Paul Mampilly Compares The Current Cryptocurrency Craze With The Year 2000 Financial Bubble

Stop pumping more investments into the cryptocurrency markets and if possible, cash out your gains as soon as possible. That was Paul Mampilly, a renowned investor and financial guru’s message to individuals investing in cryptocurrency. While he still hasn’t pointed to the exact time he expects the cryptocurrency markets to come tumbling, the Templeton Foundation investment competition winner adds that it is only a matter of time before this new technology market crashes. Follow Paul on twitter.com.

Drawing experience from the year 2000 market crash

Paul Mampilly compares the current demand for crypto coins with the second-millennium bubble burst for technology company stocks. The former hedge fund manager mentions that every investor at the time believed that wealth in the stock markets could only come through investments in technology company stocks. The greed for these stocks then saw the value of some of these stocks swell past 1000 percent. To him, such insane value increase in a short time even for companies without a solid base was in itself a red flag that prompted him to sell his shares.

In many ways, Paul likens the current greed for alternative coins with the 1999 market bubble. He notes that while the two bubbles stem from almost different industries, they have similar characteristics. For instance, just like the technology bubble culminated a notion that these companies could the future of the world economy, cryptocurrency promoters have continually hyped the need for crypto coins terming them the future of online transactions. Similarly, most of the crypto coins currently available have also shot in value by over 10,000 percent.

Why is it doomed to crash?

It can be quite difficult to tell of a market bubble but Paul Mampilly believes that the warning signs for the impending cryptocurrency crash are already up. With the most apparent being the constantly soaring popularity of the different coins that has effectively sent most investors into frenzy thereby driving the price for these coins to crazy highs. Their popularity will possibly continue growing in the near future.

But a time will come when the market can’t sustain any more investment pressure and the prices start coming down. Such an action would then throw most investors into a panic mode resulting in massive sales and would signal the beginning of the market crash. Paul Mampilly believes that just as the cryptocurrency investors are quick to buy when they think the prices favor them, most are also quite impatient and will be quick to sell when the market turns against them.

About Paul

Mampilly boasts of an investment experience of more than three decades, most of which was spent at the helm of Kinetics hedge fund. He is also the founder of Extreme Fortunes and senior editor at Profits Unlimited, two online journals offering investment advice to traders internationally.


To learn more about Paul Mampilly, visit: https://paulmampillyguru.com/

 

Getting Hacked is More Economical Than Heavy IT Security

Each time a company like yahoo is exposed in the news for being the victim of a mega hack people ask the question: Why didn’t they invest more in security? The answer is that investing in security doesnt make financial sense. RAND corporation performed a study that they published in the Journal of Cybersecurity. It took a look at the expenses involved in IT Security Failures and what they discovered was that the financial cost of being hacked was lower than expected. The typical price was $200,000 on average.

High end secuirty systems that could have prevented those security breaches cost far more than the $200,000 lost. This makes not investing in an expensive security system a smart move. Sasha Romanosky, the author of the report, says that she has spent her life in the security industry and people are expected to continually invest more each year to protect themselves. Yet, businesses are taking a rational perspective by adding up the expected costs of the security system and not investing in them blindly. They just want to minimize costs and remaining vulnerable to some hacks might be the smartest thing for them to do. Romanosky took a look at more than 12,000 incidences of hacking and saw that they only cost company’s 0.4 percent of their yearly revenue. Compared to something like billing fraud, which costs companies 5%, the amount is insignificant. It is also less than retail shrinkage which costs 1.3% of yearly revenues.

There is also damage to the reputations of these companies after they have fallen victim to a hack. This damage is not possible to quantify because each case is very different. After interviewing many company executives, Romanofsky could not estimate a consistent figure or percentage. One thing of note is that being hacked did not seem to have an adverse effect on the stock prices of the victim companies.

Security Analysits use something called the pinto formula to estimate the cost of fixing the problems. If the cost of fixing the problem happened to be more than the cost of dealing with the fallout of the problem then the companies did not fix the problem. They are primarily concerned with saving money so this makes the most business sense. You can read more about this IT security issue here