Greed and fear blinds, Markus Jooste knows. And so he fooled even Christo Wiese

How did Markus Jooste fool Steinhoff investors so easily?

What happened to all the “science” and the “experts” that helped inform their decision to invest in Steinhoff?

So asked RE:CM’s Piet Viljoen in an article on Monday.

Jooste, said Viljoen, has been described as “the ultimate con artist”, and the best conmen understand full well that the trick is to sell what their targets want.

Greed. And fear. It blinds.

The more debt and equity Steinhoff issued, the more the market applauded and asked for more, says Viljoen.

Instead of the increased levels of due diligence that should normally accompany such frenetic activity, it seems the “excitement of the deal”, coupled with an incessant promotion of Steinhoff’s "excellence" by the protagonists, caused the market to suspend its disbelief and relax its underwriting standards.

Viljoen points to research which proves that South Africans are consistently too negative about South Africa’s investment prospects.

In the Ipsos Perils of Perception 2017 survey, South Africa ranked as the most needlessly pessimistic nation out of 38 countries surveyed.

This unrealistic pessimism may explain why local investors may systematically relax their underwriting standards when it comes to offshore investments, empowering unscrupulous salespeople.

When Steinhoff’s listing was moved to Europe, Jooste effectively took full advantage of this inherent bias, with investors cheering him on, says Viljoen.

Markus Jooste sold what the market wanted, and fooled even the smartest investors.

Viljoen shares the lessons he has learned:

  • Steinhoff didn’t implode due to a poor regulatory environment. Instead, it happened due to a strong appeal to incentives which caused otherwise smart people to suspend their disbelief.

  • It pays to understand not only the numbers that represent the activities of a business, but also the human beings behind the companies. Who are they, what are their reputations, and what are their incentives? These soft issues are as important – if not more important – than the hard numbers.

  • Never ignore the outside view. Our tendency as humans is to favour the inside view.

The Money Show’s Bruce Whitfield interviewed Viljoen.

Listen to the interview in the audio below.

Get the 10 most-read articles of the week from Bruce Whitfield’s The Money Show, emailed to you every Friday morning:

Subscribe to our Business Wrap Newsletter


Recommended

by NEWSROOM AI
Read More
5 retirement saving tips for those who left it late

5 retirement saving tips for those who left it late

It’s better to start late than never! The Money Show’s Bruce Whitfield interviews Jeanette Marais.

Enjoy life and save for the future by splitting income using the '50/15/5 rule'

Enjoy life and save for the future by splitting income using the '50/15/5 rule'

You only live once — personal finance guru Warren Ingram on divvying up your income if you're not the budgeting type.

'I’m very conscious about how I spend. I don’t buy fancy cars. I buy bargains'

'I’m very conscious about how I spend. I don’t buy fancy cars. I buy bargains'

Bruce Whitfield interviews Sipho Hotstix Mabuse about his attitude toward money (hopes and fears, successes and failures, etc.).

Steinhoff gets a stay of execution. Market goes bats**t crazy

Steinhoff gets a stay of execution. Market goes bats**t crazy

Business Day’s Warren Thompson on Steinhoff's share price, which soared after the company announced a lifeline from creditors.

Steinhoff Africa Retail on name change to Pepkor (and fight with Tekkie Town)

Steinhoff Africa Retail on name change to Pepkor (and fight with Tekkie Town)

The Money Show’s Bruce Whitfield interviews Jayendra Naidoo, Chairperson at Steinhoff Africa Retail.

Steinhoff paid us with Monopoly money, says ill-sounding Tekkie Town founder

Steinhoff paid us with Monopoly money, says ill-sounding Tekkie Town founder

Markus Jooste was his “friend” and business partner. The Money Show’s Bruce Whitfield interviews Van Huyssteen.

Popular articles
5 retirement saving tips for those who left it late

5 retirement saving tips for those who left it late

It’s better to start late than never! The Money Show’s Bruce Whitfield interviews Jeanette Marais.

How Llandudno residents are bringing down crime in their small coastal suburb

How Llandudno residents are bringing down crime in their small coastal suburb

Llandudno has almost no crime in the area and that's all because of an extra levy that residents pay for some extra peace of mind.

Enjoy life and save for the future by splitting income using the '50/15/5 rule'

Enjoy life and save for the future by splitting income using the '50/15/5 rule'

You only live once — personal finance guru Warren Ingram on divvying up your income if you're not the budgeting type.

[WATCH] Woman faints after hairdresser cuts 12-inch hair without telling her

[WATCH] Woman faints after hairdresser cuts 12-inch hair without telling her

Khabazela shares tweets and Facebook posts that have gone viral.

[WATCH] Tourist steps out of his car to film lions at Kruger National Park

[WATCH] Tourist steps out of his car to film lions at Kruger National Park

Khabazela shares tweets and Facebook posts that have gone viral.

[WATCH] 'I am smart, I am blessed, I can do anything' video goes viral

[WATCH] 'I am smart, I am blessed, I can do anything' video goes viral

Khabazela shares tweets and Facebook posts that have gone viral.

[WATCH] Job hopeful caught cheating during his Skype interview

[WATCH] Job hopeful caught cheating during his Skype interview

Khabazela shares tweets and Facebook posts that have gone viral.

[WATCH] Dad dancing with daughter at school concert goes viral

[WATCH] Dad dancing with daughter at school concert goes viral

Khabazela shares tweets and Facebook posts that have gone viral.