{"id":65088,"date":"2022-11-16T09:02:17","date_gmt":"2022-11-16T14:02:17","guid":{"rendered":"https:\/\/blog.t3live.com\/?p=65088"},"modified":"2022-11-16T09:02:17","modified_gmt":"2022-11-16T14:02:17","slug":"david-prince-inner-circle-ftx","status":"publish","type":"post","link":"https:\/\/blog.t3live.com\/2022\/11\/16\/david-prince-inner-circle-ftx\/","title":{"rendered":"The FTX Collapse: A Love Story"},"content":{"rendered":"

The FTX collapse and associated mess in the crypto market isn\u2019t the first disaster of its kind.\u00a0<\/span><\/p>\n

And it won\u2019t be the last.\u00a0<\/span><\/p>\n

Richard Feynman said \u201cThe first principle is that you must not fool yourself\u2014and you are the easiest person to fool.\u201d<\/span><\/p>\n

I tell my Inner Circle<\/a><\/strong><\/span> traders it\u2019s better to be humble than smart.\u00a0<\/span><\/p>\n

The number-one problem with smart people is they know they\u2019re smart.\u00a0<\/span><\/p>\n

They\u2019re in love with their own brainpower and can\u2019t question their instincts.\u00a0 <\/span><\/p>\n

Humility makes you question yourself.<\/span><\/p>\n

Take VCs.\u00a0<\/span><\/p>\n

They are in love with the idea of finding the next Mark Zuckerberg or Steve Jobs or Warren Buffett or Elon Musk or Shopify<\/strong> (SHOP) or Salesforce<\/strong> (CRM) or whatever.\u00a0\u00a0<\/span><\/p>\n

And that is their greatest weakness.<\/span><\/p>\n

This mission to find extraordinary opportunities creates blind spots.<\/span><\/p>\n

Which is how they get fooled by fooled by hucksters like Sam Bankman-Fried, Elizabeth Holmes, and Bernie Madoff.\u00a0<\/span><\/p>\n

When you\u2019re a billionaire that\u2019s financed 10 Silicon Valley unicorns, you never imagine that you could be the victim of a hoax.<\/span><\/p>\n

And there is a lesson for traders here too.<\/span><\/p>\n

Love people, not stocks.<\/span><\/p>\n

Stock traders fall in love with finding the next sexy asset class or the next <\/span>Apple<\/b> (AAPL) or <\/span>Tesla<\/b> (TSLA).<\/span><\/p>\n

And they never ask themselves \u201cwhat if I\u2019m wrong?\u201d<\/span><\/p>\n

That turns research and analysis into confirmation bias.\u00a0<\/span><\/p>\n

Everything you see — even if it\u2019s bad — confirms what you believe.<\/span><\/p>\n

Let me give you an example.<\/span><\/p>\n

Say a semiconductor company reports a massive spike in inventories.<\/span><\/p>\n

The blind bull will say \u201cthat\u2019s good because it\u2019s more product to sell.\u201d<\/span><\/p>\n

But if you have an ounce of skepticism, you\u2019ll ask questions like \u201cis demand drying up?\u201d<\/span><\/p>\n

If you never ask tough questions, you will go broke in this bear market<\/a><\/strong><\/span>. I guarantee it.<\/span><\/p>\n

Confirmation bias wins because humans are determined to be right.\u00a0<\/span><\/p>\n

That is why FTX will happen again and again for the next 10,000 years.<\/span><\/p>\n

There were TONS of red flags around Sam Bankman-Fried and FTX.<\/span><\/p>\n

Like lack of experienced management in a complex, difficult field… including no CFO!<\/span><\/p>\n

There were obvious conflicts of interest with Alameda. <\/span><\/p>\n

And a huge money funnel to Washington.<\/span><\/p>\n

Smart people armed with confirmation bias will make up excuses for anything and everything.\u00a0<\/span><\/p>\n

\u201cThey don\u2019t need a CFO because they\u2019re MIT geniuses.\u201d<\/span><\/em><\/p>\n

By the way, you\u2019re about to see the biggest comedy in the world.\u00a0<\/span><\/p>\n

Some of the biggest crypto players are out there aying \u201cCrypto is still great! It just needs regulation so I\u2019m marching to Washington to get it done!\u201d<\/span><\/p>\n

Up until a week ago, no regulation was the whole point!<\/span><\/p>\n

The scary thing is crypto will get even messier.<\/span><\/p>\n

So remember this kids: be smart, but stay humble!<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

The FTX collapse and associated mess in the crypto market isn\u2019t the first disaster of its kind.\u00a0 And it won\u2019t be the last.\u00a0 Richard Feynman said \u201cThe first principle is that you must not fool yourself\u2014and you are the easiest person to fool.\u201d I tell my Inner Circle traders it\u2019s better to be humble than smart.\u00a0 The number-one problem with smart people is they know they\u2019re smart.\u00a0 They\u2019re in love with their own brainpower and can\u2019t question their instincts.\u00a0 Humility makes you question yourself. Take VCs.\u00a0 They are in love with the idea of finding the next Mark Zuckerberg or Steve Jobs or Warren Buffett or Elon Musk or Shopify (SHOP) or Salesforce (CRM) or whatever.\u00a0\u00a0 And that is their greatest weakness. This mission to find extraordinary opportunities creates blind spots. Which is how they get fooled by fooled by hucksters like Sam Bankman-Fried, Elizabeth Holmes, and Bernie Madoff.\u00a0 When you\u2019re a billionaire that\u2019s financed 10 Silicon Valley unicorns, you never imagine that you could be the victim of a hoax. And there is a lesson for traders here too. Love people, not stocks. Stock traders fall in love with finding the next sexy asset class or the next Apple (AAPL) or Tesla (TSLA). And they never ask themselves \u201cwhat if I\u2019m wrong?\u201d That turns research and analysis into confirmation bias.\u00a0 Everything you see — even if it\u2019s bad — confirms what you believe. Let me give you an example. Say a semiconductor company reports a massive spike in inventories. The blind bull will say \u201cthat\u2019s good because it\u2019s more product to sell.\u201d But if you have an ounce of skepticism, you\u2019ll ask questions like \u201cis demand drying up?\u201d If you never ask tough questions, you will go broke in this bear market. I guarantee it. Confirmation bias wins because humans are determined to be right.\u00a0 That is why FTX will happen again and again for the next 10,000 years. There were TONS of red flags around Sam Bankman-Fried and FTX. Like lack of experienced management in a complex, difficult field… including no CFO! There were obvious conflicts of interest with Alameda. And a huge money funnel to Washington. Smart people armed with confirmation bias will make up excuses for anything and everything.\u00a0 \u201cThey don\u2019t need a CFO because they\u2019re MIT geniuses.\u201d By the way, you\u2019re about to see the biggest comedy in the world.\u00a0 Some of the biggest crypto players are out there aying \u201cCrypto is still great! It just needs regulation so I\u2019m marching to Washington to get it done!\u201d Up until a week ago, no regulation was the whole point! The scary thing is crypto will get even messier. So remember this kids: be smart, but stay humble!<\/p>\n","protected":false},"author":52,"featured_media":57921,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[747],"tags":[],"class_list":["post-65088","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-inner-circle"],"_links":{"self":[{"href":"https:\/\/blog.t3live.com\/wp-json\/wp\/v2\/posts\/65088","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/blog.t3live.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blog.t3live.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blog.t3live.com\/wp-json\/wp\/v2\/users\/52"}],"replies":[{"embeddable":true,"href":"https:\/\/blog.t3live.com\/wp-json\/wp\/v2\/comments?post=65088"}],"version-history":[{"count":1,"href":"https:\/\/blog.t3live.com\/wp-json\/wp\/v2\/posts\/65088\/revisions"}],"predecessor-version":[{"id":65091,"href":"https:\/\/blog.t3live.com\/wp-json\/wp\/v2\/posts\/65088\/revisions\/65091"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/blog.t3live.com\/wp-json\/wp\/v2\/media\/57921"}],"wp:attachment":[{"href":"https:\/\/blog.t3live.com\/wp-json\/wp\/v2\/media?parent=65088"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blog.t3live.com\/wp-json\/wp\/v2\/categories?post=65088"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blog.t3live.com\/wp-json\/wp\/v2\/tags?post=65088"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}