Rationale for managing national reserves and pension funds

NEW YORK: It’s been a lousy month for the reputation of professional investing.

The collapse of FTX revealed that everyone from racy hedge funds to staid pension and sovereign wealth funds had been throwing money at a cryptocurrency exchange with weaker financial controls than Enron.

Above is quoted from CNA.

The explosion of FTX did not come as a surprise. The only surprise is the embarrassment caused to many so called professional investors, paid in the millions, to gamble in something they did not know much, and as quoted above, did not do due diligence or inadequate due diligence. The loss is confounding though many brushed it off as small change as they have big coffers, especially other people's money, OPM, not their own money. Caveat, doing due diligence is not the cure all and is no guarantee that the investment is safe.

The failure of FTX is only the beginning and not the only one. How many of the professional investors still have a lot of money sunk into other cryptocurrencies and hoping for the best, praying that all is well? How many have money sunk in derivatives? This is the mother of all financial crashes waiting to happen. It would be like a nuclear bomb exploding when everything standing would be flattened. And, believe me, no one cares a hoot. Everyone praying, hoping and wishing that it would not happen. This is the stupidity of it all. Murphy's Law would not fail. Whatever can happen would happen. All it needs is a tiny slip and the house of cards would come crashing down. There would be no where to hide or to run.

How irresponsible can people in authority in the financial industry allow this to happen, to be built to such an enormous sum that would be the end of the world, figuratively, should it crash? This is the biggest Ponzi scheme awaiting to explode. FTX is chicken feat compares to the collapse of the derivative scam.

Professional investors hired to invest are just gamblers in suits. Big funds, funds with excessive other people's money, are desperate to invest with all the money they have. It is not a matter of finding good opportunities to invest. They are compelled to invest for not investing is a losing proposition. Die die they must invest. The professional investors love this kind of animals, devoid of rational thinking, totally lack of wisdom in the handling wealth and other people's money. It is a senseless occupation or preoccupation to want to dump the money in their hands into someone's hands, and hoping to make money.

There is this wise saying, when you have enough of money, there is no need to risk losing it. It takes a lot of effort, time and good fortune to acquire wealth. When wealth is acquired, it is time to protect the wealth, not taking high risk to lose the wealth, especially when it is acquired by the blood, sweat and tears of a generation, other's people wealth. Most fund managers are not wise enough to know this. Or perhaps they know but it is not their mission, as not investing means not performing, and not performing means no big bonuses. 

The concept of fund management is to 'invest' or gamble with other people's hard earned money, hoping to make more money and never mind losing all, after all it is OPM. They send the best man or woman, with glib tongues to tell the owners of the wealth that they are the best to make more money for them. Once they are in, it is casino time. Just invest and invest, even when there is nothing good to invest. Gamblers are gamblers. They take high risk. If they don't risk, don't take high risk, there is no hope of high returns.

In short, the wisdom of managing big funds, other people's money, is to protect the funds. When you have it, don't lose it. Dump the professional investors instead of dumping the money in the funds. Save the money from paying exorbitant fees to professional gamblers. Rethink about the role of managing national wealth, national reserves. If money is so easy to be made, it is likely to be a scam. The so called professional fund managers have different mindset and objectives. They are hired employees paid to perform. This is in conflict with the management of national wealth and reserves that cannot afford to be wiped out by mistakes or reckless gambling...or should not be wiped out by taking unnecessary risk.

Managing national wealth and reserves is about protecting the wealth, slow but secure growth is better than high growth that comes with high risk.  It is a crime to lose national wealth and reserves by unscrupulous gambling, called investing recklessly but disguised as after due diligence.

What do you think?

PS. Can you imagine hiring a very careful and diligent fund manager, paid him in the millions and he did not invest a single cent for a year or more, because he could not find something worthy to invest in? On the other hand, a professional fund manager, by hook or crook, must find something to invest in to justify his hiring and pay.