We wish you all the blessings of the holiday as we spend time with family and friends and gather for the long Holiday weekend.
As we rapidly move From Thanksgiving into the Christmas season and New Year’s Day (I can’t believe it’s almost 2023), we want to talk about finishing strong as well as touch on the difference between knowledge and wisdom, the big FTX scandal, and how good thinking affects our planning decisions and helps us avoid disasters.
The FTX bankruptcy is a huge scandal. It comes from the Theranos health technology outrage earlier in the year.
It’s pretty complex but comes down to the fact that a lot of smart young people, mainly only in their late 20’s ran the company and many smart hedge funds and investors lost a lot of money. It’s a collapse that rivals Enron and Lehman brothers.
FTX was basically a cryptocurrency exchange that traded a variety of digital tokens like Bitcoin, Ethereum, Dogecoin, and many others. The entire house of cards came crashing down last week. Billions of dollars just vanished overnight. The CEO, a guy called Sam Bankman-Fried AKA SBF is on the run somewhere in the Bahamas, Dubai, or Hong Kong trying to escape extradition. The young man who ran the company SBF started the company at age 27 only 3 years ago.
It went from a value of zero to 35 billion in 2 years. (1 st red flag) However, he was a super smart MIT graduate who dressed in ratty tee shirts, wore shorts, white sox, and sneakers with a mop of unkempt hair. He purported to “not care” about money and was interested in “Effective Altruism”, the idea of doing the best with money, which is a great idea. It attracted a lot of smart young people to the company and a lot of investors too. However, it was used as a front and type of “virtue signal” saying 'look at how good a person I am'.
You may not have heard much about this company, but your kids and grandkids know about it and may have been sucked into it. FTX ran ads all over social media and spent tens of millions of dollars on Super Bowl Ads with celebrities pitching the scheme. (Tip – Tom Brady doesn’t know much about Cryptocurrency)
How do people get sucked into these things?
Often, it comes down to understanding the difference between Knowledge and Wisdom and not asking the right questions. Wisdom is defined as the quality of having experience, knowledge, and good judgment often developed over many years of living.
Many of us have lived long enough and saved diligently over a long period of time and made mostly good decisions that have averted these types of scandals. (Some have not) However, when it comes to scams like FTX many young people in our lives fall victim to the lure of technology, easy money, and the story of saving the world by “effective altruism”. The wise people ask questions and many just know from experience if something looks and seems too good to be true.
Be sure to ask the right questions.
Finally, let’s reflect this week on all of the good things that we are thankful for like living in this country, family, friends, freedom health, and remember and help those who are struggling without these things.
For those who liked to read “Cliff Notes” in college here are the themes and time stamps:
- Have you heard about the FTX scandal? Here are the details. (5:50)
- How people fell for FTX and why you must be careful not to confuse knowledge and wisdom. (12:12)
- Sometimes wanting to believe in something you shouldn’t, can get you into trouble. (14:56)
Get additional financial information: https://doncashpodcast.com/episodes/
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