Do you ever see those Forbes thirty under thirty lists, and they might make you feel
a bit down, as there seems to be at least thirty people on the planet who are under
the age of thirty and doing a bit better than you are...
Well, don’t feel too bad, because maybe you would have been number thirty-one on the
list – that’s just the cruelty of cutting it off at thirty.
The people on the list though – the ones who did make it – they probably just have
more promising careers than you.
They’ll have garages filled with Lamborghinis and books – while you keep all of your books
in your house because that’s where you thought they were supposed to go.
One reason not to feel so bad, is that as you dig through some of the old thirty under
thirty lists, you’ll start to notice a bit of a pattern - a lot of the winners – in
fact, often the ones that seemed most impressive at the time – seem to end up going to prison
(which probably wasn’t their goal.
Who knows, maybe they went on to become hugely successful prisoners amassing a huge collections
of cigarettes (which are the cryptocurrencies of prison).
But, sadly, things seem to have really fallen apart for many of the Forbes thirty under
thirty over time.
So, who am I talking about?
Well, in recent years we’ve seen crypto hobbit Sam Bankman Fried make the list – he
was listed in 2021 - along with a bunch of people with junior roles at banks.
It makes you wonder who exactly puts these lists together…
Oh, OK, I guess that explains a lot.
When I noticed the pattern (of criminals and banking juniors), I was excited to read the
profiles of the 30 under 30 criminals.
After all these profiles had been written right before everything had gone wrong, but
that’s just not how things are done at Forbes…
They have a Winston Smith working at Forbes whose job it is to rewrite the old profiles
– keep them up to date...
The Sam Bankman Fried profile has since been updated to include the fact that he lost all
of his own money and gambled away his customers money.
I really feel it would have been much better if they had preserved the original piece.
There are still some artifacts to be found though.
The update work has been sloppy, the current profile says that he can’t live without
Slack (he did after all love that auto delete message feature), and it says that his dream
mentor is Elon Musk.
Soon I’m sure they’ll update that again in the future - listing his favorite prison
food, and that his dream mentor is DB Cooper.
I dunno though, I don’t want to be all negative about this…
Just because Sam’s going to prison doesn’t mean that he won’t achieve success from
there, he can still hold on to many of his old goals.
Maybe once he settles in, he’ll do everything he can to get all of the prison cigarettes
and then give them away to the prisoners in the greatest need.
That’s sort of a worthy goal I guess.
I dunno…
So, what other notable thirty under thirty alumni do we have?
Well, on the 2012 list there’s a similar list of junior bankers and Martin Shkreli,
the Pharma Bro.
Prison had to be tough for a guy like Shkrelli with such a unchangable face.
If you remember the court struggled after his arrest to find a jury for his case because
they couldn’t find twelve people in the entire United States who didn’t ate him.
Some prospective jurors just saw a photo of him and said they didn’t like the look of
him.
The thirty under thirty list though…
It’s got quite a pattern, one criminal and then a bunch of junior bankers who do the
coffee run at Credit Suisse.
You need to either be under investigation for a federal crime, or good at knowing the
difference between a flat white and a latte to make this list.
As you look at the list of people being praised by Forbes, you wonder if their criteria is
to search for people with criminal tendencies, and they just keep finding the occasional
master criminal each year and a bunch of people who weren’t very good at crime and so decided
to get day jobs instead.
If you have made it onto the list and you are not a junior associate at an accounting
firm, odds are you are going to prison in the next six months or so.
In fact, as soon as the people from Forbes call you up to let you know that you’ve
made the list, you should probably start trying to secure a fake passport as if you have any
sense, you’ll be going on the run any day now.
So, who else made the list?
Well in 2022, months before their downfall, Caroline Ellison and Sam Trabucco of FTX made
the cut – they had to share a spot though meaning it was actually the 31 under 30 in
2022.
I guess you weren’t actually 31 on the list then…
Caroline Ellison holds the honor of being the only “Wood Nymph” to ever have been
included on the 30 under 30 list.
I’m told it was a huge deal in the wood nymph community at the time, but apparently,
they just don’t talk about her anymore.
They are trying to move on from that.
The rest of the list was just Associates at Bank of America and AIG – you know, office
juniors who hired a PR agent.
Now, while Elizabeth Holmes never officially made the 30 Under 30 list, she did headline
the Forbes “Under 30 Summit”, so I think she deserves an honorary mention here too.
Trevor Milton- the bargain bin Elon Musk was also on a 2020 Forbes list called 12 under
40, which listed the youngest billionaires on the Forbes 400.
The blurb read “Trevor Milton, the 38-year-old college dropout behind zero-emission truck
maker Nikola Motors, joins the ranks of America’s richest millennials after tripling his net
worth in less than a year,” If you don’t remember, Nikola (which was
named after Nikola Tesla – because the name Tesla had already been taken) famously made
a demo video of its truck rolling down a hill where the camera was tilted to make it look
like the prototype was actually driving under its own power.
I joked at the time that they named the company after the wrong scientist.
They should have named it Newton after all it was the world’s first gravity powered
truck.
Trevor Milton has since been convicted of fraud and is awaiting sentencing.
The newest member of the Forbes “Hall of Shame” is Charlie Javice, who last week
was charged by the justice department with “falsely and dramatically inflating the
number of customers of her company” Frank - in order to get JPMorgan Chase to overpay
for it.
Charlie - founded her company “Frank” to help students apply for college financial
aid in 2017 when she was just 24 years old.
By 2019, she had been named on the Forbes’ 30 under 30 list.
She described her company as like “Amazon for higher education” – a phrase that
makes absolutely no sense whatsoever.
It’s kinda like saying – My company is the Tesla of pencils…
Oh…
Are they Electric “full self-writing pencils?”
No…
They’re just… eh… they’re just pencils…
Javice described herself as “relentlessly upbeat” in a podcast interview last year,
saying “There were definitely times where I painted a rosier picture than things truly
were.”
And that – it turns out - was true…
In 2021 JP Morgan bought her company for $175 million dollars as part of its Chase retail
banking division with the aim of getting access to younger customers.
Problems emerged almost immediately after the deal closed when JPMorgan noticed that
the delivery and open rates for its emails to Frank customers were far-far lower than
expected.
They launched an investigation and uncovered what US authorities now allege was a months-long
scheme to fabricate user data.
According to the lawsuit, Frank only had about three hundred thousand clients and fabricated
data to show a much larger customer base.
Javice is alleged to have enlisted a data scientist to make up a few million customers.
Which I guess can be described as “painting a rosier picture than things truly were.”
The employee who was asked to create the false records allegedly told her: “I don’t want
to do anything illegal,” to which Javice allegedly responded: “We don’t want to
end up in orange jumpsuits.”
Come on Charlie – you’ve gotta plan a bit better – look at your CV…
You are not a junior associate at an accounting firm - the minute Forbes called you, you should
have booked a flight to a country that doesn’t have an extradition treaty with the United
States.
It’s not hard.
The signals are very clear.
The magazine curse is not a new idea either, a group of finance professors from the University
of Richmond in Virginia wrote a paper in 2007 on this very topic entitled “Are Cover Stories
Effective Contrarian Indicators?”
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There is an old story, that Joe Kennedy, a legendary stock manipulator, dumped all of
his shares right before the 1929 stock market crash, saying "you know it's time to get out
when the shoeshine boys start giving you stock tips".
(Shoeshine boys were the finance YouTubers of the roaring 20’s.)
The 2007 academic paper suggests that the modern-day contrarian equivalent is magazine
covers.
The professors looked at 549 cover stories from three business magazines (Business Week,
Forbes and Fortune) over a 20-year period.
They then went on to analyze how the shares of the featured companies had fared in the
500 days before and the 500 days after the publication date.
This is because companies made the cover of these magazines for both good and bad reasons.
You probably won’t be surprised to hear that the companies that received the most
positive coverage in the run up to the publication date were top performers, having (on average)
outperformed the stock market by 43 per cent before making the cover.
The companies that received negative magazine coverage were ones that had (on average) underperformed
the stock market by 35 per cent before making the cover.
The academics discovered a reversal of fortune tended to occur after the articles were published.
The high-fliers' period of outperformance came to an end, and the ‘beaten down’
stocks went on to beat the market after the publication date.
As the authors put it, "positive stories generally indicate the end of superior performance and
negative news generally indicates the end of poor performance".
The research shows that investing based on media enthusiasm can be destructive to your
wealth.
The magazine cover indicator isn’t new, it was first proposed more than thirty-five
years ago by Paul Macrae Montgomery, an American fund manager.
His analysis of every Time magazine cover story since 1923 led him to state that "whenever
a periodical has a cover story, it's been significant 85 per cent of the time".
When I worked for Victor Niederhoffer, I helped with some of the research that went into his
book “Practical Speculations” (I’ll put a link to that book in the video description.)
One of the studies that went into the book was an analysis on Time Magazines ‘Person
of the Year’ award.
Victor found the award to be a "hubristic curse" pointing out that the award had gone
to companies or CEO’s on six occasions, with the winning company's stock going on
to suffer an average decline of 10 per cent in the next two years versus an average gain
of 20 per cent for the S&P 500 for the same two-year period.
He similarly found that companies who had the naming rights to the world’s tallest
building tended to underperform the stock market in both one three and five year periods
after the building was completed.
And in a study that might have warned you about FTX, Victor found that companies that
paid for the naming rights of sports stadiums also underperformed.
Businessweek was a magazine that was first published in September 1929, just weeks before
the stock market crash.
It was bought out by Bloomberg in 2009.
Businessweek, had such a terrible history of wrong calls that "sell when Business Week's
cover says buy" became a Wall Street maxim.
They famously proclaimed "the death of equities" in 1979 and announced the dawning of "the
internet age" in December 1999.
They put Jeffrey Skilling - the CEO of Enron on the cover in February 2001 praising Enron's
"strict risk management controls".
Months later Skilling resigned for "personal reasons" and Enron imploded in the biggest
bankruptcy in corporate history at the time.
Skilling was eventually sentenced to twenty four years in prison.
As the economist Paul Krugman famously put it: "Whom the gods would destroy, they first
put on the cover of Business Week."
Now, the rule doesn’t just apply in the world of business.
The Sports Illustrated cover jinx is an urban legend that states that individuals or teams
who appear on the cover of the Sports Illustrated magazine will subsequently be jinxed.
An explanation for the Sports Illustrated jinx is that athletes are generally featured
on the cover after an exceptionally good performance, which might be an outlier compared with their
usual level of playing.
After this exceptional performance, there is essentially nowhere to go but down.
The statistician Francis Galton while trying to explain data that showed the offspring
of tall parents were, on the average, not as tall as their parents, and the offspring
of short parents were, on the average, not as short as their parents described this effect
as regression to mediocrity – which was later renamed regression toward the mean.
Chris Bakke, a tech entrepreneur tweeted last week that “The Forbes 30 Under 30 have collectively
raised $5.3 billion dollars in funding.”
And “The Forbes 30 Under 30 have also been arrested for frauds and scams worth over $18.5
billion dollars.
An incredible track record.”
The first number comes from Forbes and the second is Bakke’s own calculation, but you
get the idea: As a group they have frauded three and a half times the amount of money
that they have raised in funding – which is an impressive level of fraud.
You have to give it to them; they are dedicated to their craft…
The line between innovator and fraudster seems to have become alarmingly thin.
Look - If you work at a bank, and the junior associate who does your coffee run has made
it onto this list, there is a really good chance that they’ve taken your coffee money,
and they’re not coming back with the coffee.
I’m sorry but this list is a huge red flag that you should have spotted.
If your name has appeared on the Forbes 30 under 30 and you are running some sort of
criminal conspiracy, it might be time to start planning your escape.
The clock is ticking.
On the other hand, if you’ve made it onto the list and you are a junior at an accounting
firm who hired a publicist to get this done, congratulations, but you really shouldn’t
be watching this video.
I think you know better than anyone, that the coffee is not going to make itself.
If you enjoyed this video, you should watch my video on why people trust fraudsters next.
Don’t forget to check out our video sponsor Incogni using the link in the description
below.
Have a great day, and see you in the next video.
Bye.
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