Avoiding Boondoggle Investments (w/ Dean Myerow) | Expert View | Real Vision™

TL;DR

Avoid investing in unfamiliar and impractical concepts, as illustrated by examples of disastrous municipal bond deals.

Transcript

Over 25 years, I've seen stupid-ass deals, stupid. I mean, muni bond deals where some bond developer or banker decides that it's a really good idea to go down to a southern state -- I won't pick on Alabama, but they ended up -- somebody proposed a great idea a bunch of years ago to take dead chickens and they were going to raise a bunch of millions... Read More

Key Insights

• 😋 Stupid and impractical municipal bond deals exist, such as using dead chickens to generate revenue for dog food.
• 💖 A failed water park venture in Edinburg, Texas, based on the assumption of immigrant patronage, serves as an example of a disastrous bond deal.
• 💋 Avoid investing in unfamiliar or novel concepts. Stick to tried and true investment strategies.
• 👨‍🔬 Thorough research and analysis are crucial in filtering out bad investment ideas.
• ↩️ Understanding investments helps evaluate risk, potential returns, and practicality.
• 🖤 Financial losses and disappointment can occur when investing in concepts lacking understanding.
• 🔇 The speaker emphasizes the importance of due diligence and avoiding investments that don't make sense.

Questions & Answers

Q: What are some examples of disastrous municipal bond deals?

One example is a plan to convert dead chickens into dog food to repay bonds, requiring rural farmers to rent freezers. Another is a failed water park venture based on the mistaken assumption that immigrants crossing the Mexico border would visit it. Both ideas were impractical and resulted in financial disaster.

Q: Why is it important to understand investments before investing?

Understanding investments is crucial because it helps investors evaluate risk, potential returns, and feasibility. Investing in unfamiliar or novel concepts without proper understanding can lead to financial losses and disappointment.

Q: How can investors filter out bad investment ideas?

Investors can filter out bad ideas by conducting thorough research, analyzing historical data, assessing market trends, and seeking advice from financial professionals. It is crucial to critically evaluate potential investments and avoid those that lack practicality or a proven track record.

Q: What is the speaker's advice to portfolio managers?

The speaker advises portfolio managers to stick with tried and true investment concepts. They should avoid investing in ventures they don't understand or involve novel ideas. It is essential to prioritize familiarity, reliability, and proven success in investment decisions.

Summary & Key Takeaways

• The speaker highlights his 25 years of experience witnessing foolish municipal bond deals, such as using dead chickens to raise funds for dog food and a failed water park venture based on the assumption that immigrants would patronize it.

• He emphasizes the importance of filtering out bad investment ideas and sticking to tried and true concepts.

• Portfolio managers should avoid investing in novel and unfamiliar ventures.