I never watched ‘Only Fools and Horses’. Probably because I didn’t grow up in Britain, but also because it wasn’t on country ABC (or in later years GWN) when I was growing up (in the first town that people came to, when they ran out of petrol, after they were turfed out of the city).

I didn’t even mean to reference this show, but I was trying to find an image and a story about financial wrongedry (yes, it’s a word), seeing as how so many people are falling for it. So I typed in ‘fools’ and up came a TV show about a “two brothers who buy and sell almost anything, including dodgy goods, believing that they will someday get rich doing so.”

It fits so perfectly.

We’re all investing in one way or another. Looking for cash accounts with better rates of interest. Buying a house in a suburb we think will grow. Putting cash into an industry super fund with an investment strategy for the long term. Shares.

There are lots of Del Boys or Arthur Daleys or even Donald Trumps, even in the non-fiction world. (That last one was a fictional character too, right?) Always on the hunt to take your hard earned away from you and to put it in their pocket.

So let’s play a little game called…Is it a scam? We’ll start off easy.

The quote unquote Nigerian Prince

I often wonder about those ‘Nigerian Prince’ email scams. It’s surprising that so many people still fall for it in this day and age. I guess it started to make a lot of sense when I found out that they inserted spelling mistakes on purpose to make sure as to not get the brightest respondents.

This is quite an easy one to spot and an easy one to categorise. Why would a Prince email you? Why would it be in your junk mail? Do you really think that you, probably a John Smith-type, have a royal heritage somewhere in Middle-Europe-Africa-South America that makes you the most likely recipient for an inheritance, and that an inheritance of that size would be disclosed in an email?

Definitely a scam. They are relying on your greedy impulses to cloud your judgement.

That low grade unobtanium explorer in Svenborgia

It seems pretty easy for a mining ‘entrepreneur’ to get something listed on the ASX. Peg some land, waive some geological mapping around or some rock-chips, get a failing listed company to buy your tenement off you for $500k cash and bucketload of shares and options.

There was even a thing once called ‘piggy-back options’, where you get a new option each time you exercise an option, so you exercise some, sell into the market, exercise some more, sell into the market and so forth. A veritable printing press! (Maybe they’re still around, I googled it and saw a reference from 2020…)

So our ‘esteemed’ mining ‘entrepreneur’ spent a few bucks pegging a bit of land, takes a boat load of equity, uses the people buying the shares on market like an ATM, and surprise surprise, nothing comes of the drilling. The company buys a few more tenements off a friend and away they go again. Stick around for a few cycles, and you’ll see these ATM’s start off as a tech stock in a tech boom, then when that fails they become a mining explorer looking for whatever is currently ‘hot’, then the next thing and so forth.

Well, as much as I’d love to, we aren’t allowed to name and shame those directors or companies that are run with scant concern for your wellbeing, so you’ll need to find them yourselves. Rest assured they have a very solid understanding of the legislation, the ASIC and the ASX and the loopholes they can rort. But they don’t usually change their spots. They just evolve from cycle to cycle.

They are also relying on your greed impulses. They pitch the thing to the market as ‘the next big thing’, in a hot sector, pay for some promotion or even issue shares/options to a promoter with the express hurdle of ‘getting the share price up’. Then it starts to move, and you chase it.

Is it scam? Hmmm. (my imaginary lawyer just said “shut up now!”)

Marketech Focus

Art

So, some guy, maybe, painted a landscape back in the 1700’s. Sold it to someone for some old cheese and half a piece of bread. He then on-sold it for more. Then more, then more. Maybe it started out as ‘just a nice painting’, then it became ‘investment-grade’ and people started buying art for their super funds (where they aren’t even allowed to hang it but have to store it!).

Are we supposed to invest in art? What makes it worth anything? What made Damien Hurst’s ‘Cow in Formaldehyde’ worth millions, and then the ‘Shark in Formaldehyde’ worth more? (Rich humans, please stop giving him money.) I get the old masters, but some of this new stuff really, really looks like the stupid giving money to the famous.

I like art, but I really don’t know how to feel about it as an investment. It makes no money, unless you rent it out. It only does one thing; exist. Sometimes even that’s hard for art.

But should I be buying art, just because ‘art’ is going up in value? Or do I need to know about the ‘right’ art to buy? What about wine, or whisky or cheese? What about that ‘Art fund’ with guaranteed returns…

Sometimes art is a scam. Anything that you exchange money for is at risk. Equally, not all art is a scam, but even the Mona Lisa is quite possibly a fake, so this goes in the ‘maybe’ box…but…is a nice little segway into…

Crypto!

I am 46 years old. I am not by any stretch an old fuddy duddy or the ‘Boomer’ of which the younger generation speak so ill of. I could probably name most of the music played on Triple J and thrash your kids at Rocket League on a Playstation. I could probably still skateboard as good as I did in the 90’s, which was not that well.

But you know what, I’m still trying to get my head around crypto.

Let’s start with how it came about. The actual person who created it is still unknown, is only referred to by a fake Japanese name, and should, by all rights, be the richest person in the world, even if they only hung onto a few.

One of the first places you could trade them was an ‘exchange’ called Mt Gox. It was hacked and everyone lost everything. You know why? Because Mt Gox stands for “Magic: The Happening Online eXchange” and it was a place that nerds could go and talk about a fantasy-based card game, called ‘Magic: The Happening’, with wizards and shit (probably). So they converted it to a trading platform for these coins, and controlled 70% of the transactions at the time. Allegedly only 250,000 BTC’s are still unaccounted for, but that is about $14.5b worth of BTC still ‘missing’.

Now, from what I can tell they are pieces of computer code. I also understand the argument that money isn’t really much more than that, but at least we all agree to use money to exchange for things and its worth a fairly stable amount most of the time.

They also bleat about how its decentralized, and how that is somehow a good thing. But what I hear is that there are no protections from fraud. I also hear that there is no way of protecting us from money-laundering operations or terrorism funding which it is absolutely used for.

And there are only so many of them BTC’s. Except that there are ‘only so many’ of EACH coin, but you can even make a new coin yourself! And now there are thousands of different coins, and the only thing they seem to be used for is to trade between people, who then have to convert them back to cash for any normal purchase.

So its ‘worth’ is only determined by the people prepared to buy it off you. It can’t really be used for anything, so the only reason to hold them is because you think they are going up. What if everyone holds them and there’s none for sale? What if everyone starts selling them, how do you work out when they are ‘cheap – dividend yield???

You can’t stabilize a market if there’s no-one managing it, and with only so many BTC’s to go around you can’t manage supply to reduce hyperinflation or deflation. For a thing that people say will replace money, it is a bit too volatile for my liking!

What about the code? Has anyone considered what might be built into the code? What if its some sort of internet doomsday bug that Banksy has commissioned as a joke, that forms into a super-program once all of the pieces are complete, then on a certain day (probably something ironic like a bank holiday) it just shuts everything down?

So we don’t know who made it. No-one is looking over it. Its used for nefarious activities. It is either worth zero or infinity. It could be the biggest computer virus ever designed. It could be the thing that causes the next GFC at this rate, certainly I have its value collapse on my ‘Top 3 things that will cause the next market panic’ list.

But its been going up so everyone thinks they have to buy it, with no real understanding of WTF ‘IT’ IS!!!?!

So…is it a scam?

I mean, c’mon…seriously. Isn’t it?

Marketech Focus

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