The Old Man’s Views
“Past Performance Is No Guarantee of Future Success”. Ask The Argentinian Football Team
In case you have missed it, a very controversial World Cup tournament is underway in the shifting sands of the Middle East.
This 4-week tournament cost much more than SBF lost his investors. Still, it has failed to damage the reputation of football as much as SBF hurt the reputation of cryptocurrencies.
Progressive investors in FTX were slightly upset when they learned about the millions they lost. However, this didn't hurt them half as much as Qatar outlawing the wearing of rainbows during a football tournament.
My generation doesn't have much time for straight men wearing rainbows and is not into this moral signalling BS.
However, if I had gone to Qatar, I would have shed a tear when I discovered that the bars would be closed during the match.
What has annoyed me the most is that we are holding this tournament during a time when the financial markets traditionally offer us some great trading opportunities. Who the hell is going to be trading when they are watching the World Cup?
Over recent weeks I have forced myself to be more optimistic about the markets, and I hoped we would see a nice rally as we head towards the year's end. But my optimism has evaporated quicker than SBF's reputation and bank balance.
It will be a freezing winter for the crypto industry, and anyone who believes there are no more problems on the horizon might be in for a big surprise. As much as I would like to say the issues at FTX are isolated, experience tells me this is rarely the case.
Reading through the bullet points, SBF wasn't such a nasty person. After all, he donated enough money to ensure the orange man didn't stay in the White House, for which many are grateful. And allegedly, he did a massive amount to ensure good relations between Ukraine and the US administration.
Perhaps we should all take note of SBF's mother's views, "we make too much of personal responsibility, and should move away from blaming people for their lack of judgement". She will make a great character witness!
I am currently square or hedged as best as possible from an investment viewpoint.
I started positioning myself for an economic decline over a year ago, and much of my speculation capital is with Fund managers who will spend more time watching the markets than I like to do at my age.
Indeed, if they can make me a couple of per cent between now and when Brazil wins the World Cup, I will be more than happy!
Before signing off (Germany is playing Japan), I will repeat my concerns about everyone calling for more rules and regulations. Be careful about what you wish.
As bad as our industry looks, it is vastly less corrupt than the political class we are asking to set our rules.
Since 9/11, the number of rules, regulations and restrictions applied to the investment and banking industry would fill a library. Yet, those who made the laws have been happy to support and promote SBF, which helped facilitate his successful Ponzi scheme.
I don't trust any of them.
I must conduct thorough research before parting with my capital as a trader or investor. If I am looking for a higher return, I need to accept that I am exposing myself to a higher level of risk.
I am an unapologetic capitalist. I enjoy my profits and learn from my losses.
I will begrudgingly pay my taxes, as any responsible citizen. Still, I don't want some wet-behind-the-ears politician with an agenda telling me where I speculate, with whom and on what.
If that becomes the situation, then both speculation and capitalism are dead.
I came into the business when speculating was heavily regulated.
There were no financial futures markets in Europe, speculating on foreign exchange was not allowed, and the authorities set commission rates (back in the 1970s, it cost over £40 in commission to trade one contract of Cocoa).
As many have written, the 1970s was not a decade for growth in western democracies. What pulled us out of it was deregulation.
Under Thatcher and Reagan, many restrictions concerning the financial markets disappeared. More people started to invest and speculate, more markets opened, and a broader section of society enjoyed speculative profits.
In turn, these profits percolated through the economy, causing massive growth in the 1980s and early 1990s.
Since then, we have not seen another period of similar growth.
We have seen the internet take off and the dot.com boom and bust. We also had the sub-prime disaster, which to a certain extent, came as a result of political policies both in the USA and Europe. And now we are seeing the crypto industry asking for more government interference.
I accept rules and regulations are on the way, and following the collapse of FTX, some laws will be very harsh and unhelpful.
However, different from when the restrictions were removed, I expect fewer people to be celebrating the changes.
Until next time…