I read the Envestio news with a big shrug. The platform with the ugliest logo ever was a scam, ok… Truth be told, the biggest p2p investors in Europe are Germans and I never wore socks with sandals so, who am I to judge? Maybe they had a point. Like Renee Zellweger said, you had me at crypto, Envestio. I just went once to check a platform that had a movie and a videogame as project to finance, I am not sure it was Envestio, and I wondered how can you finance those type of projects (and at a 20% return!) with debt? Probably KickStarter missed the memo…Anyway, all of this to say that I do not know anything about Envestio because it sounded a big bs from the start, easy to say now you would reply, but still. I know they existed because of your reviews and that repulsive logo that you stick in my mind.
I did not want to write about this, then I reminded myself that people read more during panic days, maybe because they think they will find the secret to exit the mess unscathed or to sooth they wounds reminding themselves they are not alone.
Investors will be investors
I read Envestio investors letter on a FB group and I commented that if you start to blame hackers then the chances you are not legit shoot to pretty much 100%. Other users replied defending the platform. This is a common reaction, I did it myself when trading single ‘value’ stocks and the market was going against me. It is hard to admit, especially to yourself, that you did a mistake; must be the others that cannot see the truth. The best money managers are not right 100% of the time, sometimes you do your homework and still the trade does not go the way it should, you have to find a way to be fine with it. The important part is that your process is robust and you follow it, most of it its boring tasks but has to be done (or find someone that does some for you, like the excellent job this blogger is doing).
Monethera is (probably) legit
Reading around I found this post by Monethera. This is a platform I am not at all familiar with, another one I know it exists because of your monthly reports. Based only on this info, my first thought was that they are good guys who are trying to save their business: if they were another scam why bother, close the website and run like the others? Unfortunately this action show that they are not familiar with Michael Burry story from The Big Short: once you close the funds to your investors, even if you do it for the right reason, you lose their trust, and with that your business. Its is choosing death by a thousand cuts instead of a a single big hit, you buy yourself some times but the result will be the same. The act that put them in trouble was to offer the buyback option in the first place but as I wrote in another post, they were (I assume) forced to do it when they launched the platform otherwise they would not have raised any money. If your competitors are offering this protection, as unrealistic as it is, investors at a certain point will not look at you if you do not have it and you cannot wait for moments like this to prove them wrong, you will be out of business way earlier. No reserve fund will be big enough to protect you from a bank run and removing the option the exact moment investors will need it the most sends a very very bad signal.
Like shorting a stock, it is really hard to predict which straw will break the camel back. In my last post I wrote that after this mess yields will go up: there is also a possible scenario where investors will not go full panic, see some platforms (Mintos?) as secure and divert all their investments there. If it is the case, yields will actually go selectively down.
Two questions popped in my mind:
- Are investors already testing Go & Grow liquidity?
- Is this millionaire starting to feel the heat about his Mintos investment? One thing is write off Kuetzal, 0.1% of your portfolio, another is to think that there is a non-zero chance a full panic will drag everyone down (2008 anyone?).
What I am reading now
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