Is there a lesson here that we didn’t sufficiently focus on asset class as a factor in the patient vs impatient philanthropy debate, and if EA has more crypto money in the future, we should spent it very quickly with a low-ish funding bar (for EA standards)?
There’s probably a weaker version of the same argument to be made with tech stocks as well given Meta’s falling value over the last year.
Whilst crypto is a factor, I don’t think it’s the main one here. If FTX/Alameda had held the bulk of their reserves in BTC or ETH, this wouldn’t have happened. Although granted, they may not have got anywhere as big as they did get if they had done this—it seems likely that the $16B was mostly illiquid paper wealth that they couldn’t’ve spent fast even if they wanted to.
As someone who’s rode out 3 previous crypto crashes of ~90%, ~70% and ~93%[1], I think in the long run it’s still a good bet, and I’m still holding[2] (If I had cashed out at either of the first two peaks I’d have much less than I do now, and even now I’ve got ~what I had at the 3rd peak. There is less potential in multiples though now than there was; maybe another 10-100x is possible in the next decade? [Not financial advice!]).
In general, I still think EAs should be ~risk neutral with their investments (i.e. much more risk taking than the average investor), given the value of spending on EA work scales ~linearly with money spent (vs. value gained from personal consumption scaling logarithmically, not to mention starting at a much lower QALY/$ rate!). This is especially so for those who have secured their own financial independence, and are investing money that is surplus to their own personal/family requirements. This may mean that the median EA investor loses money, but that shouldn’t matter so much if the ultimate total is higher—we are all on the same team.
About a year ago there was discussion on Twitter about how EA was highly concentrated in crypto and tech stocks. Someone asked if it could/should be hedged. The reply was that there was not appetite for hedging. I remember thinking to myself that I’m sure the ultimate beneficiaries of the EA causes would have appetite, but clearly it was not their decision, it was SBFs. I guess someone could ask if, from a moral perspective, he should have looked at the decision about whether or not to hedge from the perspective of the ultimate beneficiaries.
Another approach could be to be more proactive in taking funding assets in advance and liquidating and holding them in fiat (or other stable) currency. (e.g. ask big highly EA sympatethic donors to fund very long periods of funding at once if in any way possible.)
Altough your argument may make a more convincing case for the funders to fund, since the money will actually be spent quickly.
Is there a lesson here that we didn’t sufficiently focus on asset class as a factor in the patient vs impatient philanthropy debate, and if EA has more crypto money in the future, we should spent it very quickly with a low-ish funding bar (for EA standards)?
There’s probably a weaker version of the same argument to be made with tech stocks as well given Meta’s falling value over the last year.
Whilst crypto is a factor, I don’t think it’s the main one here. If FTX/Alameda had held the bulk of their reserves in BTC or ETH, this wouldn’t have happened. Although granted, they may not have got anywhere as big as they did get if they had done this—it seems likely that the $16B was mostly illiquid paper wealth that they couldn’t’ve spent fast even if they wanted to.
As someone who’s rode out 3 previous crypto crashes of ~90%, ~70% and ~93%[1], I think in the long run it’s still a good bet, and I’m still holding[2] (If I had cashed out at either of the first two peaks I’d have much less than I do now, and even now I’ve got ~what I had at the 3rd peak. There is less potential in multiples though now than there was; maybe another 10-100x is possible in the next decade? [Not financial advice!]).
In general, I still think EAs should be ~risk neutral with their investments (i.e. much more risk taking than the average investor), given the value of spending on EA work scales ~linearly with money spent (vs. value gained from personal consumption scaling logarithmically, not to mention starting at a much lower QALY/$ rate!). This is especially so for those who have secured their own financial independence, and are investing money that is surplus to their own personal/family requirements. This may mean that the median EA investor loses money, but that shouldn’t matter so much if the ultimate total is higher—we are all on the same team.
Yes, I know the pain of thinking of what the money could’ve been spent on (saving lives etc)
Although I have diversified a fair bit into (similarly high risk) start-up investing over the last year or so.
About a year ago there was discussion on Twitter about how EA was highly concentrated in crypto and tech stocks. Someone asked if it could/should be hedged. The reply was that there was not appetite for hedging. I remember thinking to myself that I’m sure the ultimate beneficiaries of the EA causes would have appetite, but clearly it was not their decision, it was SBFs. I guess someone could ask if, from a moral perspective, he should have looked at the decision about whether or not to hedge from the perspective of the ultimate beneficiaries.
Another approach could be to be more proactive in taking funding assets in advance and liquidating and holding them in fiat (or other stable) currency. (e.g. ask big highly EA sympatethic donors to fund very long periods of funding at once if in any way possible.)
Altough your argument may make a more convincing case for the funders to fund, since the money will actually be spent quickly.
Or we should try to quickly move any money made in crypto into the S&P. I don’t think this is about patient vs. urgent philanthropy per se.
This gets more complicated when you factor in capital gains tax.
Better yet, into a total world stock fund, since it’s best to hold each country’s stocks in proportion to its market cap.