Woodford fund, bizarre BBC article

Hoenir

Bostonerimus1 said:

boingy said:

Seems to me that lots of people were "in the know" for months/years before the collapse. Perhaps some of those people should have shared that knowledge.

On this board there were many pro and con voices debating Woodford well before its collapse and many were pointing out that the Woodford portfolio looked very risky. Of course the come back was always that Woodford had a track record of success and that seems to have blinded many people to the nature of the investments. I find it hard to criticize an IFA or DIYer who had a small percentage of their portfolio in Woodford even though I think such small, risky investments are silly, but anyone who invested large amounts in Woodford committed the cardinal sin of rank foolishness with a side helping of greed.

Majority of investors are seemingly swayed by recency bias. Arguably investing has become too easy in the past decade or so. Resulting in people making uninformed decisions. 

Bostonerimus1

Hoenir said:

Bostonerimus1 said:

boingy said:

Seems to me that lots of people were "in the know" for months/years before the collapse. Perhaps some of those people should have shared that knowledge.

On this board there were many pro and con voices debating Woodford well before its collapse and many were pointing out that the Woodford portfolio looked very risky. Of course the come back was always that Woodford had a track record of success and that seems to have blinded many people to the nature of the investments. I find it hard to criticize an IFA or DIYer who had a small percentage of their portfolio in Woodford even though I think such small, risky investments are silly, but anyone who invested large amounts in Woodford committed the cardinal sin of rank foolishness with a side helping of greed.

Majority of investors are seemingly swayed by recency bias. Arguably investing has become too easy in the past decade or so. Resulting in people making uninformed decisions. 

But the ease of access and increased risk to the individual is a requirement now that DC pensions have largely displace the DB pension and retail investing has boomed post Thatcher and the City "Big Bang". People need have the tools to manage their own finances, but those tools can be dangerous if used foolishly and there are plenty of fools both amateur and professional. The UK has ended up at the far end of the freedom and risk spectrum with a very US model for DC pensions and ISA structures and maybe that's due for some revision.

jimjames

Bostonerimus1 said:

Hoenir said:

Bostonerimus1 said:

boingy said:

Seems to me that lots of people were "in the know" for months/years before the collapse. Perhaps some of those people should have shared that knowledge.

On this board there were many pro and con voices debating Woodford well before its collapse and many were pointing out that the Woodford portfolio looked very risky. Of course the come back was always that Woodford had a track record of success and that seems to have blinded many people to the nature of the investments. I find it hard to criticize an IFA or DIYer who had a small percentage of their portfolio in Woodford even though I think such small, risky investments are silly, but anyone who invested large amounts in Woodford committed the cardinal sin of rank foolishness with a side helping of greed.

Majority of investors are seemingly swayed by recency bias. Arguably investing has become too easy in the past decade or so. Resulting in people making uninformed decisions. 

 People need have the tools to manage their own finances, but those tools can be dangerous if used foolishly and there are plenty of fools both amateur and professional. The UK has ended up at the far end of the freedom and risk spectrum with a very US model for DC pensions and ISA structures and maybe that's due for some revision.

I totally agree and that's even before you start looking at the unregulated areas of the market. I've been bombarded with scam adverts for years but particularly in the last few months and another story on the BBC flagged up other risks. Why would you "invest" your entire life savings of £100k in whisky?
https://www.bbc.co.uk/news/articles/cx2r7enl3d1o

There seems to be a level of trust for any investment in some quarters so I can see a case for every investment needing to be regulated to remove the opportunity for scammers to operate.

masonic

jimjames said:

Bostonerimus1 said:

Hoenir said:

Bostonerimus1 said:

boingy said:

Seems to me that lots of people were "in the know" for months/years before the collapse. Perhaps some of those people should have shared that knowledge.

On this board there were many pro and con voices debating Woodford well before its collapse and many were pointing out that the Woodford portfolio looked very risky. Of course the come back was always that Woodford had a track record of success and that seems to have blinded many people to the nature of the investments. I find it hard to criticize an IFA or DIYer who had a small percentage of their portfolio in Woodford even though I think such small, risky investments are silly, but anyone who invested large amounts in Woodford committed the cardinal sin of rank foolishness with a side helping of greed.

Majority of investors are seemingly swayed by recency bias. Arguably investing has become too easy in the past decade or so. Resulting in people making uninformed decisions. 

 People need have the tools to manage their own finances, but those tools can be dangerous if used foolishly and there are plenty of fools both amateur and professional. The UK has ended up at the far end of the freedom and risk spectrum with a very US model for DC pensions and ISA structures and maybe that's due for some revision.

I totally agree and that's even before you start looking at the unregulated areas of the market. I've been bombarded with scam adverts for years but particularly in the last few months and another story on the BBC flagged up other risks. Why would you "invest" your entire life savings of £100k in whisky?
https://www.bbc.co.uk/news/articles/cx2r7enl3d1o

There seems to be a level of trust for any investment in some quarters so I can see a case for every investment needing to be regulated to remove the opportunity for scammers to operate.

It's not just investments that need to be regulated. It's the platforms that are used to promote them. Make the social media companies jointly liable for reimbursing losses flowing from scam ads they distribute through their platforms. But this is a different area than a legitimate firm operating within the regulated sector behaving badly.

Section62

jimjames said:

...Why would you "invest" your entire life savings of £100k in whisky?

Because it isn't 'fine wine'?

But maybe in addition to better regulation there needs to be some kind of ongoing monitoring of those who are a "disqualified director and convicted fraudster" to make sure they aren't involved in any business activites.  Similar to the life licence, once convicted you wouldn't be able to return to your normal life (and business activity) without someone looking over your shoulder.

GeoffTF

Bostonerimus1 said:

The UK has ended up at the far end of the freedom and risk spectrum with a very US model for DC pensions and ISA structures and maybe that's due for some revision.

That is far from being true. We have gone very much down the regulation route in my lifetime, and much further than the US. I remember when you could trade options like shares on the LSE, for example. Financial advisors were salesmen with little or no regard for their customers' wellbeing. Stockbrokers gave free courses in "technical analysis". We had Gordon Brown giving incentives to hang onto shares for a long time before selling them. We still have stamp duty. Discouraging speculation is good for the clueless citizen, and helps him from becoming a load on the welfare state, but it has a cost. We have a lack of liquidity on the LSE with companies fleeing to the US. Speculation is (on average) bad for the speculators, but it is good for the rest of us. People who gamble on the likes of Woodford provide liquidity, improve market efficiency and keep trading costs down. Long live their foolishness.

Bostonerimus1

IanManc said:

jimjames said:

Bostonerimus1 said:

Hoenir said:

Bostonerimus1 said:

boingy said:

Seems to me that lots of people were "in the know" for months/years before the collapse. Perhaps some of those people should have shared that knowledge.

On this board there were many pro and con voices debating Woodford well before its collapse and many were pointing out that the Woodford portfolio looked very risky. Of course the come back was always that Woodford had a track record of success and that seems to have blinded many people to the nature of the investments. I find it hard to criticize an IFA or DIYer who had a small percentage of their portfolio in Woodford even though I think such small, risky investments are silly, but anyone who invested large amounts in Woodford committed the cardinal sin of rank foolishness with a side helping of greed.

Majority of investors are seemingly swayed by recency bias. Arguably investing has become too easy in the past decade or so. Resulting in people making uninformed decisions. 

 People need have the tools to manage their own finances, but those tools can be dangerous if used foolishly and there are plenty of fools both amateur and professional. The UK has ended up at the far end of the freedom and risk spectrum with a very US model for DC pensions and ISA structures and maybe that's due for some revision.

 Why would you "invest" your entire life savings of £100k in whisky?

Because you believe what scammers promise you, and your greed outweighs your common sense.

I love the compo faces that some of these people pull for their photos though. Ten out of ten for artistic impression.

..and we are back to Woodford, although his "scam" was generatedf by hubris on his part and greed from his investors.