For anyone interested in emerging trends within technology, I encourage you to read about the India Stack and Aadhaar. I can definitely see a system like this spreading throughout the world. It accomplishes many of the efficiencies of Blockchain technology but is much easier for the average person to understand than Bitcoin. There are certainly some big differences but I’m sure this is the way governments would prefer to go.
I was asked what I thought about today’s IPO of Snap Inc, maker of the Snapchat app. In short, it’s one of the most egregious I have ever seen. I don’t wish them ill and I could very well be wrong, but this isn’t a stock we’ll be investing in anytime soon. For the time being, this stock shouldn’t be viewed as anything other than a very short-term speculative trading vehicle.
It made me think of an article from last summer written by Peter Atwater comparing today’s Silicon Valley to the country of Poyais. The country of what?? Yeah… it was a made up country that bilked investors out of millions in the 1820’s. Now I’m not saying Snap is a made up company. I’m referring more to the hype generated to draw in investors that don’t fully understand what they’re investing in. It offers some good lessons as a reminder to keep a level head when so many others get caught up in the exciting promise of riches (the story of every financial bubble). Here’s an interesting passage:
All this should have been a warning sign. Investors were hunting for returns, as they would later do in the run up to the Great Depression and to the subprime crisis. Financiers tend to do silly things when searching for yield. Looking back at the boom 30 years later The Economist reported that loans were being made for “mining companies to explore lands which contained no metal”…
How did the settlers, a group that included a banker, doctors and experienced military men, fall for this nonsense?
New research by Tamar Frankel of Boston University suggests some answers. Ms Frankel studied hundreds of financial cons, looking for recurring patterns. One set that pops up time and time again describes the traits of the victims. They tend to be excessively trusting, have a high risk tolerance, and—especially the more educated victims—have a need to feel exclusive, or part of a special group. Other research shows that victims tend to harbour dissatisfaction with their current economic status, and a desire not to be left behind. Some feel envious of their economic neighbours, which can lead to greedy, risky investing.
Investing is tricky. One often wants to get in early on new, exciting trends but for most people it’s usually best to stick with what you know because there’s less risk of getting bilked.
-Nick