Before Archegos Capital lost $20billion and collapsed on the 26th of March 2021, most people in the investing community did not know about the family office capital management firm run by Bill Hwang. Hwang was the greatest trader we didn’t hear about. It was in 2013 when he got his first break after multiplying his $200 million hedge fund into a billion-dollar business by betting on stocks. According to Bloomberg, Hwang’s wealth briefly eclipsed $30 billion at its peak. However, Hwang’s $20 billion net worth ‘evaporated’ after Archegos defaulted on margin calls from several global investment banks. The underlying cause of the collapse is too much leverage in particular using Contract for Difference, a certain derivative instrument. Hwang 57, took too much risk. Before, we castigate this man we must understand any of us can fall into this trap. Hwang is a born again Christian. He once said “I try to invest according to the word of God and the power of the Holy Spirit. In a way it’s a fearless way to invest. I am not afraid of death or money.” Hwang has also been reported to be a pillar of his church community. His Grace and mercy Foundation gave millions of dollars a year to mostly Christian causes. The Fuller Foundation and Fuller Theological Seminary in Pasadena, Calif., and Washington’s Museum of the Bible are two of its biggest beneficiaries. Others, in New York, include the Bowery Mission and the King’s College, a Christian liberal arts school. Hwang hosted three Scripture readings a week at his foundation offices in Midtown Manhattan – a 6.30pm. dinner on Monday, a 12.30 p.m. lunch on Wednesday, and a 7 a.m breakfast on Friday. He paid for another at Metro Community Church, too. Between listening to scripture and reading himself, Hwang said he spent at least 90 hours over the course of every year digesting the entire Bible. However, from Hwang unfortunate story, we see the importance of watchfulness, balance risk-taking and not doing anything that can jeopardize our investment and relationships!
“Not taking any risk is probably the biggest risk for most people. Taking too much risk, you could be wiped out in single event. Taking too little risk, you lose out on opportunity costs…” Changpeng Zhao, Co-Founder and CEO Binance
