『S13 Ep4 Financial Crises: The Thing About Bubbles…』のカバーアート

S13 Ep4 Financial Crises: The Thing About Bubbles…

S13 Ep4 Financial Crises: The Thing About Bubbles…

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In the fourth episode of this ‘Financial Crises’ season, Simon and Bex discuss what we can learn from crises caused by financial ‘bubbles’ that burst.Some key points of interest covered in this episode include the following:Simon explains that financial bubbles occur when the cost of an item rises quickly to a level that is much higher than it is actually worth. This happens because of speculation, with people buying into the product in the hope of getting rich quick; however, buying can suddenly turn into a frenzy of selling when it is felt that prices have reached their peak. [02:15]Investing, on the other hand, involves committing to a financial venture and then sharing in the profits as the investment grows over time, resulting in a positive-sum game. [04:05]A key difference between investing and speculating is the time scale, with investors committing for the long haul while speculators aim to take the money and run as soon as they think that the highest price has been reached. [05:12]Bex and Simon discuss two historical financial bubbles, the first one being ‘Tulip Mania’, which caused chaos in Amsterdam’s financial market in 1637. In fact, the collapse in the price of tulips did not have a long-lasting effect on the economy, mainly because buyers had generally paid only a small deposit on their purchases; nevertheless, it became the classic example of a financial bubble bursting because it was the first widely known example of the phenomenon and also because it is such a good illustration of a product being ridiculously overpriced. [06:22]Then, in 1720, a major financial crash – the South Sea Bubble – occurred when investors started regarding the South Sea Company as a surefire bet because of its trading rights and its widespread support from investors, politicians and even royalty. Once the share price started to go down, however, it became evident that their confidence was misplaced and its value then proceeded to fall at a much faster rate than it had grown. [08:58]The dot-com boom and bust events between 1995 and 2002 were the most striking recent example of a financial bubble bursting. The hype surrounding the potential profits to be made from investing in technology companies was so extreme that the situation became untenable, resulting in the Nasdaq Stock Market losing 75% of its value (15 trillion dollars!) in just two and a half years. [12:17]In reply to a question from Bex about the possibility of overpricing of shares in Artificial Intelligence companies causing a new financial bubble, Simon suggests that this will depend on (i) whether or not prices retain a meaningful relationship with the actual value of assets, and (ii) whether or not the technology companies ultimately deliver significant added value through their products and innovations. [15:16]When it comes to a strategy for investing in products and companies that are attracting high prices but may be significantly inflated, Simon suggests going for a balanced and diversified portfolio that is aiming for long-term growth rather than short-term gains. [16:42]As far as a Christian approach to investing is concerned, Simon suggests that our motivation should be to resist the allure of getting rich quick and, instead, to follow biblical principles of stewarding wealth in a responsible and prudent manner. [19:47]Any listeners wishing to hear more of Simon’s thoughts on investing might want to listen to previous podcast episodes on this topic, especially from Season 1. [22:12]Our next episode in this season will be published in a fortnight’s time (on 28 October) rather than coming out next week, as suggested by Bex. What we can agree on, however, is that the content of that episode is being kept under wraps for now! [22:28]Suggestions or feedback arising from this episode can be sent via email to whereyourtreasureis@freerangepodcasting.co.uk while messages via Instagram should be directed to @whereyourtreasureispodcast.Our Instagram page will also provide you with additional content and features.This show has been brought to you by Free Range Podcasting.You can sign up to receive news and updates about this podcast by filling out the brief form to which you will be taken when clicking here: https://where-your-treasure-is.kit.com/13c7b5fec6
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