost a million dollars at the time. It was made by a Canadian company that was listed in the stock exchange. When Wim walked out of that operation, he was so impressed and believed that this machine was going to take the world by storm. So he bought shares in the company that made that laser equipment.</p> <h3><strong>The company wasn’t as good as the product</strong></h3> <p>Within about a year, Wim lost all his money after the company went bankrupt. Wim had done no research and simply thought that the laser machine was so great the company must be doing well.</p> <p>So it turned out that there were competitors that had cheaper products and better laser machines. So the company just couldn’t compete, and that’s how Wim lost all his money.</p> <h3><strong>Delving into the Korean investment market</strong></h3> <p>In the year 2000, while working as a junior analyst, Wim got a chance to delve into the Korean stock exchange. At the time, Asia was just getting out of the 1997 <a href="https://myworstinvestmentever.com/ep205-andrew-stotz-dont-let-panic-drive-you-into-the-ground-during-the-covid-19-crisis/" rel="nofollow" target="_blank"> Asian financial crisis</a>.</p> <p>The crisis caused widespread bankruptcies as banks in Asia continued to fail. Banks now had to find new ways to attract customers.</p> <h3><strong>The credit card revolution</strong></h3> <p>Banks in Korea discovered credit cards. Credit cards hadn’t existed in Korea before, and the only credit card as we understand it, which means you can rollover the balance and borrow money, was Citibank’s.</p> <p>What existed were charged cards that were automatically debited at the end of each cycle. You couldn’t use them to borrow money, so they weren’t actual credit cards. Credit cards hence became a nice source of income for the banks.</p> <h3><strong>The government loved the idea too</strong></h3> <p>The Korean government saw this as an opportunity to stimulate the economy. But more importantly, when people pay with credit cards, the government could track those transactions making it easier for taxation purposes. So the government put in measures to promote the credit card idea.</p> <p>The government made it mandatory for businesses to accept credit cards. Also, every credit card receipt was automatically a lottery ticket. So numbers on each credit card receipt were put in a draw, and a car would be won every Friday. Also, for people paying taxes, they could deduct 10% of all their credit card receipts from their taxes. These were significant incentives for people to use credit cards. The banks, of course, loved it too, because it was good business for them. As the credit cards became popular, companies grew bigger and bigger, and some even got listed.</p> <h3><strong>Looking into investing in banks</strong></h3> <p>As a junior analyst, Wim had prepared a research package, and his recommendation was to buy the shares of Kookmin bank. Kookmin bank was one of these banks that had a rapidly growing credit card business. The bank had a separate entity called Kookmin credit card, which they had listed on the stock exchange. Wim liked the idea of investing in this bank because it was more diversified with a business bank and a deposit business.</p> <h3><strong>Following due diligence</strong></h3> <p>As a professional analyst, Wim was not quick to make the recommendation. He did his background research first. He had a few doubts, but it happened that every objection he would make in his analysis and every risk factor he would flag, mostly, there was an answer for that.</p> <h3><strong>Buying into the stocks anyway</strong></h3> <p>The company went ahead and bought Kookmin bank shares. Shortly after, credit card arrears started to rise rapidly, then they became relentless, and soon the share price started to go down. Now all the credit card companies in Korea were releasing monthly arrear stats and aging profiles.</p> <h3><strong>Cutting the losses fast</strong></h3> <p>As the analyst responsible for the stock, Wim did his research and was able to predict that things would only get worse. Shares prices had now gown down by 50%. When a window of opportunity showed up, Wim went to the chief investment officer and the portfolio manager. He told them it was time to cash out.</p> <p>Wim explained to them that they would make all their money back in the next 18 months; however, when the shares start going up, Kookmin bank would take out the minorities and keep all shareholding inhouse. Thankfully, the bosses listened and sold the company shares before that happened. Unfortunately, the company had lost about 50% of its investment money.</p> <h2><strong>Lessons learned</strong></h2> <h3><strong>Liking a product doesn’t make the company a good investment</strong></h3> <p>Buying a stock in a company because you love the company’s product is not a good strategy.</p> <h3><strong>Stand up for your convictions</strong></h3> <p>As an analyst, always fight for and state your convictions unapologetically. Also, avoid groupthink because it is a potent but dangerous thing.</p> <h3><strong>Be wary of something that seems too good to be true</strong></h3> <p>If something seems too good to be true, it probably is. And if something feels risky, it probably is. So before you invest in it, take a step back and see what’s happening here.</p> <h3><strong>Culture doesn’t trump cash</strong></h3> <p>Cultural biases are not a guarantee of the success of an investment. Put culture aside and do your usual due diligence when conducting your research.</p> <h2><strong>Andrew’s takeaways</strong></h2> <h3><strong>Risk management is not always straightforward</strong></h3> <p>The job of risk management, ultimately, is to say, we know the risks, and we’ve got them covered. But the reality is, it just doesn’t happen that way.</p> <h3><strong>Make your buy-sell decision after your research</strong></h3> <p>It’s imperative from an analyst perspective when analyzing a situation that you do not make your buy-sell decision until the end of your research process.</p> <h2><strong>Actionable advice</strong></h2> <p>Avoid groupthink at all costs. However, to be successful at investing, you need a team approach, but make sure that the team is set up properly.</p> <h2><strong>No. 1 goal for the next 12 months</strong></h2> <p>The company Wim is working with has a grand vision of turning the small idea they have now into something bigger. Wim’s number one goal for the next 12 months is to see that through.</p> <h2><strong>Parting words</strong></h2> <p> </p> <p><strong>“Don’t learn from your mistakes; learn from somebody else’s. So please, listeners learn from these mistakes.”</strong></p> <p>Wim Steemers</p> <p><strong> </strong></p> <h3><strong>Connect with Wim Steemers</strong></h3> <ul> <li><a href="https://www.linkedin.com/in/wimsteemers/" rel="nofollow" target="_blank">LinkedIn</a></li> <li><a href="http://www.rosevalleyfunds.com/" rel="nofollow" target="_blank">Website</a></li> </ul> <h3><strong>Andrew’s books</strong></h3> <ul> <li><a href="https://www.amazon.com/Start-Building-Wealth-Investing-Market-ebook/dp/B00Y25765G/ref=sr_1_fkmrnull_1?keywords=How+to+Start+Building+Your+Wealth+Investing+in+the+Stock+Market&amp;qid=1552861894&amp;s=digital-text&amp;sr=1-1-fkmrnull" rel="nofollow" target="_blank"> <em>How to Start Building Your Wealth Investing in the Stock Market</em></a></li> <li><a href="https://www.amazon.com/Worst-Investment-Ever-Andrew-Stotz-ebook/dp/B07C81PYP9/ref=sr_1_fkmrnull_1?keywords=My+Worst+Investment+Ever&amp;qid=1552861947&amp;s=gateway&amp;sr=8-1-fkmrnull" rel="nofollow" target="_blank"> <em>My Worst Investment Ever</em></a></li> <li><a href="https://www.amazon.com/Valuation-Mistakes-How-Avoid-Them/dp/1723884960/ref=sr_1_fkmrnull_1?keywords=9+Valuation+Mistakes+and+How+to+Avoid+Them&amp;qid=1552861978&amp;s=gateway&amp;sr=8-1-fkmrnull" rel="nofollow" target="_blank"> <em>9 Valuation Mistakes and How to Avoid Them</em></a></li> <li><a href="https://www.amazon.com/Transform-Your-Business-Dr-Demings-Points-ebook/dp/B00U5SRHJ4/ref=sr_1_2?ie=UTF8&amp;qid=1524026915&amp;sr=8-2&amp;keywords=andrew+stotz" rel="nofollow" target="_blank"> <em>Transform Your Business with Dr.Deming’s 14 Points</em></a></li> </ul> <h3><strong>Andrew’s online programs</strong></h3> <ul> <li><a href="https://valuationmasterclass.com/" rel="nofollow" target="_blank"><em>Valuation Master Class</em></a></li> <li><a href="https://academy.astotz.com/courses/women-building-wealth" rel="nofollow" target="_blank"><em> Women Building Wealth</em></a></li> <li><a href="https://academy.astotz.com/courses/build-your-wealth" rel="nofollow" target="_blank"><em> The Build Your Wealth Membership Group</em></a></li> <li><a href="https://academy.astotz.com/courses/gp" rel="nofollow" target="_blank"><em>Become a Great Presenter and Increase Your Influence</em></a></li> <li><a href="https://academy.astotz.com/courses/transformyourbusiness" rel="nofollow" target="_blank"><em> Transform Your Business with Dr. Deming’s 14 Points</em></a></li> </ul> <h3><strong>Connect with Andrew Stotz:</strong></h3> <ul> <li><a href="https://www.astotz.com/" rel="nofollow" target="_blank">astotz.com</a></li> <li><a href="https://www.linkedin.com/in/andrewstotz/" rel="nofollow" target="_blank">LinkedIn</a></li> <li><a href="https://www.facebook.com/andrewstotzpage" rel="nofollow" target="_blank">Facebook</a></li> <li><a href="https://www.instagram.com/andstotz/" rel="nofollow" target="_blank">Instagram</a></li> <li><a href="https://twitter.com/Andrew_Stotz" rel="nofollow" target="_blank">Twitter</a></li> <li><a href="https://www.youtube.com/c/andrewstotzpage" rel="nofollow" target="_blank">YouTube</a></li> <li><a href="https://itunes.apple.com/us/podcast/my-worst-investment-ever-podcast/id1416554991?mt=2" rel="nofollow" target="_blank"> My Worst Investment Ever Podcast</a></li> </ul>

Wim Steemers – Overcome Behavioral Biases with the Help of a Good Team