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

702 welcomes all comments that are constructive, contribute to discussions in a meaningful manner and take stories forward.

However, we will NOT condone the following:

  • Racism (including offensive comments based on ethnicity and nationality)
  • Sexism
  • Homophobia
  • Religious intolerance
  • Cyber bullying
  • Hate speech
  • Derogatory language
  • Comments inciting violence.

We ask that your comments remain relevant to the articles they appear on and do not include general banter or conversation as this dilutes the effectiveness of the comments section.

We strive to make the 702 community a safe and welcoming space for all.

702 reserves the right to: 1) remove any comments that do not follow the above guidelines; and, 2) ban users who repeatedly infringe the rules.

Should you find any comments upsetting or offensive you can also flag them and we will assess it against our guidelines.

702 is constantly reviewing its comments policy in order to create an environment conducive to constructive conversations.

Read More
Need a loan? How to improve your credit score (before you apply)

Need a loan? How to improve your credit score (before you apply)

Get a free credit report, then follow these five tips and see by how much you can improve your credit record.

5 rubbish beliefs about investing that are keeping you from getting rich

5 rubbish beliefs about investing that are keeping you from getting rich

Financial advisor Warren Ingram rubbishes some popular, yet blatantly untrue ideas that are keeping people from growing wealthy.

How to make your first R1 million (after that it just becomes so much easier)

How to make your first R1 million (after that it just becomes so much easier)

Rich. Wealthy. Financially free... Call it what you will; the first million is how you get there. Warren Ingram on his book...

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
[LISTEN] Father shares how he shot the man who raped his daughter

[LISTEN] Father shares how he shot the man who raped his daughter

Johannesburg father, Chris says he had just come back from work when he walked in on an employee raping his 17 year old daughter.

Human trafficking: The life of drugs and prostitution - Grizelda Grootboom

Human trafficking: The life of drugs and prostitution - Grizelda Grootboom

The author of Exit, Grizelda Grootboom, explains how she was trafficked, drugged and sold for sex on the streets of Joburg.

Why the PAC wants South Africa renamed Azania

Why the PAC wants South Africa renamed Azania

Pan Africanist Congress's Narius Moloto explains why it supports the name Azania, a word which he says has Arabic origins.

Is the lovable Winnie The Pooh a boy or girl?

Is the lovable Winnie The Pooh a boy or girl?

A trending Twitter debate has left social media users arguing over whether Winnie the Pooh is a girl or boy.

UPDATE: Chilling WhatsApp from Marli van Breda's ex-boyfriend read out in court

UPDATE: Chilling WhatsApp from Marli van Breda's ex-boyfriend read out in court

Marli van Breda's ex took the stand in the trial of triple murder accused Henri van Breda.

3 easy questions could bag you R2000!

3 easy questions could bag you R2000!

WIN R2000! But only if you can prove you're a whiz of the MTN Biz Quiz by answering the following three questions...

Blesserfinder: Matching you with a sugar daddy near you

Blesserfinder: Matching you with a sugar daddy near you

Is social trend Blesserfinder, where girls are allegedly matching up with rich 'benefactors' in exchange for sex, a real thing?