Valuable Investing Lessons You Can Learn from Taylor Swift

Enraged individuals who fell victim to the FTX scam are seeking compensation from the celebrity endorsers who promoted the ill-fated exchange, in a legal case that includes Larry David, Tom Brady, and Shaquille O’Neill, among others. Notably absent from this list is Taylor Swift, who was reportedly offered a sponsorship deal worth $100 million by the offshore cryptocurrency exchange. However, by exercising basic caution and skepticism, she avoided both public embarrassment and the possibility of legal repercussions.

According to The Block's Frank Chaparro, during negotiations that ultimately failed between Taylor Swift and FTX representatives, Swift reportedly posed the question, "Can you tell me that these [listed assets] are not unregistered securities?" This revelation was shared by Adam Moskowitz, the plaintiff's lawyer in the FTX endorsements lawsuit, who learned about the incident during the discovery phase of the case. While Swift's camp has not confirmed this account, it raises questions about her concerns regarding the legality of FTX's listed assets and the due diligence performed by her team during the endorsement deal negotiations.

While the parable may be somewhat of a just-so story, it contains a wealth of wisdom. This is particularly relevant given Taylor Swift's track record as a savvy and shrewd businesswoman, in addition to her musical talents. One notable example of her business acumen is her successful effort to extricate herself from an oppressive publishing contract. By doing so, Swift demonstrated her tenacity and sharp-elbowed approach to negotiating deals in her favor.

The message to take away from her FTX experience is not as straightforward as it may appear. Swift's inquiry about unregistered securities was incredibly astute, particularly in light of the current wave of strict regulatory actions taken against cryptocurrency exchanges. Clearly, she has been closely following developments in this arena. However, FTX's downfall was not due to the sale of unregistered securities; rather, it was caused by more conventional fraud. It appears that Swift did not pose the question to FTX representatives, "is your management team secretly sending user assets to an affiliated hedge fund?"

So how might Swift's inquiry about securities law, which ultimately had no direct connection to the risk that ultimately caused FTX's downfall, have influenced her decision to avoid doing business with them? This is purely speculative, but one possible scenario is that either Swift or her team were dissatisfied with the way FTX responded to this and other questions. Perhaps Bankman-Fried or his representatives were unclear, disorganized, or defensive, all of which could be indications of underlying issues within the organization. Alternatively, it's possible that Swift's team didn't appreciate FTX's CEO playing "League of Legends" during their meeting.

Although Moskowitz's secondhand account suggests that this is how the negotiations played out, it's impossible to confirm the accuracy of his claim. The talks between FTX and Swift were originally reported by the Financial Times in December. As per their report, the proposed agreement would have seen Swift receiving $100 million in exchange for promoting FTX branding at her concerts. However, sources cited by the Financial Times revealed that there were doubts about the deal within FTX, primarily due to its exorbitant price tag (in comparison, FTX paid $135 million for the naming rights to the Miami Heat stadium).

If we accept Moskowitz's story as true, then the key takeaway is that perhaps it's not necessary to be fully informed about every obscure risk associated with every investment you make. The real lesson from Swift's experience isn't so much about asking a specific question related to the law or securities, but rather, it's about being willing to ask any challenging and critical questions at all. In other words, it's important to take a proactive and inquisitive approach when evaluating potential investments, rather than assuming that everything is above board without question.

A truly savvy investor understands that it's not just the content of the answers to tough questions that matters, but also the manner in which those questions are handled. Whether it's done in-person like Swift reportedly did, or by scrutinizing a company's public communications, this is a fundamental and critical evaluation tool in both business and investing, regardless of the level of experience. In other words, evaluating the response to challenging questions is just as important as asking the questions themselves when assessing potential investments.

In my interpretation of events, Taylor Swift had suspicions about the responses she received to her inquiries regarding securities law. By choosing to walk away from the deal, she may have avoided a potential disaster.

Source Coindesk