Things we're reading today - 16th November 2022: Only when the tide goes out that do you discover who’s been swimming naked

“Only when the tide goes out that do you discover who’s been swimming naked.” - Warren Buffett.

SPACs were the go to option for shady promoters to dump worthless stocks on investors who didn’t care. Now that the cheap money is over and money has a price (high-interest rates), we’ll see all the scams and frauds come out.

Bird said it had recorded revenue on certain trips even when customers lacked sufficient “preloaded ‘wallet’ balances.” The company said it should have reported the unpaid balances on its financial statements as deferred revenue.

The marketcap of the stock is down from a peak of $2.5 billion to ~$80 million

Economist Hyman Minksy in his financial instability theory said that stability breeds complacency, which leads to instability. This theory got the pop culture treatment and came to be known as the Minsky Moment. The phrase became popular during the 2008 crisis.


We’re seeing the exact thing play out. More skeletons will start tumbling from closets.


Do crypto investors make money? NOPE! Some data from The Bank Of International Settlements (Central bank for central banks).

We show that, when the price of Bitcoin rises, more people download and actively use crypto exchange apps. These new users are disproportionately younger and male, commonly identified as the most “risk-seeking” segment of the population. We show that, due to price declines, an estimated 73-81% of retail investors have likely lost money on their initial investment.

I know we’ve shared a lot about FTX but it’s really funny.

It’s easy to say it in hindsight but it’s ridiculously easy to fool VCs sometimes. Elizabeth Holmes of Theranos used to dress like Steve Jobs and fake her voice. She was hailed as a genius. Now, this SBF character who used to act like a jackass was considered the same. It’s funny that weirdness is equated with genius.

In the last year, Bankman-Fried had soared to buzzy prominence as a paragon of how the ultra-rich, who have seemingly endless wealth, might use it for good. He’s been the subject of countless profiles; he was on the cover of Fortune’s September issue. The media portrayed him as an unassuming, nerdy savant, frequently noting his down-to-earthness, his messy mop of hair, his penchant for wearing T-shirts and shorts, his Toyota Corolla. Investors were enamored of the fact that he wasn’t a buttoned-up entrepreneur; he played computer games during pitch meetings, and like other modern-day founders, his eccentricities were taken as proof of his distinct genius.

Matt Levine, the greatest financial journalist alive today, put it best:

“FTX’s list of investors spans powerful and well-known investment firms: NEA, IVP, Iconiq Capital, Third Point Ventures, Tiger Global, Altimeter Capital Management, Lux Capital, Mayfield, Insight Partners, Sequoia Capital, SoftBank, Lightspeed Venture Partners, Ribbit Capital, Temasek Holdings, BlackRock and Thoma Bravo.” I suppose FTX is a failure of venture capitalist due diligence, but it’s an odd kind. The usual VC due diligence failure is, like, you back an entrepreneur who promises a futuristic product, and the product doesn’t work. FTX worked fine: People liked its technology, and it seems to have made money. The problem was in its balance sheet, which was full of snakes, and its governance, which put all the snakes there. Ideally the venture capitalists would have spotted that in due diligence, but the typical VC company has a very simple balance sheet and terrible governance, so it is sort of understandable that they sailed right by those problems.

Also, this

FTX’s bankruptcy could involve more than one million creditors, its lawyers said in court filings late Monday.

Also :joy::joy::joy:


These two charts perfectly illustrate how bad the situation in China is.


Despite this gold has done nothing :sob:

Central banks globally have accumulated gold reserves this year at a pace never seen since 1967, when the US dollar was still backed by the precious metal.

In the quarter ending September, demand for gold was up 28% year-on-year, reaching 1,181 tons, according to a new World Gold Council (WGC) report.


8 billion

That’s the number of people living on earth at this moment.

It took the world just 12 years to go from seven to eight billion in population. The next billion, the UN’s sexual and reproductive health agency estimates, will take less than 15 years till 2037. While the global population will hit 9.7 billion by 2050, it will reach 10.4 billion by the end of the 21st century, the UN forecasts in its latest World Population Prospects report.


“Those who got rich overnight don’t understand how their wealth was actually generated (i.e. a bubble). So they keep doing the same things that got them rich in the first place, in an effort to further increase their fortunes. But, once the bubble pops, the behavior that got them rich leads to their ruin. As they create, so they destroy. It’s a doubled-edged sword all the way down.”

If you’re not tired of reading FTX saga :wink: this is nice piece on:

  • The Origins of “Bankruptcy”
  • Parallels with 19th Century Railroads
  • The Panic of 1907 & Founding of the Fed

One of the most common features of 19th century / early 20th century “panics” was the collapse of major financial institutions due to speculative loans or bets.

During the 19th century in particular, practically every market panic stemmed from problems in the railroad industry. Like crypto markets today, the 19th century railway industry was utter chaos and plagued by volatility.

During the Panic of 1907, J.P. Morgan famously bailed out other financial institutions in the aftermath of market turmoil. The fact that markets had relied upon a single individual to rescue America’s financial system highlighted the need for a central bank tasked with aiding markets in times of distress. Just a few years later, the Federal Reserve was founded as a result.

Hydro-meteorological calamities, including heavy rainfall and floods, have damaged 33.9 million hectares of India’s cropped area between 2015-16 and 2021-22, as per the ministry of agriculture data tabled in the recent monsoon session of parliament.

The drought, an event arising out of scanty and deficient rainfall, was equally destructive. About 35 million hectares of cropped area (where crop loss was 33% and above) was damaged between 2016-17 to 2021-22, according to data obtained by this journalist in the last week of October, under the Right to Information (RTI) Act, provided by the drought management cell of the Union ministry of agriculture and farmer welfare.


Bubbles and frauds not only prey on similar human behaviours, at times they can become one and the same thing. The most perilous situation is when a fraud morphs into a bubble. Here the euphoria that arises around an investment doesn’t lead to the price being detached from reality, but the price being attached to a fantasy.


From multi million power ball lottery winners to crypto millionaires/ billionaires. So much in common. Well as the law of nature states what goes up has to come down.

the most funny thing for me is the behavior doesn’t change. even though the history may not repeat exactly, it always certainly rhymes.

Something is cooking. is currency backed by gold coming back.

Not necessarily, it is the greed and perhaps the overconfidence that makes people stay that way. They need to know if it is their great genius that made them rich or if it something else too.

If I buy a lottery ticket and win, I will not buy a ticket again :grin:

The price of a stock trading at extraordinary valuations without any base will come down, but not the price of a stock which the market knows has great future, with capable management at the helm, which is gaining market share, it defies gravity in a way :chart_with_upwards_trend:

buying the lottery again and again is not making most lottery winners go bankrupt. its not knowing operational costs involved in maintaining big things they buy after winning the lottery.

these make the world go round and round.

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Well, it kind of says that, even big intelligent people too extrapolate current growth into future. Also, if Facebook’s plans work, critics may again come back and praise it.

It is just that, sometimes it is hard to say about the future.

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A really nice read on Softbank ^