Fool’s gold | Value Research Crypto and ULIPs might be able to generate more money but are they good investment products?
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Fool's gold

Crypto and ULIPs might be able to generate more money but are they good investment products?

Early this month, I made this very important announcement on Twitter: Value Research to stop researching mutual funds and stocks and will focus only on analysing cryptocurrencies. In case that leaves our research team with too much time on their hands, we will add horse racing to the types of investments we cover.

Of course, by 'early this month', I mean April 1. That should have made the true meaning of the tweet clear to everyone, but it didn't. In any case, there were a lot of responses from people who follow me, as well as some from those who don't. There were responses on Twitter, as well as some private ones.

When I had initially written out the tweet, I had hardly given it much thought - my goal was nothing but to provoke a few chuckles amongst my Twitter audience and move on. However, the replies and QTs that the tweet collected were quite thought-provoking and have made me think hard on a couple of things.

Broadly, there were three kinds of responses:
1. Those who got the joke, laughed (or didn't) and moved on.
2. Those who thought that I was serious and were unhappy with it.
3. Those who thought that I was serious and were happy with it.

This last category of people was the most amusing, and come to think of it, the joke was intended to be on them. That was the whole point of the joke. Someone like me, and many investors like me, consider cryptocurrencies to be a ridiculous idea as an investment. It's a punt, to be kept in the same category as horse racing. Those who got the joke saw this clearly.

However, the crypto fanatics seem incapable of imagining that there are still people who are NOT crypto fanatics. To them, it seemed like a sensible thing that Value Research has abandoned mutual funds and equity and has switched to crypto. They feel that's what everyone will do, sooner rather than later, so my announcement did not come as a surprise to them.

Anyhow, let's get back to the people whom I really feel for, the ones in category 2. These are mutual fund and equity investors and rely on Value Research. These people thought that Value Research had abandoned them and gone on to crypto simply because more money was to be made there. Some of these people showed a certain amount of hostility as well. Initially, I was somewhat surprised by this, but it's a genuine reaction so it requires some analysis and response.

Value Research is a belief-based organisation. Unlike other parts of the financial media, we are not here to tell you what's happening and what is available. We are here to tell you what is good, what is bad and what is ugly. You may not like our opinion, but it is what it is.

Most importantly, we will not go along with the commercial flow. In fact, this has a close parallel to the ULIP story. ULIPs are a terrible financial product. They are designed to enrich insurance companies and sellers and to impoverish you. There was a time about a decade ago when the ULIP hype from insurance companies was at its peak. Every publication and TV channel was doing articles like 'Best ULIPs to Buy, etc.' and here's the most important part - collecting crores and crores of advertising money from the insurance industry.

We had plenty of offers like that too but we were clear in our view: there was no question of doing 'Best ULIPs' kind of analysis because ULIPs are ALL rubbish. They are all harmful to the financial health of our readers. It cost us a lot of lost revenue but we relentlessly did anti-ULIP stories. We may have even contributed to the (partial) regulatory clean-up of ULIPs that followed.

The crypto-mania reminds me of that. There's money to be made, but only by stealing from the pockets of savers and investors.

Suggested read:

Crypto's price is the only signal

Crime and speculation

Blood and money

This editorial appeared in Mutual Fund Insight May 2022 issue. To read the cover story and other insightful analyses, columns and articles

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