Is FX United a bubble?
- What if FX United is a bubble?
- Bubbles can be great!
- Get out at the right time
- Bubbles are like cooking popcorn
- Warning signs to watch out for
what if fx united is a bubble?
My son Ben actually started me thinking about this. He said: “I can see that you are convinced by this, and I am not saying there is anything wrong with this business, but what if it is a bubble? What happens if the bubble bursts?”
That is a really good question. What he meant was: “What happens if FX United (or its holding company) goes into liquidation”. Of course, this is a real possibility. Trusted institutions like Lehman Brothers Bank and huge companies like ### have gone bust. This is something we have to keep in mind for all of our commercial dealings.
bubbles can be great!
Of course, bubbles are not bad. In fact some of the best investment opportunities have been bubbles. Look at the Tech Boom of the early 2000s, or indeed the residential property market over the last few years in places like London, Singapore and Sydney. They are all great investment opportunities – and lots of people became rich from these investments. The trick is getting out at the right time!
In answer to Ben's question, I gave him two answers:
get out at the right time!
Have a look at my answer to the question "Does it matter if FX United is a scam?" - the same applies for bubbles. The monthly return from FX United is so phenomenally high that your initial capital with FX United is repaid within just a few months – so really, there is quite limited risk if there is a bubble, and the bubble does burst – and what’s more that limited risk reduces significantly every month.
bubbles are like cooking popcorn
Ben liked my second answer better: “Ben, economic bubbles are just like popcorn!”
Who has made popcorn? You heat up the oil in a pan, add some salt and wait until it is good and hot (indeed when the oil is just starting to smoke). Then you add the popcorn. It is really satisfying when the corn starts to pop. At first there are only one or two and then suddenly, it seems like there are hundreds of corn kernels all popping at once! Then the popping starts to slow down. There are fewer pops, then fewer … pop, pop, pop … then there is gap ... pop pop … and then it stops.
But what happens if you leave the pan on the heat right until the last corn kernel pops? At that time, the bottom layer will be totally burned and the whole batch will be ruined.
So here is the question: “who knows when the very last corn kernel is going to pop?” Answer: Nobody! And it is an irrelevant question because at that point, it is already too late to save the popcorn from burning.
But let me change the question just a little bit: “who knows when most of the corn kernels have popped, and it is time to take the popcorn off the heat?” Answer: everyone who has ever successfully made popcorn. You can tell when things are slowing down, and you know when to take if off the head.
warning signs to watch out for
The FX United business is no different. If things are going bad, and you stay in too long, you are going to get burned. That is just the way business works.
However, if that starts to happen, and before any bubble bursts, there will be signs:
1. Warning from financial regulator
Update: I am now on high alert following the May listing of FX United on an FMA listing of companies to be aware of. However, at this stage, no warning or action has issued. see link
2. Slow to payout
3. Internet chatter
4. Google alert
5. Changes to laws
6. Slow down in people joining
I am confident that (just like watching popping corn) we will be able to tell when most of the corn has popped, and in the case of FX United, if there are problems, then we will see the signs and there will be time to withdraw our funds before any financial bubble has time to form and burst. You can withdraw your funds at any time. There is no locking period.
And even if the very worst happens, and FX United goes into liquidation, then consider that the potential loss is capped to our initial investment.