Ep658: Jeroen Blokland – Know the Actual Business Outlook Before Investing

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Quick take

BIO: Jeroen Blokland is a long-term multi-asset investor with a long-term track record in financial markets. Jeroen worked at Robeco, the largest independent asset manager in The Netherlands, for almost 20 years before launching his independent investment research company, True Insights.

STORY: Jeroen’s first investment was in a Dutch company selling PCs. He barely did any research or due diligence. The company reported a loss of $27 million in the same year Jeroen invested. It later went bankrupt, leaving Jeroen with a massive loss.

LEARNING: Know the actual outlook of a company before investing. Diversify your portfolio.


“90% of the investing population doesn’t know the actual outlook of a company.”

Jeroen Blokland


Guest profile

Jeroen Blokland is a long-term multi-asset investor with a long-term track record in financial markets. Jeroen worked at Robeco, the largest independent asset manager in The Netherlands, for almost 20 years before launching his independent investment research company, True Insights.

True Insights offers institutional and retail clients high-quality investment research to make better-informed investment decisions based on a proven investment framework covering Macro, Sentiment, and Valuation.

True Insights is currently offering a discount on its Subscriptions. Get a 20% discount on your Monthly Premium Subscription (add ‘MONTH’ in the ‘Have a coupon?’ section.) You can also get a 25% discount on top of the regular discount on our Annual Subscription (add ‘YEAR’ in the ‘Have a coupon?’ section.’)

Worst investment ever

When Jeroen decided to dive into the investment world, he knew nothing about investing and had no framework. He came across a Dutch company, Tulip Computers, the second biggest PC seller, next to IBM in the Netherlands.

Jeroen didn’t know anything about the company besides what they did. He looked in the newspaper and ranked the company’s 12-month performance from high to low. He figured it was a good investment. His genuine belief was this is how you make the most money.

The company reported a loss of $27 million in the same year Jeroen invested. In 1979 that was a very massive loss. Then the company went bankrupt, and Jeroen lost his entire investment.

Lessons learned

  • 90% of investors don’t know the actual outlook of a company, even if they’re experienced in reading a balance sheet.
  • Though difficult, invest in a couple of companies based on their fundamentals.
  • Diversify your portfolio.

Andrew’s takeaways

  • Just like investors, most companies also don’t know their actual outlook.

Actionable advice

Diversify your portfolio and limit your risk by buying more companies or investing less.

Jeroen’s recommendations

Jeroen recommends using information and research that’s already been done by others. Then determine if you need to gather additional information by yourself. He recommends Twitter as a massive source of helpful information—as long as you follow the right people.

No.1 goal for the next 12 months

Jeroen started a new business, and his number one goal for the next 12 months is to grow the knowledge part of the business so that more people have access to it.

Parting words


“Continue investing because, in the end, it will work. Thank you for having me; it was nice.”

Jeroen Blokland


Read full transcript

Andrew Stotz 00:01
Hello fellow risk takers and welcome to my worst investment ever stories of loss to keep you winning in our community we know that winning investing you must take risk but to win big, you've got to reduce it. Ladies and gentlemen, I'm on a mission to help 1 million people reduce risk in their lives. So join me go to my worst investment ever.com and sign up for our frequent free weekly become a better investor newsletter where I share how to reduce risks and create grow and protect your wealth fellow risk takers this is your worst podcast host Andrew Stotz from a Stotz Academy, and I'm here with featured guest, Jeroen Blokland. Jeroen, are you ready to join the mission?

Jeroen Blokland 00:40
Yes, I am. Well, let

Andrew Stotz 00:42
me introduce you to the audience. Jeroen is long term multi asset investor with a long term track record in financial markets. He worked at Robeco, the largest independent asset manager in the Netherlands for almost 20 years before launching his independent research investment research company True Insights. This company True Insights offers institutional and retail clients high quality investment research to make better informed investment decisions based on proven Investment Framework covering macro sentiment and valuation. Jeroen take a moment and tell us about the unique value that you bring into this wonderful world.

Jeroen Blokland 01:22
Yes, well, I hope that I bring in a unique value. But as you mentioned in the introduction has so I have built a investment framework called macro sentiment and Federation nothing fancy about the name. But the fanciness is, of course in what we do. So I think that a lot of people just look at what central banks are doing, or just what the economy is doing. Some look only at technical analysis or sentiment and other sets valuation. But I think the power of what we do is combining the most important elements of these three pillars macro sentiment evaluation, and then try to make investment decision. And I think by doing it by this holistic approach, the odds of getting it right, increase, still you will get it wrong. Some of the time, of course, yeah. But I think this this general approach is what adds value for our clients.

Andrew Stotz 02:14
And is it a like a quantitative framework or a qualitative quantitative framework? Or how does it work?

Jeroen Blokland 02:21
Yeah, good question. So I would call it data driven. So it's not quant per se, but you will see that behind everything that we put out our research notes, there is a lot of data behind it, we look at long term relationships, and why should they be different this time, because I think that's very difficult phrase, a very dangerous phrase. So it's very much data driven. I love charts, you will see a lot of charts in my research. I think in the end, it's a combination of data driven, fundamental top down, I think that that would best qualify where our multi asset approach fits

Andrew Stotz 03:03
when an investor or a person who's listening to this may not understand it completely. Basically, what's happening is that you coming from a top down perspective, and your result that you're coming out with is okay, overweight, gold or underweight US Treasuries or overweight, emerging markets, or a particular sector or commodities, or how did how would that come out for the investor?

Jeroen Blokland 03:28
Yeah, so basically, we have three pillars. The first is what is actually a well diversified portfolio. How do you construct that? And do you need very different difficult methodologies? I mean, for ice optimizations, now, you don't actually it's pretty straightforward. So that's the starting point, the strategic asset allocation, and then where the macro sentiment evaluation framework comes in is, how do you use all these indicators that are out there to actually say something about the relative attractiveness of different asset classes so we put them actually to work. So in the end, what you say sometimes you will see okay, equities are more attractive than high yield bonds or commodities. And then also depending on the amount of conviction that we have a we reflected in the portfolio. So we say, Okay, this is your strategic mix, but now add five or sometimes even 10% of equities and sell something else until market circumstances change. And that is what a macro sentiment valuation framework should pick up your portfolio again, and the third pillar is to make it as tangible as possible, especially for the retail part of the business. We end up with an ETF based model portfolio. So how do you translate these views into actual portfolios? So you will see portfolios consisting of 10 or 15 ETFs, which are from the big providers, they are tradable in most areas, so you can take this as inspiration or try to copy paste it and we have some clients who try to do that, that's also very fine. So to make it as tangible as possible, we end up with these model portfolios?

Andrew Stotz 05:02
And where would someone go to learn more about that?

Jeroen Blokland 05:06
Yeah, we have a website. So it's true dash insights.net. But if you Google it or Google with my name, you will see it, you will see some information on what we do how we do it, what you can expect to see some research samples, of course, we write blogs. And then on the website itself, first of all, there are four types of research. There's a daily, there's a weekly, there's a monthly, so the daily, we can talk about everything that is going on. But also, I like to debunk sometimes the narratives that are living in the market, which are not true, the weekly is a concise overview of what's happening in the markets this week, but then directly aimed at what does it means for the attractiveness of these different asset classes? So I'm not a storyteller, I want to know, does this mean I have to adjust something in my portfolio, and the monthly, and then the monthly? That is like the flagship, there we go hardcore. All the major indicators in macro sentiment evaluation, I will put out so it's like 100 charts, it's a lot of pages, but you will learn a lot how a framework works, and what do we look at. And then finally, we have portfolio changes, because this, of course, is the proof of the pudding. Whenever we change something, and we put out directly a message to our clients, this is what we do. This is why we do it. And this, these are the ETFs evolved in the portfolio to implement that change in views.

Andrew Stotz 06:35
Okay, great. And I'll have links to that in the show notes for the people that want to check that out. You know, I heard you on the episode 291, on macro voices with Eric Townsend impact with Patrick's RESNA. And you're talking about inflation, bond yields portfolio allocation and Bitcoin and that a lot of different stuff. But I'm just curious, before we get into the big question of my podcast, what is something that you've been looking at? Or that you've been positioning in? Or that what's the theme that you have that maybe other people don't know about? or something that you can share with us? That's a high conviction feeling or a thought or, you know, strategy that you could share with us something that you're seeing in the global market?

Jeroen Blokland 07:15
Yeah, so good question. And actually pretty relevant, because we just put out a couple of pieces based on the relative attractiveness of bonds against equities. So. So what we did, we looked at what were the starting yield. So the earnings yield, and the yields on high yield bonds and corporate bonds, developed market equities, so the major asset classes back in August 2020. So this was the month when the 10 year US Treasury yield made the all time low, the lowest effort. So what were the yields back then, of equities compared to these bonds, asset classes, now you see that equities were favored, even though their yields were not that impressive, but on the bond side, it was very, very low. Now we made a chart showing what these yields looked then. And now and you'll see that the of course, it's no surprise, but that the yields on bonds have increased massively, whereas the yields on equities have only very modestly now, if you do that, in a, what you should do risk return dimension, so you're at risk. So we also determined the risk adjusted yield on all of these asset classes, you see that bonds now beat every equity asset class, and this is a crowding out effect, if you don't want to take that much risk, you can now get a 5% return or starting return yields on corporate bonds, against almost 6% on equities, but with much less risk. And so these more defensive investors, they don't, they are not forced up the risk curve to take more risk to get return in. And I think this is a let's say, let's say we also do a little bit, of course, short term tactical asset allocation, but from a more general, the competition from bonds, relative to equities has increased dramatically. And this means that a lot of investors not willing to take risk don't have to take risk anymore. And that, of course, reduces the overall demand for equities, it does not mean that equities cannot outperform, but they need very favorable conditions circumstances to continue. So now, and if you think that the recession is coming, or if you think that earnings will fall, that, of course is a little bit difficult to reconcile. So that is also why I'm a little bit more cautious on everything that is equity related versus what is bonds related. So that is that is I think, a very interesting the general concept of relative competition. So bonds are more attractive and they are out competing equities on the risk adjusted yield approach.

Andrew Stotz 09:52
Yeah, so it's a great point that, you know, everybody was chasing yield, you know, when interest rates were so low and they were forced into equities, they were forced into some kind of creative stuff. And now they can kind of sit happily in a 5% corporate bond and not be forced, as you say. So that's, that's great, a great point. And it means that the demand, the shifting of those assets into equities may not be happening. And what do you think about the next I don't know, let's say 12 months, would that be the good trade for the next 12 months? Or is that only something that you think's happening on a short term basis,

Jeroen Blokland 10:31
this is a very interesting dynamic, what is going on now, because almost everybody thought equities would struggle in the first half, and then it would get better in the second half. But now with the Federal Reserve inflation being sticky, you see this dynamic is changing, because Federal Reserve and other central banks are aiming to extend this tightening cycle. So my my and that makes it a little bit more easy for me, I think that I put out discharge so. So the amount of inflows from retail investors into US stocks is the highest on record, if you look at US retail sales, so the real economy, they rose 3%, in January, the highest in almost two years. So apparently, we have to take into account that this massive rise in bond yields, has not hit either financial markets or risky assets, or the view economy. So and of course, we are looking at low savings ratios and credit card debt, which is ballooning. But overall, you still see that this, this, this whole yield to the sensitivity of rising yields is either less than we expect. But if you look at debt to GDP ratios, there's something that is not very logical. So this means most likely that the hard part's still has to come. And I think that, for me is a very clear starting point that at this point, you should at least not be overweight, risky assets, yet, because the odds that we will seek new lows or go down 10% or whatever is still apparent, unless you believe that the whole recession or the downturn is already behind this. And they're also some indicators that indicate that but if you look at very dumbed down very high over Yeah, so both the regional economy is not collapsing because of high yields. The housing market is here, but that's always the first it's a leading indicator. But also the financial markets are not collapsing because of these higher yields. That's strange, unless you believe that interest rate sensitivity of all of these areas is less than that before that. I don't think so. So that makes me think that on the 12 month basis, yeah, so some struggle is still ahead of us.

Andrew Stotz 12:55
And I should know that we're talking on February 23 2023, just for the listeners in case someone stumbles upon this later. I'm just one last question for me, given that you're in Europe, obviously, lately, we've seen some momentum coming into European markets. And there's people that are thinking, Oh, the worst is over, maybe oil prices aren't going to be that high or gas prices, you know, not going to have a problem, maybe China reopening or that type of thing. And so you've got this, you get this dichotomy where you get people thinking, well, we may be through the worst. And then you have people that say, Well, we're gonna have a recession. I mean, it's a delayed impact of this type of interest rate rises and all of that stuff. And if you look at the inverted yield curve in the US, at least it says, yeah, it's mid 2023. Just curious, what's your take on? Are we what's the likelihood that we're going to be going into a recession in Europe, in particular, this year?

Jeroen Blokland 13:52
So this year, that's, that's a little bit difficult now, so I think there will be a recession. But of course, when you let's look at the final quarter of last year, when natural gas prices spiked, and we were thinking about the shortages. Basically, every investor thought your vase dude really don't. And you have this. So Germany's business model is broken, because they use cheap gas for industrial production, whatever. And actually, I saw an very interesting chart yesterday showing that on average, in Europe, the use of natural gas is 20%, less than average, but industrial production is almost flat. So it's not growing anymore, but it's not it has not collapsed. And I think the whole idea that Europe is not going down the drain because of this whole energy related to a crisis has has led to a massive relief rally, because if German manufacturers cannot produce any more they go out of business of course, so So, so I think some some anxiety about these companies in Europe was was was was was in place was to think. But you see now with this massive decline in all these energy prices that it's Armageddon is not coming. And I think that is why equities have done so well in Europe. I also some of those risk premiums should be priced out, I understand. But going forward, and that is exactly what you mentioned, look at the PMI manufacturing against the PMI services, it really is two worlds, the one is above 50. And is doing pretty good. Okay. The other is declining. And in Germany, it was worse than expected. And until, let's say gofit. We say okay, we always look at the manufacturing part more, but because even though that is smaller parts of the economy, it does have more sensitivity. It's more about economic cycle. But now you have a further push in scope it that the services industry is maybe now becoming the leading indicator we don't know yet. And that is up. So also for central banks, that will be interesting. Is this recession going to happen or not? Now, my idea is exactly what you said, I think there's some kind of delayed effect, because of the massive swings that we have seen in these energy prices. On top of what we already seen in labor markets around the world. There is some something has changed here, because they're extremely tight everywhere. Now. And I think this will be a delayed and this is also why if you mentioned 2023, I'm not sure if that is 2022 anymore, could well be but we could also that this whole thing is delayed in 2024. That would not mean that things like the yield curve is now bad forecaster, because if you look at the historical period between the inversion and the start of recession, 2024 would still fit perfectly. So I'm very much on the delayed part, I think earnings will go down. The interesting thing is, of course, I'm not a big believer in that should be extremely severe, because central banks have much more room to act now. Because of this tightening cycle. So I think that is very interesting. But yeah, I'm still on the there will be a significant downturn, perhaps a recession. Path. Yes.

Andrew Stotz 17:23
Fantastic. Well, that's a lot of great, valuable discussion for my audience, and we appreciate it. And now it's time to share your worst investment ever. And since no one goes into their worst investment thing you will be tell us a bit about the circumstances leading up to an intelligence your story.

Jeroen Blokland 17:38
Yeah, so basically, I have two worst, as my but the first thing I think a lot of people when thinking about the worst investment is about a specific company, losing all of your money. So I went back in the very early days. And that is also when I knew nothing about investing, at least I did not have any investment framework. So we talked about the value of an investment framework. I learned. But yeah, there was this company called tulip computers. It was a Dutch company. It was a big company, because I looked at up at his house, it was the second biggest seller of PCs, next to IBM in the Netherlands. So it was picked. So what I did, I think I was 19 or something. But I didn't know nothing about the company. I understand what they did. But that was it. And then I looked in the newspaper because back then everything was in the newspaper. And then I ranked the 12 month performance from high to low. And I thought I had never heard of the factor premium momentum and never momentum in markets. It works. I've never heard of it. So I bought a company that I understood that no, no fundamental analysis ever. We test the lowest so it was down 80% already for my 52 week perspective. And my belief, my true belief was okay, this is how you make the most money. And that same year, I looked it up. The company reported a loss of 27 million but was in 1979 was a very massive loss. And then the company went bankrupt or some kind of construction. I don't know. Well, this interesting that a couple of years later, they bought Commodore the game console, Commodore 64 Right. But that was one of my more famous, so no due diligence, no understanding of fundamentals, no understanding of momentum, just by what is down the most. Yeah, I think a lot of people have that tendency. Please don't.

Andrew Stotz 19:44
Yeah, and maybe that's the next question is What lessons did you learn?

Jeroen Blokland 19:48
Yeah, so I don't know. I'm a melting investor. No. So so I know a lot about diversification and things like that and Toto but I really If I sometimes look at podcasts, or were also part of the topics concern individual companies, I think that 90% of the investing population does not know what the actual outlook for a company is, even if they if they are experienced in reading a balance sheet, for example, but most of time you hear yes, but the company is saying this. And then a couple of months later, yes, but the factory they are building is going to be twice as expensive. Yeah, a doubt they have to do a share issuance or whatever, I think investing in a couple of companies based on their fundamentals. So because that is what you should do is really, really difficult for a lot of investors. So I'm not saying you should not do it. But again, yeah, there has to be some kind of diversification. I left it because I'm not an expert in this. But I also think it's really difficult, especially as a veto investor to get an edge. How do you do that?

Andrew Stotz 21:01
It's interesting, because one of the things I was thinking about what you said is that, you know, it's a great point that 90% of investors don't really know what the outlook for a company is. And I would say the companies don't know the outlook two, I teach a course called the valuation masterclass boot camp, and the students feel really comfortable plugging in the assumptions that Management gives them in their forward guide. That's what I mean. Yeah. And they look at that. And I try to, you know, teach them that, you know, it's, it's hard. It's just everything is constantly moving. And so that's a great lesson for, particularly for beginners who think that, because when you see people on CNBC, and you hear professionals, and you hear everybody talking, you think, Wow, these guys really know. But the fact is, is that we're all, I'm guessing to a certain extent, and we understand that to a point where we know to reduce risk. And that's part of the diversification, you know, concept that you mentioned, let me let me ask you, based upon what you've learned from this story, and what you continue to learn, go back to your early self, when you did this, what one action would you recommend our listeners take to avoid suffering the same fate.

Jeroen Blokland 22:17
So, first diversification, so so so, and somehow incorporate the uncertainty that is around it, and this can be by buying more companies, this can be by investing less this there are all kinds of of ways you can you can do that, to limit your risk, I think that is the end have some understanding. So this is a course about company fundamentals. But then I also said, the company that I bought was down 80% Be aware that sector momentum. For example, if you look at technology, stocks, they are very much driven by a deep rooted belief in that all of these stocks, not one of them, but all of these stocks can grow until oblivion. And I think that is also the characteristics of this sector of the team or whatever you are investing in, allow for uncertainty. And if you want to do it with uncertainty, yeah, you have to find another a couple of other companies that that that they do basically the same thing, and then then then spread that risk, of course,

Andrew Stotz 23:28
and what's the resource that you'd recommend for our listeners, either of your own or something else?

Jeroen Blokland 23:35
To use?

Andrew Stotz 23:36
Yeah, I mean, they can help people, you know, in investing,

Jeroen Blokland 23:39
So I use a Bloomberg. But of course, it's very expensive. But I must say, if you follow, so for me, Twitter is also a it's sometimes really a drag and all these boats, but if you follow the right people, and there are a lot of people. So for some people, that is technical analysis that there are on Twitter is a massive source of useful information. It does, like, take a little bit of time to get the right people on your list. But yeah, that is trial and error, of course. But I think you don't have to reinvent the wheel every time. So try to use the information and the research that is already done by others. And then try to determine if you need additional issues by yourself, or if that is enough. So use a lot of what others are doing. And that is that you don't have to do anything from you don't have to be built a spreadsheet if you don't want to. But you can learn a lot of what others are doing.

Andrew Stotz 24:36
Yeah. Twitter is a great recommendation. I think that you know, spending time on there following the right people and the things that they write very viable.

Jeroen Blokland 24:45
Alright, last time, you will Yep. And eventually we will get a source a real time source of research that will help you with your investment decisions. Yes.

Andrew Stotz 24:55
Last question. What's your number one goal for the next 12 months?

Jeroen Blokland 25:00
Now I started a new business. And I can tell you that that requires quite a bit of work. And so, so yes, I, of course, I would like to make that a success. And that means that the quality of my research should be really high. I'm confident that this, but also, I think the ways that I can disclose this research or my insights, that is something that I will build on in the next 12 months. And so we have the website, but also doing some videos, Twitter, of course, podcast, like with you. So that will be for the next CEO to grow the knowledge part of the business so that more people have access to it. That is, I think, my main goal,

Andrew Stotz 25:44
great goal, and we'll have links to all of your different stuff in the show notes, listeners, there you have it another story of loss to keep you winning. Remember, I'm on a mission to help 1 million people reduce risk in their lives. If you've not yet joined that mission, just go to my worst investment ever.com and join my free weekly become a better investor newsletter to reduce risk in your life. As we conclude your room, I want to thank you again for joining our mission and on behalf of East Arts 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?

Jeroen Blokland 26:21
Now continue investing, because in the end, it will work and thank you for having me. It was nice.

Andrew Stotz 26:28
We appreciate it. And that's a wrap on another great story to help us create, grow and protect our wealth fellow risk takers. Let's celebrate that today. We added one more person to our mission to help 1 million people reduce risk in their lives. This is your worst podcast host Andrew Stotz saying. I'll see you on the upside.


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About the show & host, Andrew Stotz

Welcome to My Worst Investment Ever podcast hosted by Your Worst Podcast Host, Andrew Stotz, where you will hear stories of loss to keep you winning. In our community, we know that to win in investing you must take the risk, but to win big, you’ve got to reduce it.

Your Worst Podcast Host, Andrew Stotz, Ph.D., CFA, is also the CEO of A. Stotz Investment Research and A. Stotz Academy, which helps people create, grow, measure, and protect their wealth.

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