How investment funds are created (feat. Justin Simpson)
Manage episode 301905237 series 2963994
02:40 - Welcome to the show, Justin Simpson
04:34 - Retail investors may be exposed to an underwriting by buying shares through a broker. But most people get a piece of equities through funds... instead of putting money into shares, put money into a vehicle (fund), which owns a lot of various shares.
07:01 - What other types of funds are out there? Most funds are in the equity sphere.
11:31 - Buzz value...are investment fads here to stay? Example: r/WallStreetBets and GameStop ($GME).
13:21 - GameStop was so extreme there was basically nothing the hedge funds could do.
15:31 - What is a hedge?
17:52 - Short selling, explained.
30:53 - When/how do you select the equities you bundle together into your fund?
36:11 - Fees matter. 2% vs. 20 basis points (0.20%) cumulative over many years is a massive different.
37:18 - Both Chris and Justin have created funds. What did they create?
43:45 - In Crisis Deluxe, Dusty comments about Asian markets dumping Argentine stocks. That happens because they need liquidity to cover their positions. Just because you think there are uncorrelated risks, they can be correlated.
47:51 - Summary: Investment bankers make funds that eventually retail investors like us can buy. Actively managed mutual funds are assembled by a team of investment bankers, who then go to big institutional investors to get big money behind him. If they get that big money secured, they begin to acquire equities to assemble the fund. Once the fund is made, shares become available through brokerages to retail investors.
50:38 - What is an "accredited investor"?
52:28 - These rules and regulations exist to protect people. Do not assume the worst motivations behind the rules to exclude small investors from the higher-risk investment opportunities. It's to protect them from such high risk investments, to make sure if you invest $20k or so in something, it won't break you if you lose it all.
55:04 - Thank you for listening!
Get Chris's first novel, Crisis Deluxe
https://www.crisisdeluxe.com
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