You don’t have to be a poet to understand that today’s world continues to rhyme with thousands of years of our past because we just can’t simply help our feeble selves.
And we don’t have to recap the “oh this was obvious” yack about one Sam Bankman -Fried and FTX. Our note here is simple: out and out fraud and stupidity and billions of dollars either melted or changing hands from the should have been suspecting to the bezzler is nothing new in the annals of humankind. Moved a few thousand years to date, it is stupendously difficult to ignore the trend to d’jure when EVERYONE seems to be making a crapload of money at it while you cling to what seems an anachronistic process catering to someone’s grandparents. As Tversky once noted, if it happened the obvious message was that it was inevitable and that fits here.
Decision fatigue exists, whether you are staring down the doughnut in the conference room or explaining to yet another consultant or client why the nonsense to d’jure seems highly speculative and out of your box of competence. People walk into large institutional firms every day and spend their days fighting what they know isn’t so, but is damn well happening down the hall, so get on board. It helps to work in an environment where you don’t have to fight the urge to be dumb, like running a running club to focus on running or not signing a lease for an office with a Dunkin Donuts in the lobby, or being born into a permanent capital family office and not going to family office conferences, but we all know that institutional trends leak all over a principled good idea.
We would note again, the ten years of “no penalty for silly” investing is now officially over, the FTX debacle is just part of the great unwinding. We will go through some sort of reasonable sobriety as an investing world..and then..read the previous paragraph.
And, “where were the regulators” is as old a cry as “bring out yer dead” in the town square. The history of regulation is the fight against the last war. And…one cannot help but smugly note the tens of millions of dollars in political donations from SBF to the party presently in power, which in the realm of history, tends to be an effective salve against inconvenient action. If nothing else, SBF was as effective a regulatory entrepreneur as Elon Musk. (I would note that if you are about to assign a similar stink to his far-flung operations, it can be argued that at least he makes stuff that has utility to someone.)
Crypto in general? First off, please note that a “cryptocurrency” has nothing to do with the technology of blockchain, which has conceptually legitimate use. As a currency? Something will continue to exist in some form, because if a collection of paper, paint and wood can sell for $40mm on a collective belief that it has “worth,” why not a limited quantity of digital tokens created by someone we still can’t pin down and maintained by no one? As a self-reflection of your individualism and lack of philosophical trust in the expert mandarins doing such a fine job making the world a better place? Why not. As an institutional asset class? Fire yourself and go away.
