“The Road to Hell is Paved with Good Intentions.” Such is the old (1828) Portuguese proverb. It would seem to be a reasonable description of the Federal Reserve’s prior policy for 12 years with interest rates at 0%. Ironically, there are also 12 Federal Reserve Governors on the Federal Reserve Board. These board members have more than 400 Ph.D. economists giving them their “expert” advice.

Apparently, these experts didn’t foresee – or understand - the impact that 0% Fed policy would have on the largest investment pools in the world. These pools belong to public sector and sovereign wealth funds whose managers have a fiduciary responsibility to manage money as though it were their own. Historically, that meant a “balanced” portfolio of stocks and bonds. In a world of 0% interest rates that historical 60/40 (stocks to bonds) ratio became all stocks. Thus, the new institutional investment policy became TINA (there is no alternative). Stocks.

From that new reality, the world of bitcoin, FTX, cloud computing and fintech were born. These groups were the wunderkind of the previous 12-year bull market. The term “unicorn” had been introduced early on by Reid Hoffman, a former partner of the prestigious venture capital firm Greylock Partners. Greylock had been established in Boston in 1965 by two former partners of General Doriot - the famed Harvard Business School professor - who formed the first public venture capitalist firm, American Research and Development. Reid Hoffman went on to fund PayPal, LinkedIn and Facebook.

Originally, the concept of a unicorn was historically based on its highly prized mythical storied rarity. In our 21^st century that standard became a business valuation of one billion dollars or more. When the past bull market was at its peak, there were more than 1,000 “unicorns” with that designation. Does that seem rare? Patrick Jenkins, of the Financial Times, recently wrote that Fintech Labs, a small-business portal, noted that there are now 332 such fintech unicorns!

That’s reminiscent of the automobile industries’ history. From 1895 there was at one point in the early 20^th century over 1,900 car companies making more 3,000 different automobiles! Of course, we know how that turned out. Is it any wonder so many fintech stocks are down so much? Or that FTX is bankrupt and that the whole bitcoin concept is inexorably fading? Only this time it’s not money chasing cars, but money chasing itself.

As for economics, Peter Lynch – the former Magellan Mutual Fund manager - perhaps said it best. “If all the economists in the world were laid end to end, it wouldn’t be a bad thing.”

-Francis Patrick Boland