Crypto Pro Sam Bankman-Fried warns against traditional portfolio hedging under inflation

Sam Bankman-Fried founded the cryptocurrency and derivatives exchange FTX in 2019, and it has quickly become the sixth largest exchange in terms of volume, with a valuation of $ 3.5 billion. In 2021, he was named Forbes ’30 Under 30 list in the finance category.

Recognized by GOBankingRates as one of Money’s most influential, he shares here the importance of being aware of the expected value when it comes to investing, and why it is never a good idea to be too risky – or too safe.

What is the only money advice you would want everyone to follow?

Think about expected value. Your goal is not to win 75% of the time, it is to win in expected value; do not fall for trades that make up 10% three quarters of the time and lose 50% the other quarter.

Check out: GOBankingRates’ top 100 money experts
More advice: Mark Cuban on the importance of doing your investment homework

What is the most important thing to do to build wealth?

Keep enough capital to be comfortable in safe assets, and be aggressive with the rest.

What is your best tip for combating the effects of inflation?

Changing rates can mean that hard assets deviate from soft assets in the other direction, so be aware of the risk of multisectoral rallies or downturns. Do not rely on traditional hedges that work in your portfolio, and make sure you budget for the potential at increased prices.

What is the biggest mistake people make when it comes to money?

People alternate between being too aggressive [and] risk too much, and [being] too conservative [and] unable to grow wealth. Instead, try to find and maximize opportunities while maintaining a safety net.

Jaime Catmull contributed to the reporting for this article.

More from GOBankingRates