From the 32 billion empire collapse case, see through the three traps of the "wealth creation myth".

Author: Michael Lewis

Introduction

In the winter of 2022, cryptocurrency giant FTX collapsed spectacularly, with its $32 billion empire crumbling within 72 hours, and its founder SBF fell from "living saint" to prisoner. Behind this collapse were the hard-earned savings of countless ordinary people turned to nothing. Michael Lewis, author of "The Big Short," reveals the entire process from SBF's rise to his imprisonment, exposing the truth behind the wealth creation myth — telling stories with a perfect persona and exploiting people's feelings of knowledge inferiority and blind obedience. This article uses SBF's story to share three tricks to avoid falling for the "wealth creation myth," helping you stand firm amidst the waves.

That winter, a young man named SBF, wearing his iconic oversized shorts and worn-out sneakers, looked like a neighborhood boy who had just finished playing basketball, was taken away by the police from a penthouse mansion in the Bahamas. In that moment, a $32 billion crypto empire collapsed like a sandcastle in just 72 hours.

All over the world, from the smartest elites in Silicon Valley to countless ordinary people who stare at their phone screens late at night, their hearts racing along with the candlestick charts, have become the background sound of this "big crash."

Warren Buffett once said a particularly unkind thing: At the poker table, if you have been playing for half an hour and still don't know who the sucker is, then you are the sucker.

The story of SBF is a tribute presented to the elderly, a sacrifice written with the hard-earned money of countless people.

Recently, I finished reading the new book by Michael Lewis, the author of "The Big Short" — "Going Infinite." This book is like a documentary filmed with SBF's face, detailing every step of his rise to fame and subsequent imprisonment, laid bare for you. After closing the book, I didn't ponder those complex financial things; what swirled in my mind were the living people around us, washed away completely in the tide.

History is quite boring; it always loves to replay itself. From the tulip mania hundreds of years ago, to the internet bubble 20 years ago, and now to the various "coins" today, the script hasn’t changed. Beneath every stage of wealth creation, there lies layer upon layer of bones.

I often wonder why we always unconsciously rush to be that fool? The next time the wind blows, what should we ordinary people do to hold tightly onto our hard-earned money and not let it be blown away?

Today, I want to have a good chat with you about this matter using SBF as the "century sample."

Mythology is customized for retail investors

Remember, any large-scale harvest does not begin with wielding a scythe. It starts with telling a story that you particularly love to hear.

This guy SBF is definitely a storytelling genius. The persona he has built for himself is nothing short of perfect, so perfect that you wouldn't even want to doubt it.

He tells you that he doesn't love money. With a net worth of billions, he lives like a monk. Sleeping in a bean bag chair, driving a broken Toyota, and showing no interest in all the good things. When you see this state, you are impressed.

He tells you that he has great love. He believes in something called "effective altruism," saying that the only purpose of making money is to donate it and save the world. As soon as you hear this, you are in awe.

He also tells you that he is particularly impressive. Graduated from MIT, praised by the smartest venture capitalists in the world as the "next Buffett." When you see this IQ, you completely give up.

Alright, a "living saint" who doesn't love money, has great love, and is particularly impressive, stands right in front of you. He is not here to make money; he is here to lead you believers to conduct a great social experiment.

This is so comfortable, it is like a spiritual massage tailor-made for us ordinary people who yearn for miracles.

Why do we go through all this? Because deep down, we harbor three unacknowledged "little secrets": we secretly admire geniuses, hoping someone will take us to new heights; we secretly believe in shortcuts, hoping to uncover the "wealth code"; and we naively think that someone who talks endlessly about "saving the world" wouldn't possibly scam me out of this little bit of money.

SBF, you see through our little thoughts very clearly.

So, when he started selling his "dream" (the token called FTT), countless people rushed in. They felt that they were not speculating, but investing in a dream.

But they forget that in the world of business, when a story sounds too good to be true, what you are likely hearing is not the trumpet of angels, but the hissing sound of a scythe being sharpened.

What makes you lose everything is your illusion

When the story comes to an end and everyone is moved to tears, the harvesting quietly begins in places you cannot see. Lewis has uncovered countless secrets in his book, but I believe that what truly traps ordinary people are three deadly illusions.

The first illusion: "I don't understand it, so it's very advanced."

Cryptocurrency, derivatives, economic models... these terms make your head hurt just hearing them.

In today's era, what we fear the most is being "outdated". So when a completely incomprehensible new thing appears, our first reaction is often not "Is this thing reliable?" but rather "Am I too stupid to have missed out on this? What should I do?"

SBF and his team exploited our "knowledge inferiority." They built a dazzling black box with a bunch of complicated words, making you feel that being able to squeeze in is a symbol of identity.

But my friend, remember a simple truth: When something is so complex that you can't explain it to the people around you in three sentences, it's not an opportunity for you, but a trap.

The second illusion: "Everyone has joined, what am I afraid of?"

"Look, Sequoia has invested!" This is the most common self-comforting phrase I've heard.

When we see those smartest institutions and the most powerful big shots supporting SBF, it's like we copied the homework of the top student during an exam, and it makes us feel so at ease.

But we never considered a fundamental question: The big shots are losing the fund's money, which they can afford; what you are losing is your hard-earned money, your children's tuition, your parents' pension. The endorsement of elites can never be a reason for you to stake your entire fortune. When all the elephants are swimming naked, if you, a little ant, follow them into the water, you will only be crushed by the first wave.

The third illusion: "He is so good, he won't deceive me."

This is the gentlest yet deadliest knife among all illusions.

SBF's rhetoric of "for all humanity" is his sharpest weapon. It successfully made us lower our most basic business vigilance. How could a "saint" who aspires to donate all his wealth be a fraud?

We forget that business is just business. When a deal starts to desperately talk to you about sentiment, ideals, and morals, you should be extra cautious. Because the most skillful con artists do not use lies to deceive you; they use a distorted form of "sincerity" to touch you.

A Letter to You Who No Longer Want to Be a Fool

History has turned a page, but we still have to live our lives. The next time a new craze, whether it's AI, the metaverse, or something else we can't even imagine right now, sweeps in, what should we do?

I don't have any complex investment models, just three simple sayings that were bought with the hard-earned money of countless people.

First sentence: "Common sense" is your last piece of bulletproof armor.

Under the sun, there are no new things. No matter how fancy the wrapping paper is outside, some of the oldest business wisdom will always be useful.

For example, "You can't use customers' money for reckless activities," this is the first rule of banking. FTX collapsed because of this. Another example, "Returns that are absurdly high must be hiding equally absurd risks."

When you are stirred up by those words like "disruptive" and "revolutionary," stop and ask yourself a few questions like a primary school student: How exactly does he make money? Do I understand it? What if it fails?

On the battlefield of information asymmetry, "common sense" is your only free weapon that will never betray you.

Second sentence: Stop being a "giant baby" waiting to be fed.

You must take 100% responsibility for every penny of your own.

Don't rush in just because some big influencer shouted. Don't be afraid of missing out just because everyone around you is buying. Before you hit the "confirm" button, ask yourself, is this a decision you've made after independent thinking?

This process is exhausting and counterintuitive, but it's the only path for you to graduate from being a "retail investor." No one can guarantee your life except for yourself. When it comes to money, the ability to think independently is more valuable than any insider information.

Third sentence: Stay away from those who sell "infinity."

SBF said he is playing an "infinite game."

I beg you, remain vigilant towards all grand narratives that talk about "infinity", "the stars and the sea", and "the future of humanity".

A truly healthy enterprise, a genuinely reliable investment, often grows slowly, even a bit "boring." It addresses specific problems one by one. On the other hand, projects that aim to "change the world" from the outset often sell not products, but a kind of hope.

Hope is the most expensive commodity in this world.

As ordinary people, our goal is not to become the fattest pig on the wind, but to keep our little boat from capsizing in any storm. Please believe in the values that you can understand, touch, and grow slowly, rather than those "infinite games" that sound exciting but could instantly wipe you out.

At the end of "Towards Infinity," the author found the 2000-pound tungsten cube that SBF had custom-made for a hefty price. A small cube, yet so heavy that it is impossible to move. It serves as a metaphor: all those virtual, hyped-up wealth bubbles hide at their core an incredibly heavy truth that will ultimately crush everything.

The river of wealth flows endlessly. There are always those who become rich overnight, and there are always those who lose everything. As ordinary people, what we can do may not be to surf on the waves, but merely to build for ourselves the dam called "common sense" and "rationality" before the next flood arrives.

Sometimes, not being swallowed by the tides of the times is a greater victory than standing at the peak of the waves.