Bubble double toil and trouble

Earlier this year I questioned a tweet from ThaiLeagueCentral promoting Thai League NFTs promoted through their new relationship with Bitkub.

The future is here. A historic event for Thai football as the @thaileague has partnered with @BitkubOfficial to release over 1.2m NFT cards. Go get yours today at: https://bitkubnft.com”

As I pointed out at the time “1.2m cards hardly gives them the uniqueness that is where trading cards (inc. NFT cards) get their value. People could lose a lot of money trying to find an NFT trading card that turns out to be a rare winner.”

It should be noted here that I have been writing articles for ThaiLeagueCentral during the season that is coming to a close.

One of the founders of Thai League Central suggested that I did not understand the appeal/value of NFTs and that our disagreement may be a generational issue.

A little reality check – I have far more investment experience, and a far greater understanding of risk, at a personal and corporate level than he does.

Here is a piece in today’s Guardian on “NFT scams, toxic ‘mines’ and lost life savings: the cryptocurrency dream is fading fast”

One of the comments under the article covers rules for investing, these are as valid now as they were in the days of every bubble that we have ever known – from South Sea bubble to Internet bubble.

  1. Do I broadly understand what I’m buying?
  2. Is it something for which there is a liquid market of buyers?
  3. Is it’s pricing easy to understand?
  4. Am I happy with the cost of buying it and owning it (and not just the cost of purchase)?
  5. If I couldn’t know the value of it for ten years, would I still be happy that I owned it?
  6. Is it something I can hold on to indefinitely if I choose to do that, confident I can exchange it for cash at any time?
  7. Is it regulated to a degree that I find acceptable?
  8. Is it legal to buy, own and sell?
  9. If it’s a derivative, can I identify at least 90% of its underlying composition?
  10. Can I explain my entire investing strategy to somebody else in less than two minutes and do they understand it?

If you can’t do all of the above when you buy something……..you’re going to lose your shirt sooner or later.