Bernard Baruch – investment behemoth and all round ‘big cheese’ – describes the Wall Street scene in the days leading up to 1929’s big crash:
“Taxi drivers told you what to buy. The shoeshine boy could give you a summary of the day’s financial news as he worked with rag and polish… My cook had a brokerage account and followed the ticker closely. Her paper profits were quickly blown away in the gale of 1929.”
Now I don’t think he was deliberately insulting taxi drivers, shoeshine boys, and cooks. They are all honorable professions.
The point he was making is that when people who have no skills or experience in the financial markets start actively piling in – and shouting loudly about it – you’d do well to tread carefully.
Big wigs like Bernard Baruch, Joe Kennedy and other old-timers even used it as an explicit sell signal: if the shoeshine boy was giving stock tips it was almost always a sign that the top of the market was approaching. And behind the scenes the smart money would begin offloading their holdings – and banking the real profits – by selling to these ‘late to the party’ fortune hunters.
So imagine what sprung to mind this morning as I read about Paris Hilton and cronies Floyd Mayweather (boxer), and Denis Rodman (basketball player) endorsing new crypto coin offerings.
The ruse here is that Initial Coin Offerings (ICOs) can raise massive investments through crowdfunding with little more than a business plan ‘white paper’ sketched out on the back of a beermat.
Some of the bigger ICOs have raised $200 million up-front.
$200 million, imagine that!
And there’s nothing tangible to show for your investment. They’re all just fresh air ‘ideas’.
Ideas that happen to capture the imagination of the get-rich-quick crowd very well in this current climate. So read into it what you will.
Paris Hilton included a #ThisIsNotAnAd hashtag to her tweet about LydianCoin, so who knows, these stars may well be issuing public service announcements for their loyal fans. You know, just letting everyone know what they’re up to with their private finances.
But the way I see it these ICOs are like selling fresh air, and there’s no way of knowing which ‘coins’ will ever see any substance fall into place behind the hype.
It goes without saying that many of them will disappear completely.
One thing’s for sure, though, they ARE a damn good way for their creators to hoover-up millions of pounds for very little effort.
ICO’s are like the ‘wild west’ of the crypto coin world. So if you will be riding out to stake your claim, ride carefully.