“There’s a sucker born every minute”
P.T. Barnum
The collapse of the crypto company FTX and its founder, Sam Bankman-Freid’s Ponzi scheme has dominated the news lately. Apparently he conned seasoned investment bankers and VCs out of billions of dollars while bilking individual crypto investors of billions more.
I am not the least bit surprised. Nor have I lost a cent to any NFT, crypto or Ponzi scheme.
This in not because I’m good at predicting the future. Nor because I give myself credit for having more insight than his backers – many of whom likely are wealthier, better educated and credentialed than me.
It’s because I pay attention to history. That, plus I don’t invest in anything I don’t understand.
Everyone wants to get rich quick, without working for it. I’m no different. I’d love it.
This is precisely the opening for con men to take advantage of the next sucker.
Bubbles happen all the time. I read about the tulip bulb bubble in the 1600s and the South Sea Company bubble in the 1700s. I read about the stock market crash after the roaring ’20s. I lived through the 1999 dot-com boom and bust. I’ve got painful personal experience with the housing market crash of 2008.
So when Bitcoin was surging and “everyone” was making “tons of money” seemingly overnight, I was skeptical. I’ve read a little about crypto, but still don’t quite understand the value. I get this concept – buy it for a lower price and sell it for a higher price and you’ll make money. What I can’t grasp is the “stored value” of crypto. What keeps it from going right to zero?
The “get in and get out at the right time” tactic sounds good in theory. Like any market bubble, if you buy and sell at the right time, you might get lucky. If not, you might get screwed.
But just like everyone wants to get rich quick, everyone thinks they are smarter than the “losers” and can time the market. (See any market bubble for numerous examples).
Not me.
I’m only smart enough to invest in things that have tangible, real value. I have zero interest in gambling.
If the US government collapses, the banking system fails, the US stock market collapses or society falls apart, I’m screwed. Then again, we all will be and I have plan for that worst case scenario.
There will be another bubble, another FTX and another Ponzi scheme to come. Many people will jump on the bandwagon, believe the hype and lose their money.
That sucks.
But don’t doubt it – there’s a sucker born every minute.