The explosive collapse of crypto exchange FTX has sent shock waves throughout the industry and cost up to a million investors an awful lot of money.
Even if you wouldn’t touch Bitcoin, Ethereum, Dogecoin and all the other alt-coins, you can still learn from them.
Here are 12 investor lessons worth learning after the latest crypto meltdown, which you can apply to your own portfolio.
What is Bitcoin and how did it start?
1. Beware false prophets
Sam Bankman-Fried, the self-styled eccentric genius behind FTX, is a shaggy-haired 30-year-old in shorts and untied trainers, who famously played League of Legends while on business phone calls.
It’s no surprise that crypto fans loved the “unkempt millennial”, as The Wall Street Journal called him, but grown-up investors who should have known better also bought into the “SBF” cult — and paid a high price.
Mr Bankman-Fried has gone from “billionaire prodigal son to bankrupt pariah in record time”, says Matt Weller, global head of research at Forex.com and City Index. “The implosion of FTX has set the crypto industry back tremendously.”
2. Everybody is wise after the event
Just as investors rushed to praise SBF before the crash, now they are rushing to bury him. This is yet another warning of the dangers in following the crowd.
Stick to what you understand. Billionaire investor Warren Buffett is widely quoted, but judging by recent events, widely ignored.
The “Sage of Omaha” famously said: “Invest in what you know … and nothing more.”
Unfortunately, that lesson was lost on the venture capitalists who poured money into FTX, having fallen for the SBF myth.
Huge financial institutions such as BlackRock, the world’s biggest fund manager, also fell for the hype, Mr Weller says.
3. Ignore celebrities
You wouldn't take fashion tips from a crypto investor, so why take investment tips from a celebrity?
Yet, that's exactly what people did with FTX, which was endorsed by A-list celebrities such as NFL quarterback Tom Brady, his ex-wife, model Gisele Bundchen, basketball player Shaquille O’Neal and Seinfield writer Larry David. All skilled in their chosen field, but that wasn’t finance.
They are now being sued for $11 billion in a class-action lawsuit brought by disgruntled investors. With luck, that will make other celebrities think twice about handing out investment advice.
4. Cheap money blows bubbles
Central bank largesse blew bubbles into everything, from equities to bonds, property, art, sports cars, thoroughbred racehorses and cryptocurrencies, says Russ Mould, investment director at online platform AJ Bell.
“It stands to reason that the withdrawal of that cheap cash will pop the selfsame bubbles,” he says.
We live in a different world today as central bankers tighten monetary policies and investors can no longer afford to take the same level of risk.
5. A crash can last longer than people think
Self-styled contrarian investors may be tempted to go shopping for crypto at today's reduced prices, but they should tread carefully as contagion grows, says Carsten Menke, head of next generation research at Julius Baer.
“Genesis Global Capital, another crypto lending platform, also suspended withdrawals, citing ‘unprecedented market turmoil’ after already being affected by the collapse of Three Arrows Capital in June,” Mr Menke says.
This year has also seen the downfall of Luna, broker Voyager and crypto lender Celsius Network.
“Amid mounting contagion and shattered confidence, any kind of recovery becomes much less likely,” says Mr Menke.
“The wounds of this crypto crisis will need much more time to heal and the long-term potential of digital assets has firmly moved out of focus.”
6. Trust matters
Trust may sound like an old-fashioned concept but we are lost without it.
FTX was a household name among retail traders in the often-opaque crypto markets, Mr Weller says.
“Likewise, institutions trusted the exchange as a trustworthy, ethical counterparty in the space. Even US lawmakers had a positive view of SBF from his aggressive lobbying efforts and willingness to explain the nuances of the crypto industry.”
All of this trust has been destroyed, leaving behind massive financial losses and extreme cynicism towards crypto markets.
“If even SBF and FTX were running illegal undercollateralised businesses, who can be trusted?” Mr Weller says.
It will take months if not years for the trauma to heal, he says.
7. Beware people who claim to do good
Mr Bankman-Fried followed a creed called “Effective Altruism”, whose adherents pledge to give away as much of their wealth as they can.
Today, many believe his high-minded claims helped to deflect criticism and scrutiny from how he was making that money in the first place.
If even SBF and FTX were running illegal undercollateralised businesses, who can be trusted?
Matt Weller,
global head of research at Forex.com and City Index
8. Don't borrow to invest
Investing money you don't have, known as leveraging, can be a respectable strategy in the right hands but it is always risky.
This is particularly so in the case of FTX, which created its own cryptocurrency, FTT, then used it as collateral to raise loans.
Yet FTT had no actual value, aside from a promise by FTX to buy any tokens for $22.
Leveraging is more dangerous than ever as central bankers tighten monetary policies, says Jim Wood-Smith, market commentator at Hawksmoor Investment Management.
“Money has become more expensive and harder to come by and that makes things very tricky for those who need to borrow to stay solvent.”
It is especially dangerous when your collateral is valueless, Mr Wood-Smith adds.
9. There is a point to regulation
If you buy an unregulated asset like crypto, you are on your own if something goes wrong, says Jack Amy, portfolio analyst at digital wealth manager Moneyfarm.
“FTX clients can’t withdraw their funds from the exchange. In a world with no regulator, it will be difficult to get any recourse on cryptocurrency losses.”
At least if you buy a regulated investment and feel cheated, you have some hope of redress.
Cryptocurrencies — in pictures
10. Speculating and investing are two different things
Mr Wood-Smith says his portfolios “have never, do not and will not hold” crypto.
“They are not, in any shape or form, investments but sheer speculation.”
As with any speculative venture, do not invest money unless you can afford to lose all of it.
11. There will be another bubble soon enough
There is nothing new about crypto, Mr Wood-Smith says.
“Homo sapiens have rarely been able to resist the lure of speculation. We are deterred by neither history nor experience.”
Tulip bulbs, the South Sea Bubble, dot-com shares, Bernie Madoff and Beanie Babies have all gone the same way, he says — and there will be more.
All have one thing in common: when there is big money to be made, investors lose their heads. Then their shirts.
12. History suggests there will be more bubbles, so how do you spot one?
All bubbles have similarities, says Mr Mould.
“It could be anything from railways to cryptocurrencies and the more disruptive or revolutionary it seems, the better.”
That may help you to identify the next one - but it may prove difficult to resist.
MOUNTAINHEAD REVIEW
Starring: Ramy Youssef, Steve Carell, Jason Schwartzman
Director: Jesse Armstrong
Rating: 3.5/5
The bio
Studied up to grade 12 in Vatanappally, a village in India’s southern Thrissur district
Was a middle distance state athletics champion in school
Enjoys driving to Fujairah and Ras Al Khaimah with family
His dream is to continue working as a social worker and help people
Has seven diaries in which he has jotted down notes about his work and money he earned
Keeps the diaries in his car to remember his journey in the Emirates
How to get exposure to gold
Although you can buy gold easily on the Dubai markets, the problem with buying physical bars, coins or jewellery is that you then have storage, security and insurance issues.
A far easier option is to invest in a low-cost exchange traded fund (ETF) that invests in the precious metal instead, for example, ETFS Physical Gold (PHAU) and iShares Physical Gold (SGLN) both track physical gold. The VanEck Vectors Gold Miners ETF invests directly in mining companies.
Alternatively, BlackRock Gold & General seeks to achieve long-term capital growth primarily through an actively managed portfolio of gold mining, commodity and precious-metal related shares. Its largest portfolio holdings include gold miners Newcrest Mining, Barrick Gold Corp, Agnico Eagle Mines and the NewMont Goldcorp.
Brave investors could take on the added risk of buying individual gold mining stocks, many of which have performed wonderfully well lately.
London-listed Centamin is up more than 70 per cent in just three months, although in a sign of its volatility, it is down 5 per cent on two years ago. Trans-Siberian Gold, listed on London's alternative investment market (AIM) for small stocks, has seen its share price almost quadruple from 34p to 124p over the same period, but do not assume this kind of runaway growth can continue for long
However, buying individual equities like these is highly risky, as their share prices can crash just as quickly, which isn't what what you want from a supposedly safe haven.
Results
2pm: Handicap Dh 90,000 1,800m; Winner: Majestic Thunder, Tadhg O’Shea (jockey), Satish Seemar (trainer).
2.30pm: Handicap Dh120,000 1,950m; Winner: Just A Penny, Sam Hitchcott, Doug Watson.
3pm: Handicap Dh105,000 1,600m; Winner: Native Appeal, Pat Dobbs, Doug Watson.
3.30pm: Jebel Ali Classic Conditions Dh300,000 1,400m; Winner: Thegreatcollection, Adrie de Vries, Doug Watson.
4pm: Maiden Dh75,000 1,600m; Winner: Oktalgano, Xavier Ziani, Salem bin Ghadayer.
4.30pm: Conditions Dh250,000 1,400m; Winner: Madame Ellingtina, Richard Mullen, Satish Seemar.
5pm: Maiden Dh75,000 1,600m; Winner: Mystery Land, Fabrice Veron, Helal Al Alawi.
5.30pm: Handicap Dh85,000 1,000m; Winner: Shanaghai City, Jesus Rosales, Rashed Bouresly.
UPI facts
More than 2.2 million Indian tourists arrived in UAE in 2023
More than 3.5 million Indians reside in UAE
Indian tourists can make purchases in UAE using rupee accounts in India through QR-code-based UPI real-time payment systems
Indian residents in UAE can use their non-resident NRO and NRE accounts held in Indian banks linked to a UAE mobile number for UPI transactions
The Limehouse Golem
Director: Juan Carlos Medina
Cast: Olivia Cooke, Bill Nighy, Douglas Booth
Three stars
Bawaal%20
%3Cp%3E%3Cstrong%3EDirector%3A%3C%2Fstrong%3E%20Nitesh%20Tiwari%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EStars%3A%3C%2Fstrong%3E%20Varun%20Dhawan%2C%20Janhvi%20Kapoor%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3ERating%3A%3C%2Fstrong%3E%201%2F5%3C%2Fp%3E%0A
Timeline
1947
Ferrari’s road-car company is formed and its first badged car, the 125 S, rolls off the assembly line
1962
250 GTO is unveiled
1969
Fiat becomes a Ferrari shareholder, acquiring 50 per cent of the company
1972
The Fiorano circuit, Ferrari’s racetrack for development and testing, opens
1976
First automatic Ferrari, the 400 Automatic, is made
1987
F40 launched
1988
Enzo Ferrari dies; Fiat expands its stake in the company to 90 per cent
2002
The Enzo model is announced
2010
Ferrari World opens in Abu Dhabi
2011
First four-wheel drive Ferrari, the FF, is unveiled
2013
LaFerrari, the first Ferrari hybrid, arrives
2014
Fiat Chrysler announces the split of Ferrari from the parent company
2015
Ferrari launches on Wall Street
2017
812 Superfast unveiled; Ferrari celebrates its 70th anniversary
The specs
Price, base / as tested Dh135,000
Engine 1.6L turbo
Gearbox Six speed automatic with manual and sports mode
Power 165hp @ 6,000rpm
Torque 240Nm @ 1,400rpm 0-100kph: 9.2 seconds
Top speed 420 kph (governed)
Fuel economy, combined 35.2L / 100km (est)
F1 The Movie
Starring: Brad Pitt, Damson Idris, Kerry Condon, Javier Bardem
Director: Joseph Kosinski
Rating: 4/5
CHATGPT%20ENTERPRISE%20FEATURES
%3Cp%3E%E2%80%A2%20Enterprise-grade%20security%20and%20privacy%3C%2Fp%3E%0A%3Cp%3E%E2%80%A2%20Unlimited%20higher-speed%20GPT-4%20access%20with%20no%20caps%3C%2Fp%3E%0A%3Cp%3E%E2%80%A2%20Longer%20context%20windows%20for%20processing%20longer%20inputs%3C%2Fp%3E%0A%3Cp%3E%E2%80%A2%20Advanced%20data%20analysis%20capabilities%3C%2Fp%3E%0A%3Cp%3E%E2%80%A2%20Customisation%20options%3C%2Fp%3E%0A%3Cp%3E%E2%80%A2%20Shareable%20chat%20templates%20that%20companies%20can%20use%20to%20collaborate%20and%20build%20common%20workflows%3C%2Fp%3E%0A%3Cp%3E%E2%80%A2%20Analytics%20dashboard%20for%20usage%20insights%3C%2Fp%3E%0A%3Cp%3E%E2%80%A2%20Free%20credits%20to%20use%20OpenAI%20APIs%20to%20extend%20OpenAI%20into%20a%20fully-custom%20solution%20for%20enterprises%3C%2Fp%3E%0A
The specs
- Engine: 3.9-litre twin-turbo V8
- Power: 640hp
- Torque: 760nm
- On sale: 2026
- Price: Not announced yet
UAE currency: the story behind the money in your pockets
Results:
First Test: New Zealand 30 British & Irish Lions 15
Second Test: New Zealand 21 British & Irish Lions 24
Third Test: New Zealand 15 British & Irish Lions 15
Business Insights
- As per the document, there are six filing options, including choosing to report on a realisation basis and transitional rules for pre-tax period gains or losses.
- SMEs with revenue below Dh3 million per annum can opt for transitional relief until 2026, treating them as having no taxable income.
- Larger entities have specific provisions for asset and liability movements, business restructuring, and handling foreign permanent establishments.
Global state-owned investor ranking by size
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China
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UAE
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Japan
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5
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Norway
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Canada
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Singapore
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Australia
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Read more about the coronavirus
The specs
Engine: 4.0-litre flat-six
Torque: 450Nm at 6,100rpm
Transmission: 7-speed PDK auto or 6-speed manual
Fuel economy, combined: 13.8L/100km
On sale: Available to order now
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MOST%20POLLUTED%20COUNTRIES%20IN%20THE%20WORLD
%3Cp%3E1.%20Chad%3Cbr%3E2.%20Iraq%3Cbr%3E3.%20Pakistan%3Cbr%3E4.%20Bahrain%3Cbr%3E5.%20Bangladesh%3Cbr%3E6.%20Burkina%20Faso%3Cbr%3E7.%20Kuwait%3Cbr%3E8.%20India%3Cbr%3E9.%20Egypt%3Cbr%3E10.%20Tajikistan%3Cbr%3E%3Cbr%3E%3Cem%3ESource%3A%202022%20World%20Air%20Quality%20Report%3C%2Fem%3E%3C%2Fp%3E%0A
Tips%20for%20travelling%20while%20needing%20dialysis
%3Cul%3E%0A%3Cli%3EInform%20your%20doctor%20about%20your%20plans.%C2%A0%3C%2Fli%3E%0A%3Cli%3EAsk%20about%20your%20treatment%20so%20you%20know%20how%20it%20works.%C2%A0%3C%2Fli%3E%0A%3Cli%3EPay%20attention%20to%20your%20health%20if%20you%20travel%20to%20a%20hot%20destination.%C2%A0%3C%2Fli%3E%0A%3Cli%3EPlan%20your%20trip%20well.%C2%A0%3C%2Fli%3E%0A%3C%2Ful%3E%0A
Earth under attack: Cosmic impacts throughout history
- 4.5 billion years ago: Mars-sized object smashes into the newly-formed Earth, creating debris that coalesces to form the Moon
- 66 million years ago: 10km-wide asteroid crashes into the Gulf of Mexico, wiping out over 70 per cent of living species – including the dinosaurs.
- 50,000 years ago: 50m-wide iron meteor crashes in Arizona with the violence of 10 megatonne hydrogen bomb, creating the famous 1.2km-wide Barringer Crater
- 1490: Meteor storm over Shansi Province, north-east China when large stones “fell like rain”, reportedly leading to thousands of deaths.
- 1908: 100-metre meteor from the Taurid Complex explodes near the Tunguska river in Siberia with the force of 1,000 Hiroshima-type bombs, devastating 2,000 square kilometres of forest.
- 1998: Comet Shoemaker-Levy 9 breaks apart and crashes into Jupiter in series of impacts that would have annihilated life on Earth.
-2013: 10,000-tonne meteor burns up over the southern Urals region of Russia, releasing a pressure blast and flash that left over 1600 people injured.
Killing of Qassem Suleimani
Killing of Qassem Suleimani
All about the Sevens
Cape Town Sevens on Saturday and Sunday: Pools A – South Africa, Kenya, France, Russia; B – New Zealand, Australia, Spain, United States; C – England, Scotland, Argentina, Uganda; D – Fiji, Samoa, Canada, Wales
HSBC World Sevens Series standing after first leg in Dubai 1 South Africa; 2 New Zealand; 3 England; 4 Fiji; 5 Australia; 6 Samoa; 7 Kenya; 8 Scotland; 9 France; 10 Spain; 11 Argentina; 12 Canada; 13 Wales; 14 Uganda; 15 United States; 16 Russia
Expert advice
“Join in with a group like Cycle Safe Dubai or TrainYAS, where you’ll meet like-minded people and always have support on hand.”
Stewart Howison, co-founder of Cycle Safe Dubai and owner of Revolution Cycles
“When you sweat a lot, you lose a lot of salt and other electrolytes from your body. If your electrolytes drop enough, you will be at risk of cramping. To prevent salt deficiency, simply add an electrolyte mix to your water.”
Cornelia Gloor, head of RAK Hospital’s Rehabilitation and Physiotherapy Centre
“Don’t make the mistake of thinking you can ride as fast or as far during the summer as you do in cooler weather. The heat will make you expend more energy to maintain a speed that might normally be comfortable, so pace yourself when riding during the hotter parts of the day.”
Chandrashekar Nandi, physiotherapist at Burjeel Hospital in Dubai
