Financial frauds are a fact of life. Especially when things are hidden or poorly regulated. The question is NOT will it happen again; the question is when it will happen next.
What is next?
We don’t necessarily need a big fish like Madoff, many small operators can cause as much trouble. Just because it isn’t in the news, doesn’t mean fraud isn’t happening.
Some frauds go on for years before imploding, some go quick
Sam Bankman-Fried was at one time ranked the 41st-richest American in the Forbes 400. In the end he was sentenced to 25 years in prison.
Think of Enron. Enron was created in 1985 by a merger of two small companies, and it took until December 2001 for it to implode into bankruptcy.
The South Sea Company was founded in 1711, became a insanely popular, but collapsed in 1720, bankrupting many people.
I view cryptocurrency as one big fraud and fantasy. Some have profited, but eventually it will all fade and collapse. Think of the endless cryptocurrency scandals, where hackers steal millions online. The amount of money stolen from the crypto universe is staggering. You must read this.
Further reading: here /
And
Noteworthy and associated with fraud are political figures profiting from their positions. For example, insider trading is legal for members of congress. Trump profits from his position.
How is one to manage?
The July 5, 1955 cover of Newsweek featured that fateful line: “Everyone’s Getting Rich But Me!”
One way to stay safe is to avoid FOMO. FOMO is a modern version of comparison, as in Comparison is the thief of joy.
Back Here on Earth
As raised previously, we should continue our investments when we sense chaos around us.
But I avoid complex and seemingly new investment ideas. It is never different, as in This time it’s different. It Is Never Different,
I stick to the old school investing. Companies I know about, companies that are real, registered and legal. That way I have lesser chance of being drawn into something that will go bust.
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