Updated on 11/20/2022 15:29
The best screenplays are still written by life. Again this week: a story of rise and fall, ambition, greed and jealousy – hidden in economic news. And best of all: I learned a lot about human nature and my own mistakes with money.
Once in a while, there is economic news that attracts me. Not because it’s a lot of money, it often is. But because it shines a light on the dark side of human nature in a way that only crime novels can. This week was the story of the crash of crypto exchange FTX.
I know this business abbreviation sounds more incomprehensible than exciting at first glance. My interest was heightened when I read that the founder of FTX, which was worth $16 billion last Friday, is a disheveled 30-something who casually plays video games in meetings. But he had managed to woo soccer star Tom Brady and his wife, supermodel Gisele Bundchen, as brand ambassadors. And: This said founder lived in a villa in the Bahamas and had had jealousy dramas there with his girlfriend, who also ran the second largest company in his group of companies.
Sam Bankman-Fried: Most of his fortune disappeared in just two weeks
Sam Bankman-Fried – that’s the name of the 30-year-old ex-multibillionaire – built the third-largest trading platform for cryptocurrencies like Bitcoin in just four years. Within two weeks, his business collapsed and dragged the entire crypto asset market into the abyss ever since.
Since the beginning of this week, Bankman-Fried is not only broke, but must also answer questions from American investigators who accuse him of investment fraud. What’s so exciting about his story isn’t the spectacular accident. Even more exciting is his meteoric rise, which wouldn’t have been possible without a deeply human trait: greed.
And honestly, aren’t we all a bit greedy? This is by no means only true for Bitcoin fans. When we unmask investment fraudsters in the financial test, we are often shocked to see that many normal, if not very reasonable, people put large portions of their savings at risk because the prospect of high interest rates or is stronger than their reason.
One of our most important websites is therefore the investment warning list: all the companies, web portals and people we know of are working with impure methods and which investors must absolutely keep away from. listed. So, if you are ever tempted to give in to the promise of high interest rates or tempting investment opportunities, take a look at the list of financial tests first.
The Crash of Crypto Entrepreneur Bankman-Fried
Teenage bohemian crypto entrepreneur Bankman-Fried has managed to hide his greed for years. Part of his image as an investment prodigy was to pose as a future big donor a la Bill Gates.
He doesn’t need the money himself, he says. But to do really well in the world, you need to have a fabulous amount of money to be able to donate it, according to his credo, with which he made the cover of many respected business magazines. I don’t want to judge at this point if he believed it himself or if it was all just a nefarious publicity ploy.
Whatever the goal, when he founded his company in his mid-twenties, his goal was to make as much money as possible. He was not alone in this case: his investors, who lent him hundreds of millions of euros, pursued the same objective, and presumably many too, who stored their cryptocurrencies on his platforms, attracted by the immense increases. bitcoin prices and others. during the last years.
By the way: If you want to invest some of your money in Bitcoin, Ethereum or other cryptocurrencies despite the known risks, Finanztest has examined which regulated platforms in Germany allow this with an acceptable risk. As a business journalist, of course, I welcome everyone who deals with investments and pensions. But the Bitcoin boom makes it clear that we often fall into thinking traps – myself included.
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Biggest Pitfall: We overestimate what’s new, what’s tempting in the short term, and overlook proven strategies that seem boring but pay off in the long run. I notice this in myself: how tempting it was during the stock market boom of the past few years to think about the rapid rise in bitcoin stocks and prices – and how boring it was to have a solid portfolio of a global ETF, that is to say a fund that replicates a major stock market index, and a daily or fixed deposit part.
A solid wallet does not inspire fantasies – but it is safer
Such a mix is suitable for almost all investors who want to grow their money over ten, twenty or thirty years. Ideally, you leave such a deposit largely alone, adjust it once or twice a year and avoid bad times on the stock exchange. But this method does not inspire fantasies – unlike the wild visions of the future of crypto-prophets. Studies show that for the average consumer, a balanced portfolio over a period of ten, twenty or thirty years is hard to beat.
There’s something reassuring about this realization: whatever the investment hype is spreading through all channels, chances are you won’t miss much. Reconciled with my boring fixed deposit account, I now sit down, sip tea, and read the latest pungent promises from narcissistic investors — but for entertainment only.
Mexican researchers have used climate models to calculate the extent of the damage caused by the mining of the Bitcoin cryptocurrency.