Explaining Tchenquiz

The brothers that is.

From what I can see, there\’s not all that much that needs explaining. If you\’re playing in a rising market then leverage is the key. The more you can borrow then the greater the profits will be. Not necessarily beause great value has been added by your activities but because asset prices are rising generally. And debt burdens are of course nominal.

Which is just fine until asset values stop rising generally, perhaps even start to fall, which is a problem for those leveraged because of course debt burdens are nominal. Debt burdens don\’t fall just because asset prices do, just as they don\’t rise when the assets are making you a profit.

The secret then, such as it is, is in a rising market, find someone who will lend you all the money you want to borrow.

And, err, hope that asset values don\’t start falling.

5 comments on “Explaining Tchenquiz

  1. Will Rogers supposedly said something like that in the 1930’s:

    The way to make money in the stock market is to buy a stock when it’s low, wait’ll it goes up, then sell it.

    And if it don’t go up – don’t buy it.

  2. The clever thing is to be like Guy Hands. He’s followed exactly the same strategy as the Tchenquizes, but with better legal advice and a slightly higher calibre of bust banks lending him the money, so will remain super-rich rather than risking jail.

    In principle, “borrow a great deal of money in the name of your limited company, invest it in stuff that isn’t totally crap, pay yourself enormous bonuses every year you make money, then piss off whenever – or ideally just before – the company goes bust” is by far the best way to get super-rich. The tricky bit is “borrowing a great deal of money in the name of your limited company”, obviously.

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