A fat finger-error is a term used to describe a keyboard input error on the stock market, typically resulting in a buy or sell order being placed at a far greater size or price than intended. Last week we witnessed a particularly fat finger-error that had a remarkable temporary effect on one person’s net worth, at least on paper.
When reference is made to the richest man in the history of the world, many people think of John D. Rockefeller. At one stage, the oil baron’s net worth reached 2% of the Gross Domestic Product (GDP) of the U.S, translating to roughly $410 billion in today’s terms.
However, many people would not have guessed that the richest man in history was not Mr. Rockefeller, but likely a ruler from Africa – a man named Mansa Musa.
Mansa Musa was the king of the Malian empire in the 14th century. Whilst there is no way to place an accurate value on his wealth, many historians estimate that it was likely more than any other person ever accumulated. During his reign, the Malian empire was the largest producer of gold on earth. On a pilgrimage to Mecca, his caravan included 60 000 companions, 12 000 slaves carrying 4 pounds of gold each, and 80 camels each laden with 300 pounds of gold. He gave away so much gold on his journey, that the value of the commodity collapsed and caused hyperinflation in many of the economies he passed through.
Earlier in the week, Mansa Musa’s wealth was likely trumped (for a brief moment) by Chris Larson, one of the founders of the Ripple cryptocurrency. The currency’s ticker is XRP.
XRP’s recent trading range has fluctuated between $0.18 and $0.23. One buyer of the currency accidently placed an order for one XRP at a price of $8 341, which was matched with a willing seller! Chis Larson owns 15.19 billion XRP, meaning at that price, his paper net worth jumped to the trillions, making him the wealthiest person in the history of the world, for that brief moment, and at least on paper. Most likely, an unfortunate trader succumbed to a fat-finger error by accidently entering the price of one Bitcoin instead of one Ripple coin and, thereby, significantly overpaying. The market quickly corrected on the following trade, and the price is currently around $0.21 per XRP. Above is a screenshot of the unfortunate trade.
Fortunately, the Fintax Funds have steered clear of risky cryptocurrencies, which tend to be manipulated, instead focussing on proper diversification, and quality investments. By investing in funds and instruments that are less likely to succumb to ‘’fat finger” or other types of market errors, the Fintax Funds have delivered risk-adjusted returns in excess of the market since inception.
As always, we welcome any comments, queries or questions you may have.