The valuations of VC-backed tech companies depend more on the supply of VC capital than on changes in the economics of the companies. The downturn in VC capital has caused a large drop in tech company valuations; as much as 80% for some https://www.ft.com/content/6395df7e-1bab-4ea1-a7ea-afaa71354fa0

FTX MARKET MANIPULATION

One of the clearest cases of the need to regulate cryptocurrencies. The manipulation of markets described in the article is reminiscent of the stock market before regulations were put in place to prohibit these practices.

https://www.nytimes.com/2023/02/15/technology/ftx-modulo-capital.html?login=smartlock&auth=login-smartlock

#cryptocurrencies #digitigalassets #FTX #ezrazask #investments #financialfraud #marketmanipution

FTX: Failure of Due Diligence

 https://www.ft.com/content/6e912f25-f1b7-4b19-b370-007fbc867246 

This close-up look at the breakup of FTX shows so many red flags that we have to ask how Sam Bankman-Fried was able to hoodwink the investment world for so long, especially since many of the red flags were also present in the Madoff Ponzi scheme.  It does seem like investors have to re-learn the lessons of previous fiascos every generation.

UK Proposed Digital Pound is in Sight

 The U.K.'s intent to introduce a digital pound in the coming years is notable for its commitment to giving access to banks, credit cards, and payment systems such as PayPal access to the digital payment system, thus allowing them to compete with the digital pound. The U.K.'s move is a defensive attempt to forestall competition by cryptocurrencies and similar techniques. All major countries face the same threats and are examining the introduction of digital currencies. Paradoxically, cryptocurrencies may yet have a significant impact on the world's payment system, not as a substitute for existing payment systems, but as a spur to the development of national digital currencies. 

https://www.ft.com/content/1247a045-6750-45ee-b3a9-f5144d4efb4d

The Fed's Political Decision-Making

 Is the Fed too eager to raise rates?

https://lnkd.in/e5Vz4fS5
As Mr. Sandhi points out, the Fed is in an unenviable position in its choice of decisions. If it allows the economy to surge ahead, inflation may become institutionalized, while slamming on the breaks can tip the world's economy into a recession of unknowable depth and duration. This decision has many unknowns, including the relative importance of various factors in maintaining inflation at high levels and the unknown impact of a labor market undergoing structural changes. A central question is whether a wage-price cycle is inevitable if the Fed resists a dramatic rise in interest rates. And yet, despite the uncertainties, the Fed is hell-bent on pursuing an all-or-nothing approach. Mr. Sandhi convincingly argues that public opinion may be a decisive factor. In the public's perception, economic pain is preferable to high inflation. However, it remains to be seen if opinion remains the same if the coming recession turns out to be deep and prolonged and only has a moderate impact on inflation.

Investment Strategies for a New Era

 ​https://www.ft.com/content/05d0324f-e216-47ff-973e-c22f660edf22​

The era of the Great Exasperation arrives for investors
This article lays out the changes in the investment climate brought out by recent changes in economics, economic policy, and the difficulty of finding investment strategies that work in the new environment. Many of the trends he identifies are sure to be with us for the medium term.  One result is to undermine the tools that investment managers have used for decades and that generated acceptable risk/reward returns. The end of this era undermines many of these tools as well as the underlying premises. Investment professionals may be better off changing investors' expectations than attempting to use old tools in the new environment.

Amazon Unions: It's About Inequality

 https://www.ft.com/content/7b0fa691-ec18-43ec-81ae-172c0e44dc0a

The issue here is not inflation but the distribution of wealth between corporations and the ultra-wealthy on the one hand and workers and the middle class on the other. The fact that workers regained some power in negotiating wage increases (by no means a certainty) is not inflation. That is a canard wheeled out (along with others including projected declines in economic growth of productivity) whenever workers gain some power.  However, these imputed links are not backed by empirical evidence. What is backed by overwhelming evidence is that while the U.S. economy has been growing for decades, most of this growth has lined the pockets of corporations -- which means the wealthy as share buyback proliferate -- and the wealthy, notably the ultra-wealthy.  While this phenomenon has multiple causes, one of strongest causes has been the reduction in the bargaining power of labor resulting from the decimation of labor unions, itself caused by the promulgation of anti-union legislation in recent decades. The fact that one local union was able to assert some power largely because of local circumstance is taken by many as the harbinger of crippling inflation.  I don't think inflation hawks should be worried.  This is not the proverbial canary in the coalmine.  Labor still faces impossible odds against gaining power on a large scale.  And if they do, there is always the tactics used during the Homestead strike.

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Apple co-founder Steve Wozniak joins ranks of VCs and investors in cryptocurrencies

Steve Wozniak, co-founder of Apple with Steve Jobs, recently announced his participation in a crypto startup. During the interview, Mr. Wozniak (Wo...

http://ow.ly/rJnQ30lw43z

What CEOs get Wrong About Activist Hedge Funds

CEOs view activist funds as predatory rather than as opportunities. https://lnkd.in/dbSA6hk

Will Factor Investing Replace Hedge Funds?

Will Factor Investing Replace Hedge Funds? 7/22/2018 0 Comments   https://www.ft.com/content/2b3e2eaa-6fe6-11e8-92d3-6c13e5c92914#comments-anchor This article touts the benefits of using factors to make investment decisions for hedge funds. However, "factors" are beta (i.e., market indexes") variables, which means the differences between factor investing hedge funds comes down to their identification of factors and allocation among factors.  Missing in these hedge funds are producing "alpha"  investing.