The article referenced above is a review of Elliot Managements letter to investors regarding the perils of Cryptocurrencies. In it their founder states: “But is it not glorious that when the equivalent of nothing attracts priests and parishioners who run up the price, the very willingness of the mob to buy it at higher and higher prices is seen as a validation of the thing, rather than an indication of the limitless ignorance of swaths of the human race?”
Since they threw the first punch, lets talk about investment scams.
The opportunity to invest in stocks and mutual funds (scam) consist of the following:
Convincing people to put their money with a third party who will use the bulk of it to make lots money for themselves while throwing back just enough of a bone to keep the Rubes happy so that they don’t pull their money out, all the while making sure to put put all the fees and taxes on the investor side of the ledger. For this “opportunity” they charge the client for all transaction decisions that they alone make. Regardless of the outcome of those decisions the client pays. For all this the investor gets claim to a derivative of a partial ownership of a company that is a real tangible asset. If you believe that go ask a stock or bond holder from General Motors to see how tangible their claims were.
In this case Elliot Management posted a whopping 8% return last year. Translation, the clients paid the management to underperform the market by a mere 45%. Take taxes and fees out now you are talking maybe 6% return. This is the norm in the mutual fund mess: overpaying for underperformance. A no load index fund would have returned 14% with essentially no fees and minimal taxes.
The question not asked is why would normally sanguine conservative investors be willing to tolerate the volatility of the crypto space. Aside form slinging the afore mention epithets impugning the intelligence of the average investor, this appear to be a mystery to Elliot management and its founder Paul Singer. Simply put they are afraid to admit that Crypto is a monster of their own making. The last 10 years has laid bare the BS that is the conventional investing industry. People are willing to tolerate the volatility of Crypto because unlike conventional investing, they know what they are getting. Ultimately Mr Singer and his minions are haunting by the real possibility that the people he impugns may finally get access to the financial temple without having to intermediate through the self anointed priests of that ancient system. Such a thing can not be tolerated. Mr Singer has to convince us all how important he is to our well being.
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