Ep262: Greg Au-Yeung – Debt Management Tip: Only Invest What You Can Afford to Lose

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Guest profile

Greg Au-Yeung has held senior executive positions at various global banks in China, including Saxo, UBS, ANZ, Morgan Stanley, and State Street Bank. He has a solid track record pioneering, building, and managing technology centers in China that deliver innovative solutions and support digital transformation programs for incumbent banks and FinTech.

Greg is currently Senior Advisor for Shanghai Fudan University, specializing in FinTech, and the Co-founder of the Financial Technology Talent Standardization Committee. He was also the China columnist for Shanghai Daily, ComputerWorld, and various newspapers and magazines in Hong Kong and China.

He graduated with a degree in Computer Science from the University of Westminster (UK), completed the Executive MBA program at the Chinese University of Hong Kong, and certified from MIT (Artificial Intelligence), Harvard University (FinTech), and Copenhagen Business School (Digital Transformation-Financial Services). He is also a Chartered Information Technology Professional, a Fellow of the Hong Kong Computer Society, a member of the British Computer Society, the Hong Kong Chamber of Commerce (Shanghai), and the American Chamber of Commerce (Shanghai).

 

“I do speculate sometimes, but only when I can afford it.”

Greg Au-Yeung

 

Worst investment ever

Around 1995, Greg’s parents decided to invest in additional property when prices were on a record high. Because they could not raise funding, they had to remortgage their current properties and borrow money from the bank. Due to the high property prices, the interest on the bank loan was high too.

Here comes the Asian financial crisis

For one year, everything was good, and the investments were making good returns. Then boom! The bubble burst and the property market crashed. In just two years, property prices went down by 50% and continued to go down for almost eight years.

The banks still wanted their money

Greg’s parents still owed money to the bank. The bank came knocking on their door, wanting to get paid. So they had to start selling the properties at much lower prices than before, including some of the properties they held before just to pay off the debt. They experienced a substantial loss in the family’s assets.

Lessons learned

Always know what you can afford

Make sure that you always understand what you can and cannot afford. Before you leverage or borrow money, know that you have to pay it back and with interest.

You cannot live on credit

Don’t hide under the comfort of a paycheck and think that you can live on credit; you can’t. The world is not the same anymore. That comfort can be taken away from you anytime.

Make debt management a priority

To make debt management possible, always live within your means because you don’t know what will happen next year. Your job could be lost tomorrow. The economy could go down the drain tomorrow; just see what COVID-19 has done.

Andrew’s takeaways

Expect economic crashes

Crashes in the economy happen. They can be massive and can take years for them to recover.

Almost every economic crisis is a property market crisis

An economic crisis starts with the property. Part of the reason is that property is the ultimate collateral that backs the loans.

Debt is the number one risk in business and life

Debt can take you down just when you don’t expect it. There are other risks, such as foreign exchange, but ultimately, the number one risk is debt. To manage your debt, do not get overextended. If you’re going to borrow money for yourself or business, borrow a small amount. You may have slower growth, but you will protect your wealth over the long term.

The free market should set interest rates

The free market should set interest rates because interest is the price of risk. And when you distort the price of risk, you cause tremendous distortions in your country’s economy and the global economy.

Actionable advice

Afford what you can invest; it is as simple as that. Do your calculations and know what risk appetite you have, and what you can afford to lose.

No. 1 goal for the next 12 months

Greg will be doing something different soon and so his number one goal for the next 12 months is to get ready and prepared for his next adventure.

Parting words

 

“People deserve to understand what the real world is like, what’s better than to share a real story of a bad investment so you can help people to make the right choice going forward. I’m super glad to be here.”

Greg Au-Yeung

 

Read full transcript

Andrew Stotz 0:04
Hello fellow risk takers and welcome to my worst investment ever. Stories of lost keep you winning in our community we know that to win investing, you must take risk but to win big, you've got to reduce it. My name is Andrew Stotz of a Stotz Academy where we apply finance principles to help four types of people, investors who want to better manage their stock portfolio, aspiring professionals who want to learn how to value any company in the world business leaders who want to make their companies financially world class and even beginners, who just want to learn how to implement a simple lifetime investment plan. Join the Academy at my worst investment ever.com slash Academy and get free access to the short course I created called six ways to lose your money and six strategies to win this course comes from what I learned from all of these podcasts interviews. Well, now on with the show. This is your worst podcast host Andrew Stotz and I'm here with featured guests. Gregory young Greg, are you ready to rock?

Greg Au-Yeung 1:04
Absolutely.

Andrew Stotz 1:06
I know you are because we just had a nice chat and catch up. So let's get into it. I'm going to introduce you to the audience. So let me get that to you. Hold on. So Greg has held senior executive positions at various global banks in China including Saxo UBS and Zed, Morgan Stanley and State Street bank. He has a solid track record pioneering building and managing technology centers in China that deliver innovative solutions and support digital transformation programs for incumbent banks and FinTech and my that is such a big and important space it has been for the last decade. Greg is currently Senior Advisor for Shanghai, Fudan University, specializing in FinTech and he's also the co founder of financial technology talent standardization committee. He was also the China columnist for Shanghai daily computer world in various newspapers and magazines in Hong Kong and China. Greg graduated with a degree in Computer Science from the university University of Westminster. He completed Executive MBA program at the Chinese University of Hong Kong. And he certified from MIT in artificial intelligence, Harvard in FinTech and Copenhagen Business School in digital transformation of financial services. He's also a chartered Information Technology professional, a fellow of the Hong Kong Computer Society, member of British Computer Society, Hong Kong Chamber of Commerce, and American Chamber of Commerce, Shanghai. Wow. Take a minute, Greg, and fill us in on a little bit of details about your distinguished life.

Greg Au-Yeung 2:40
Well, thank you, Andrew, I think it's his re honor to be your podcast show here. And I'm making myself you know, I, originally from Hong Kong, and then I have been in the financial industry for a long, long time, as you can see, you know, from my resume, and in about 1514 years ago, I was fortunate to offer a post in China, and that's why I moved to China, and stay that stay here ever since. And it's been such a journey, that's such a memorable journey in here, you know, setting up centers, not just on the work side, but also in lifestyle, you know, which, basically, I've witnessed the exponential growth of the economy, you know, in China for the last two decades, and which is incredible. I mean, from the time, you know, I have to carry cash everywhere, and even the ATM machine, don't mess up the foreign cars, I cannot use a foreign credit credit card, or even a debit card from Hong Kong bank, you know, hometown bank yet doesn't work here. And but within, you know, five to 10 years, and everything has changed. And today, I just carry our cell phone go out to buy everything. And even my wife go to what market, you know, she doesn't care cash is everything is you know, the transaction is done by cell phone. So this demonstrate, you know, how drastic the change has been for the last two decades?

Andrew Stotz 4:04
Yeah, it's interesting, because I'd never been to China until about roughly 10 years ago. And when I went, it just blew my mind. You know, as an American growing up in America, the what the way that the story was built for young kids in America about China was built by politicians, of course. And, and, you know, it was it wasn't a positive view. It was, you know, communist, and this and that. And then I went there, and I just saw a whole nother world. And one of the challenges I faced was how do you go to a very different country, and not bring your preconceived ideas. And, you know, we all have a frame of reference that comes from our own society, our own upbringing, and having now lived outside of the US for 29 years. I'm forced, you know, if I was to live by my American principles to the core, I just have a miserable Life. And I think everybody's doing it wrong. And when I went to China, and I kind of saw the success that was happening all around, and the development that was happening all around that country, I just had to realize, you know, they're doing some things that are right. You know, every country has, you know, the wrongs and the difficult things that they're facing. But I was very impressed. And then to talk about the thing that you mentioned about the pace of development. I remember on my university where I did my PhD, you know, within, within one year, there was no yellow bicycles for getting around the university that you could use your QR code on. And then within one year, the whole campus and everywhere in the town was available to get on these bikes. And you just think, the pace of adapting new technology, it's just unbelievable. For the average American that's sitting in Cleveland, where I grew up in that area, they just couldn't imagine how fast things are moving. And I just find that really, really something that people don't realize. And I, someone asked me, Why are they moving so fast? I said, Well, I would say that Chinese people have a different level of urgency. But also, when you have such a vast volume of people, you have to develop these technologies, otherwise, you know, it's just going to be long jams everywhere. So the pressures on the system are much more than they are in other countries, I would argue, but any thoughts about that?

Greg Au-Yeung 6:26
No, I think you're absolutely right. I think it's that the pace is definitely is extremely well supervised fast. It's beyond imagination. But at the same time, a lot of people don't realize that, you know, I think going back to your earlier question about, you know, when you first come in, you know, as a foreigner, you know, even though I'm Chinese, but you know, I think Chinese and for Mongo but you know, but he's a very different, you know, like Singaporean Chinese, you know, Hong Kong, Chinese are all different, but their DNA is Chinese. Right? But there's a lot of similarity, and the value, etc. But once I came in here, I think, you know, it's different is everything is different, you know, especially in the early days, right. And I had this, you know, culture shock, you know, and first year, it took me a while, even though I've been covering China for a while, but actually living here is very different, you know, like I said, the inconveniences and all this thing. And then, you know, people don't follow the cues, you know, like and elsewhere, and the cat the lanes and, you know, and so on and so forth. Right? But when I step back and say look, I mean, it's a developing country, right? And even when I talk to my mom about this, that was in those days, that way, you know, in the 50s, Hong Kong, people don't actually queue up in a bus, you know, and waiting for the bus they are everyone's scrambling to the bus, right, or people spit on or, you know, it's not that logo, you know, and but you got to step back and see where that stage is, right. But then they look back and see the changes is, like I said, it's not just technology changes, it's actually the civilization that people are more civil than before, right? And even when people jump kills, now, the locals will say, you know, go back to the neck of the, you know, and you don't need a foreigner to tell them off. Right? And, of course, you know, the biggest challenge in China, I guess, is the population 1.4 billion people, and it's not possible, or it's almost impossible to change everyone's mindset overnight. And that's why you have clusters of different developments, you know, all over China, you know, in Shanghai is a good example, or Shenzhen is another great example, you see people are far more civil, well behave, then, let's say in unweight, so you're familiar with that, or even going back to even further inland. Because, you know, a lot of people have not even been in touch with so many foreigners, and they have not been exposed to any new way of thinking, you know, and and so on, so forth. This is why you have to cut them on slack. And you got to step out and say, Look, I mean, they're catching up, and they are improving, and but first you got to solve the poverty first. And if you're poor, forget about the vandalism. Right. Exactly. If your welfare then you think about Oh, how can I you know, get a better house you know, and then when I have a better house is that you know, can I do charity and got you know, a back society Oh, it's this steps of you know, little steps that you know, people need to take and and i think you know, it's but but I do believe that it is on the right track and and a lot of people have so a lot of Miss in being misinformed about China.

Definitely. They know human rights and all this right. But a lot of people don't even realize that you know, if you bought the wrong house because of your own problem. And then if you keep on complaining to the government, eventually you may get away from it not by paying yet you know the property and a lot of people don't realize that because the government is very cautious about taking care of the little guys. Not the big guys, the wealthy guys, they don't you know, yeah, they got they pay taxes and all this right, but Little Guy. So the ones who could create a lot of trouble for the society and create become a chaos, so it could become, you know, a civil unrest, and they do pick up them. And that's why you see that, you know, people are being taken care of. And that's why people support the government.

Andrew Stotz 10:16
You know, there's so many fascinating things. And I know for a lot of listeners, they don't, you know, nothing, they had never been to China, or they don't know that much about China. And there's a couple of other quick things I would like to just talk about before we get into the show. And I think, you know, the first thing is, when an American person says to me, oh, democracy, democracy, and I think, how are you going to MIT? How would you manage 1.4 billion people? It the level of complexity of that is just off the charts. And so it's easy to say, yeah, we'll just do it my way. But you know, when you're on top of that, you know, it isn't it isn't as simple as that. Number one. The second thing that, that, you know, I, I think about when I think about the challenges in China, is that it also made me think when I, when I walked in, and I saw that say things can be pretty rough, as you said, you know, some privacy provinces can be, you know, let's say, from an American perspective, or British perspective, you know, not very polite, or something like that. And, you know, the first thing that we can think of is, oh, I wonder when they're going to develop, and they should have better manners, or whatever. And then I started have to think I challenged the listeners to this podcast to think, why do we have these manners? Why do we act this way? Well, it's because as a society, we set up these structures of this is the way you act when you're sitting at a table, and you act very politely and you put your, you know, your knife in your fork this way, why do we do that? And I'm not saying I have the answer. And I'm not saying what's right or wrong, but I'm asking for each of us to question what we have been taught is right, or wrong. And when we do that, and then we look back in China, and I thought to myself, you know, 5000 years of civilization? No, you know, there's some credit there as to way things happen. And I think you can question why things happen, you know, why you've been socialized in the way that you've been socialized? It's very difficult to do, because you've got to overcome, you know, what you think. Now, the other thing is that Thailand is nearby in Thailand is a democracy. And there was a politician in Thailand that got kind of in trouble when he said, I don't care what type of government what form of government we have, what matters is the benefits that the people get from the government. Well, if you say that that's going to ring raise a lot of red flags to a lot of people, but from my perspective, I went to China and saw that, in fact, the little guy gets a lot more from the government in China than they do in Thailand. But we're labeled a democracy. So that, you know, really made me Just think about what is the function of government? And, you know, what, what is it. And the last thing that I would end, my little chat on China is, after traveling around the world, to many places, and being out to villages, and many different cities and all that, one conclusion I have is, people do not want to fight, they want to live in peace. It's politicians, from every country, from every tribe, from every group, that fans the flames of fighting. And people ultimately get sucked into it. And so if you go and you look at the world, and you say, majority of people just want to live their life as a farmer, as a worker, and not have to deal with, you know, violence, then it also helps us to remember to stop putting too much faith in politicians, because they are the ones that start fights and start wars. So those are my last comments on it any any comment you would make?

Greg Au-Yeung 14:04
No, like, gray, you know, everything you said about this? And I think, you know, it's, uh, we just wish, you know, we're living in the more far more complex world than 2030 years ago, and the far more challenges ahead of us and new challenges. And I'm, I just hope that, you know, we, you know, the government, all of the government's, you know, have maintained a rational mind and, you know, and actually do take care of the people and I do believe people are, you know, have good intention.

And I think that's a good stop, you know, when you're negotiating, and then try to work out solutions rather than, you know, creating, you know, false images, etc. So, so I think, you know, we still have a long way to go, but I think, you know, it's not something that we can solve but, but I think you know, for as long as we can influence other people that you know, or inform other people With the right information, and hopefully this could help other people to based on the better information and facts to make that decision.

Andrew Stotz 15:10
Yep. And ultimately, we as a people across the world have to work for peace, and have to want peace. So that's a critical Well, that's a great introduction to China to yourself so many different things, I appreciate the time, but now it's time to share your worst investment ever. And since no one goes into their worst investment thinking it will be tell us a bit about the circumstances leading up to it, and then tell us your story.

Greg Au-Yeung 15:36
Sure, I myself is actually a very conservative investor, you know, and I always adopt a buy and hold strategy, all my life. And so, maybe because of, you know, my upbringing, you know, by trade, I've been always when working in banks, and the risk appetite is always something that are locked in for us, right? And secondly, you know, it's because we work in bank, you know, you know, they also have rules that you need to follow, you cannot just speculate stocks and everything, you got to apply, you know, with your bosses and then you, you need to, you know, you need to get that proof, then you this assault, so lock in period, so by the time you actually get everything approved, right, the stock is gone, you know, so, you know, so, so basically, you know, it's, it's a forced me into that mentality as well. And so, so I think, you know, that's why touchwood by, by and large, myself, you know, my only investment so far has been relatively Okay, you know, and because I'm not an aggressive investor, you know, usually mutual funds, money market, you know, property, etc. I mean, I still take a very, very cautious mind about that risk averse sort of approach. And the story goes today, it's actually the main story, it's actually my family, it's where I think my family is actually very conservative, just admit of, you know, sort of mid class, you know, household, you know, in Hong Kong, you know, and just just a regular family, and we're not very wealthy and so on. And then my parents are from humble beginning. And they earned a set, you know, last, you know, savings, you know, throw his, you know, their Korea, and I think, you know, there's always been like this and, but things change, you know, in 1997 I think 997 for some men, maybe many people don't know, you know, was that, you know, 997 is actually the, the Asian financial crisis, it was the time when george soros actually tried to attack you know, attack the different currency, the Asian currencies, and I cost us the tsunami, you know, in the entire Asia economy. And it brought down a lot of things, you know, basically the economy, you know, from Thailand to, you know, Malaysia, Singapore everywhere, right. And, and finally, it also hit Hong Kong, but fortunately, Hong Kong actually defended pretty well, it did not unpacked with the US dollar at the end, but it causes a lot of financial issues, especially to the households and and the causes of market crash and basically not just the stock market crash, but also the housing market crash. So, the story when that my family actually started to do some investment, additional property investment, before 97 there was about 9596 and that was the you know, the height of the you know, before just before the bubble burst, and for you know, you know, so, you know, so reasons, you know, my you know, our family need to invest in another property and then and but because we cannot raise funding, so, we have to remortgage our current properties, and some of the properties should be paid off already, but because of this additional investment, we have to actually remortgage that means we have to borrow more money from the banks. And, and we have to borrow at the high time because that not just interest rates high, but also the property price was, you know, was very high, it was a record high. And so we did that. And for one year, it was okay, you start the business, etc. And then, I think the problem arise, you know, when 1997 hits us, and because the property market crash, and it did not crash just by a single digit, it's actually a double digit crash and continuously. And if you look back, right, the entire 97 Asian financial crisis, it lasts for almost like eight years, and it's a continuous dip for many, many years. And so within two years, you know, the property price went down like 40 50%. And that was harsh and and that's why and of course, you know, if you owe money to the bank at a time, and the banks will be quite worried they're worried that you won't be able to pay off. So they will call them and when they call loans, then you have to pay back the room. Meaning of the mortgage or whatever that you borrow from, from the banks, and, and, you know, there's no no small business, it's actually the bank sector, knock on your doors and, you know, missed out on you need to pay off this debt, you know, and we will not lend you money anymore. So this is exactly what happened. And so, you know, we have to struggle and then start selling the properties at a much lower price than before. And, yeah, you know, the whole deal took us like, three years, and then we finally sold off a lot of the properties and including some of the properties that we hold before. And, and we experienced substantial loss in the family assets. And over the three years, and basically, there was a terrible moment for the family. And of course, you know, I thought it meant my family apart and people, you know, arguing and why did you do the investment, you know, I wasn't really involved in the decision, but still, you know, it was a painful moment. And you can imagine, for any family do that. And just to give the perspective, and we weren't the worst, you know, this, because there are a lot of people who actually commit suicide, you know, during around 97, because, you know, they couldn't pay off the debt, and they still owe money, etc. And people actually, you know, took their own life. And that's a, and there was a very, very sad moment in Hong Kong's history. And a closer one, you know, we had a family friend who was actually a lawyer, you know, respectable lawyer in his 60s, and he actually did a lot overleveraged as well, he actually remortgage and he basically did not pay by cash, you'd have all the property, he own life, and 15 properties or something like that. And then, and then at the end, he had to sold all of them all return all assets to the bank. And, and he lost his entire savings. And, and also, because of the bankruptcy law states that you know, as a legal profession, you don't hold that license anymore, you have to give up them, you know, you basically no longer a licensed lawyer,

Andrew Stotz 22:07
If you're declared bankrupt.

Greg Au-Yeung 22:09
Yes, yeah. And imagine, you know, in your in the 60s, and you lost everything, how to solve again, you know, and I don't know what happened to him afterwards. And it's my, actually, my mother's friend. And, but I can not imagine, you know, he and he's not alone. It wasn't a lot. I mean, it was a lot of people like that in Hong Kong during that time. And that's why in that was really the darkest moment, you know, in Hong Kong history. And, and what's worse is that, you know, for some people who may remember, SAS, the virus that hit Hong Kong was around 2003. And yet, like, adding fuel to the fire, is actually what it hit rock bottom Hong Kong's economy, hit rock bottom, around 2003, you know, after, after this, you know, a couple years after the 97 Asian financial crisis, I then came of SOS, and actually no one that ever, you know, went to see property or to buy anything, even when we went to restaurant, I still remember when when I went, my, my wife and I Went, went to a restaurant, and they gave us a 50% discount. And it's unheard of, yeah. And the restaurant you walked in, and they said, we'll give you a half, you know, is everything's half price in the restaurant. And because there's no one actually in the restaurant. And that's why I think that was really, for serious financial crisis that hit Hong Kong hot.

Andrew Stotz 23:33
Well, man, and there's a lot to think about that. But let's just review, first of all, what are the lessons that you learned from that experience?

Greg Au-Yeung 23:42
I think first is that, you know, you always need to understand what you can afford. And what you cannot afford, leverage or borrow money is you need to understand that you have to pay back isn't just like credit card, you know, you can use your credit card, you know, you can, you know, apply for, you know, and you know, a, you know, beyond that maximum limit, but at the end, you have to pay off, and it'll pay off the interest rates, and there's a very high interest rate. And, and you've got to calculate that you cannot just, you know, think that, you know, everything is great, I have a salary, I still get a paycheck tomorrow, you know, next month, and then you know, I can say, you know, I can live on credit, you can't, because the world is not the same anymore. And I think you know, based on experience, I would say you know, I think the biggest impact to me my especially investment philosophy said you know, know what you can afford before before you make that decision, and the other thing is probably one more thing that tie with the same philosophy is that even if you buy property, if you are being you know, you know, a few years later, you have been called on, you would have that cash to pay back and I all you know, ever since 97 always hold that philosophy, I will never buy anything that's beyond my capability. Because you don't know what's going to happen next year, your job will be lost tomorrow, and the economy will go down the drain tomorrow, just like COVID. Right.

And all of this could happen. And everyone say that property only go up and property prices only go off. That's nonsense. I've been. I was lucky in Japan. I, you know, having to see that dip. And then when I lived in Hong Kong, I saw that dip. And that's why in China, whenever I talk to the young people, I said, you know, don't count on it. You think the poverty price will only go up? No, it won't, it will come down. Down, you know, so, right.

Andrew Stotz 25:38
So let me summarize some of the things that I take away. I mean, I lived through that crisis. I was in Thailand in 1992. And then started working as an analyst in the stock market in 1983. And then in January of 1994, the set index in Thailand hit 17, at its peak. And that was, you know, fantastic times, it was exciting times, actually, from 1985. Until 1995, all of Asia was just going through an absolute boom, the idea of being able to tell someone that you know, this could crash or something, you would be laughed out of a boardroom, if you went in told him that, you know, what if what if the economy only grew by 1%, or something like that. Everybody was in that mentality. And the stock market in Thailand fell 90%. And I know in many other countries, also, during that time, in the 97 crisis, it fell massively. And when you factor in the currency devaluation, it actually fell 95% for, let's say, a US investor. And in fact, the US the Thai stock market is still not back to where it was at the prior peak, we're talking about almost 25 years. So get real folks, if you're listening in right now, remember, crashes do happen. And they can be massive. And they can take years for them to recover. And I'm thinking particularly about the US where I believe, you know, there is a very, you know, the market is being propped up. The second thing that I that, you know, you remind me of is when I was a young guy, my first 10 years as an analyst was as a bank analyst. So I was looking at the banks and balance sheets and going through the boom time, and then the crisis, and then the recapitalisation. And what I learned from that is that almost every economic crisis is a property market crisis. It starts with property. And part of the reason is, because property is the ultimate collateral that backs the loans. So one of the reasons why it's very important in China in the past to keep that property market high. So even because if that property market starts to fall, the ability to collect and get back the money that you've lent becomes very difficult. In fact, I was in China not too long ago, talking at a CFA event. And I was driven from the airport into the event by a woman who worked for a government agency that buys basically bad assets in China. And I said, you must be really struggling right now. So no, we're making money. And I realize, of course, in China, you have the ability to set the pricing of the transfer of that asset at a relatively low price, number one, and number two, is that the property Mark was rising. So as long as you got it at a reasonable price, you waited a little bit, you could sell it for some profit. But if that property market falters, that's a disaster. And that brings me to the third thing I would take away is that the number one risk in business and in life, is that, in my opinion, it can take you down just when you don't expect it. There's other risks, foreign exchange and all that stuff. But ultimately, the number one risk is debt. And from this, what we learned from your story is that do not get overextended. And in the world of finance, we teach, oh, there's an optimum capital structure where you're going to have a certain amount of capital, throw that out the window. And think about, if you're going to borrow money for yourself for your business, just borrow a small amount. You don't need to borrow huge amount. Now you may have slower growth, but you protecting your wealth over the long term. And that brings me to the last thing which is about interest rates. Most important thing about interest rates is that they should be set by the free market. Why is that because interest is the price of risk. And when you distort the price of risk, you cause tremendous distortions in the economy in your country and global economies. And that's what's happening in the US. That's what's happening around the world when we try to control the interest rate. Right now, I listened to you know, one of my nieces just got a loan, she bought a house in the middle of this crisis, because she could borrow money at 3% 30 year fixed. You know, this type of very, extremely low interest rate, causes malinvestment that we'll be cleaning up for decades to come. So ladies and gentlemen, if you're listening, I highly recommend that you listen carefully to Greg's story about the impact of debt on a particular Family, because ultimately, these kinds of losses happen in same thing in Thailand. Thailand actually was the beginning of it in the epicenter of it, but we had people that jumped off buildings, people that shot themselves and killed themselves because of the pressures that debt put on them. So anything you'd add to that?

Greg Au-Yeung 30:19
No, I think, you know, you know, I think people need to keep the motion away from, you know, from investment, or often nothing, you know, it's, it's difficult, I think, you know, just like, there's a story, right, you know, in in Hong Kong A long time ago and heard this over and over again, you know, you know, in Hong Kong, you know, people are so into speculation, and they may not listen to analysts, they may not listen to the bankers, you know, but, you know, when he was queuing up in a supermarket buying, you know, household things, you know, and then the lady in her 50s, you know, told her that, you know, this, you know, this stock coming in, you know, he said, you know, you should buy it, then you know, you know, they may listen, you know, and then they go into the, you know, the broker, and then, you know, place the order and, and, and it's just that, you know, very often it's just that, you know, even I told my wife, you know, when you buy the stocks, I mean, you know, have you actually done enough homework about it, so, I'm always a fundamental guy, you know, I was looking at fundamentals, and then, like I said, you know, buy and hold, and then I look at long term debt, of course, I do speculate sometimes, but only when I can afford it, because I know the technology sector well, and know what sort of stock that is, this, this company is going to be big, you know, and then I just buy it, and then leave it there, you know, if I lost it, so be it, you know, and, again, is that I can afford it, but it's not like a casino that you will you go all in and then you know, you just you, you're just waiting to kill yourself. You know, I think it's something that, you know, over and over again, people just, you know, seem to be driven by emotion, Rob, rational, you know, mind, you know, when when, you know, when they're dealing with investment.

Andrew Stotz 32:02
And I think that's a good lesson in this is the idea of mental accounting, and it's a very valuable tool in the behavioral finance, you know, arsenal of tools. And that is, if you really feel like you've got to gamble a little bit you want to play, you want to try to invest in this or that, do it with 10% of your money. Okay, separate that money. So that you're, you're segregating that into a separate mental account, and have fun. And, you know, over five years, see how much he got in these two different accounts, one, building in a fundamental, you know, low risk way and another one by, you know, having some fun. And you'll probably see, after five years that the one to 10%, probably went to zero. but not always, not always. All right. So based on what you learn from this story, and what you continue to learn, what one action would you recommend our listeners take to avoid suffering the same fate?

Greg Au-Yeung 32:56
I think it's the same message. afford what you can invest, I think, as simple as that. And you've got to do your own calculation. And you got to know what risk appetite you have. I mean, no one, no one can tell you except yourself, not even the banker. I want to sell you something, especially nowadays, I don't trust the bankers at all, you know, they, they're given a quota. They're given the mandate. And but you have to do your own homework, you know, yourself far better than anyone else. Right now. Even your mom, no, you bet better yourself. And that's why you got to know, what's your risk appetite and what you can afford? And what's your long term goal for that? Whether or not you can, you know, put investment asako, 10 years, or five years, so one year, and not worrying about it, you know, even the loss. And I think that, you know, this is something that is it's a bit of common sense, really,

Andrew Stotz 33:45
it's a it's a great point to that I think everybody needs to listening needs to think about is that the food companies are going to sell you bad food and the the, you know, government may sell you bad ideas, and someone else may tell you, this bank is going to sell you, you know, stuff to make money off of you. Ultimately, there's something that my mother used to say to me, and I know in the old days they said it in that is I think it's caveat emptor, which means buyer beware, ultimately, it's your responsibility, and no government can ever fully protect everybody they try to regulations and all that. But in the end, ultimately, you are responsible. Well, last question, what's your number one goal for the next 12 months? Ah,

Greg Au-Yeung 34:29
I think my number one goal is actually we're exploring my next adventure. You know, and, you know, I sort of left my previous company, you know, a couple months back and then it took a really good break and did a lot of interesting things, including podcast today. So very, you try something different and then do a teaching and do learning. And, and then you know, probably the next within the next 12 months I'll be doing something different and that's why I'm so getting ready and prepared. For my next adventure, and I think, you know, it's but but one thing is that, you know, it's, uh, you always have to keep yourself excited about things, you know, and, and that's why I always advise people not to retire, you can never be retired. Because when you retire, you know, like, my mom, for example is a good example. Or should my mama to retire and then actually, the whole day she just watched TV drama which is not good, very good, you know, you, you know, anyone need to have a passion, you need to have a passion, about, you know, anything, you know, it could be sports could be, you know, some interests of yours and you learn something new every day, and then keep yourself occupied keep you motivated, and, and will be great if that turns into income as well. Right. But, but the thing is that keep you thinking if you're motivated, and then and you won't be disconnected from the society, I think that's another thing that a lot of people get conned on, you know, in, you know, and by, by people in the streets, you know, you know, and because they're so disconnected, that, you know, they're lonely, etc, you know, but if you, if you always keep your mind, you know, fresh and look at new things and paying attention. And I think, you know, you'd be fine.

Andrew Stotz 36:17
It I have a book on the shelf behind me. And it's, it was a book written by my grandfather, and he wrote a few different books, but this one was his final book that he wrote. And in the book, there's a little handwritten note, and it's from his publisher. And it says, you know, congratulations, Charlie. My grandfather's name here is, you know, the first book off the printing press of your new book. Well done, I hope you're relaxing and enjoying, you know, and that was it. And the date of that letter was about one week before my father, my grandfather passed away. And, and what I learned from that is he lived to be 87. And he, he really worked to the last days. And I thought to myself, that's what I want. I want to be doing the things that I love. And then one day, you know, I'm done. So yeah, well, listeners, there you have it another story of loss to keep you winning, remember, to go to my worst investment ever.com slash Academy, to get access to my short course, six ways to lose your money and six strategies to win. As we end, Greg, I want to thank you again, for coming on the show. And on behalf of A. Stotz Academy, I hereby award you alumni status for turning your worst investment ever, into your best teaching moment. Do you have any parting words for the audience?

Greg Au-Yeung 37:41
No, I just, you know, I'm glad that I shared a story with people here. And I think, you know, people deserve to understand what the real world is like. And what's better to share a story, a real story that, you know, even though it's a bad story, you know, it's a bad investment. I think, you know, it's so help people to make the right choice going forward. And I'm super glad to be here.

Andrew Stotz 38:06
Yeah, we're happy. We're happy to have you. And that's a wrap on another great story to help us create, grow and most importantly, protect our wealth. Fellow risk takers, this is Andrew Stotz, your worst podcast hosts, saying I'll see you on the upside.

 

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Dr. Andrew Stotz, CFA is the CEO of A. Stotz Investment Research, a company that provides institutional and high net worth investors with ready-to-invest stock portfolios that aim to beat the benchmark through superior stock selection.

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