Lasse-Peter Pestel – Avoid the Risks of Eurozone Bailout Fund

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? Tell us here!   Resources:  My Worst Investment Ever Book   myworstinvestmentever.com    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...