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  • Gerard Kavanagh

Risk & Reward

In these troubled times of inflation, cold and hot wars, falling markets, and macro headwinds.

It's interesting to hear what the rest of the investment world is talking about in terms of risk and reward. Pleasingly, and in a positive sense, that has been the continuing conversation about the cryptoverse and its risks and rewards as this Axios article details: Crypto consumes the Milken conference (https://www.axios.com/pro/fintech-deals/2022/05/06/crypto-consumes-the-milken-conference) "Inflation, rising interest rates, and a shaky global economy were all hot topics at this year's annual Milken Institute Global Conference, but growing institutional interest in crypto seemed to be on everyone's mind. Why it matters: The advancement of cryptocurrency and web3 came up repeatedly throughout the three-day finance conference, even during interviews and panels that weren't devoted to new financial technology. A few opinions on fintech, web3 and the metaverse from the conference: Marc Rowan, CEO of Apollo Global Management "There is now a fintech competitor at every point in the financial system, it doesn't matter what you do. That, for us, is a threat." "But it's also a massive opportunity. Every one of these financial competitors has the same business model in some way: They want to be a toll taker, not a balance sheet. They don't want to own the asset." "Therefore, for the right partners, we have the ability to go to them and become their balance sheet." David Hunt, president and CEO of PGIM "For us, there are three criteria: We need an asset class that has consistent regulatory oversight. We need an asset class that has a store of value that’s more than just what someone else will pay for it. And we need an asset class where we understand the correlation between it and other asset valuations so we can put it into a portfolio." Now, most cryptocurrencies are 0-for-3." Scott Minerd, chief investment officer at Guggenheim Partners "I think the world of crypto is real and virtual currencies are real, but it's the Wild West right now in terms of trying to sort out who the winners and losers are." John D'Agostino, director of institutional sales at Coinbase "If you think about where you were on cloud data storage 20 years ago, I think probably in 20 years you'll see that's where you are now on using blockchain technology for payment mechanisms, customer engagement and lending."

Steve Kokinos, CEO of Algorand "In a few years nobody will be talking about NFTs, they'll be talking about the products that are encompassed in those NFTs, just like we don't talk about surfing the web anymore. I think these will just become part of the fabric of everyday life."

Alexis Ohanian, founder of Seven Seven Six "[Zuckerberg’s metaverse] is like AOL. Thank God we didn't all end up on AOL — we use the internet now. I think it's going to play out the same way with Meta." Risk clearly and understandably has the upper hand to reward and our offering, the portable non-correlating asset that will protect you in this new investment regimen and from increasing financial repression, certainly plays into that environment. But there is also a reward in what is on offer from the FIX00 project and that is being relegated in importance in the face of increasing risk aversion. We are building a better, efficient, broad public market for luxury collectibles that is the mirror opposite of what the real-world offers. It is inclusive and not exclusive. We are daring to challenge and staking our assets/net worth in that process. We do not see risk, but opportunity and as a result reward. No discourse on risk assessment can end without insight from Oaktree maven Howard Marks: Howard Marks: Proof That Risk Is Counter-Intuitive: (https://acquirersmultiple.com/2022/05/howard-marks-proof-that-risk-is-counter-intuitive/) "In his recent presentation at The Wharton School, Howard Marks provides some great examples of proof that risk is counter-intuitve. Here’s an excerpt from the presentation: Marks: Now, let’s talk a little more about risk. I believe that risk is counter-intuitive. So they did an experiment in the town of Drachten, Holland. They removed all the traffic signals, the lights, the signs, and the road markings. And what do you think happened to accidents? They went down! How could that be? Isn’t driving more dangerous when you don’t have lights, signs? No, because people saw it. Oh, no lights, no signs, I better drive more careful. And so accidents went down under ostensibly riskier circumstances. Jill Fredson, an expert on Avalanches said that every year they develop better and better mountaineering gear but the number of fatalities does not decline. Why? This is because people say, oh I have safer gear, I can do riskier things, and it draws them into riskier behavior. So what this says if you think about it, is that the risk in an activity does not reside in the activity. It resides in the behavior of the people participating in the behavior. And likewise, I believe that the risk in investment comes from the behavior of the participants, not from pieces of paper called stock certificates, not from buildings called Stock Exchanges, not from the companies themselves, the risk comes from the behavior of the people."

Food for thought


For a short overview of the FIX00 project 🙂 please use this link: The Start of something new


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