Share
Lesson 1: Avoid the obsession with quick wealth
“He who wishes to be rich in a day will be hanged in a year.” (Da Vinci). Numerous successful Kuwaitis abandoned their thriving businesses in pursuit of quick riches in Souk Al-Manakh. The book “Manakh 82” highlights that among the investors who suffered losses were accomplished businessmen, graduates of prestigious universities, and even an expert in financial crises. Therefore, it is crucial not to assume that education alone can shield you from such mistakes.
Alsharrah underscores that bubbles emerge when intellect clashes with obsession, demonstrating that even the brightest individuals can succumb to rampant greed, as Souk Al-Manakh exemplifies. Some investors faced heart attacks and even left Kuwait permanently due to severe losses. Imad, a 62-year-old interviewed by Kuwait Times, advises young investors to exercise caution before engaging in risky investments, using a Kuwaiti saying that encourages measuring the depth of a pool before diving in, as measuring won’t help once you’re drowning.
The obsession with quick riches persists, evidenced by shady and fraudulent schemes on platforms like Instagram, promising instant wealth, and the losses incurred by Kuwaitis in high-risk investments like cryptocurrencies and NFTs. Talal Al-Ajmi, CEO of VI Markets, points out that “many young people have invested in cryptocurrencies” but laments their lack of proper investment knowledge and capital management. Ajmi advises young investors to “thoroughly research the market before investing, particularly with the abundance of free and useful online resources”.
Lesson 2: Resist the herd mentality
The collapse of Souk Al-Manakh teaches us that the majority is not always right. A prominent Souk Al-Manakh investor mentioned to author Alsharrah that “Greed and fear of missing out on wealth drive obsession.” Many individuals joined Souk Al-Manakh late due to the fear of missing out and invested despite their reservations. This highlights the fact that the majority can be wrong, as has been observed in various financial crises, including the 2008 housing crisis.
Therefore, if you have a strong conviction, stick to it and don’t succumb to the fear of being left behind. Abdulaziz Al-Shammari, an accounting and finance graduate interviewed by Kuwait Times, refers to an anchoring bias, where people are heavily influenced by their initial sources of information when making decisions. For instance, if your first impression of Souk Al-Manakh is an investor with a Rolls Royce urging you to join, you’re likely to invest. However, many financial crises remind us to consistently question information and be aware of biases in our decision-making.
Lesson 3: Don’t rely solely on government assistance
As reported by Business Recorder, “it was not surprising that investors expected government assistance in a nation where they even cover citizens’ marriage expenses and telephone bills.” Many believed that the government would intervene to rescue investors, motivating them to make risky investments in Souk Al-Manakh. In reality, the government did not provide substantial aid.
Alsharrah, in her conversation with Kuwait Times, believes that holding investors responsible for their decisions is more beneficial. A paternalistic governance model is unsustainable for Kuwait, given declining oil prices and a growing population. Relying on the government to compensate for losses will likely lead to further financial catastrophe. Therefore, it’s advisable to anticipate a scenario where the government won’t bail you out, as there is no guarantee they will.
Lesson 4: Documentation matters
Researching Souk Al-Manakh reveals that the crisis is better documented by foreign authorities, such as a comprehensive 20-page article by the Federal Reserve Bank of Cleveland. Unfortunately, local authorities have not adequately documented one of Kuwait’s major historical events, possibly due to the involvement of influential individuals in the crisis. Nonetheless, it is our responsibility to future generations to maintain transparency. This is not to diminish the commendable efforts of Kuwaitis in documenting the crisis.
Alsharrah, in her interview with Kuwait Times, mentions her ongoing research in London to write a second book on Souk Al-Manakh. Notable documentation efforts include “The Knights of Al-Manakh” play by the late Abdulhussain Abdulredha, the Mahfoof podcast, “Blackbox” by Ammar Taqi, and “Kuwait Fall/Rebirth” by author Mohammed Al-Yahya. Financial crises have occurred in the past, will continue to do so, and have occurred after Souk Al-Manakh.
Some worthy mentions are the 1637 Tulip Mania, the 1997 Asian crisis and the 2008 Great Recession. Imad, who was a university student during the Souk Al-Manakh crisis, says that forgetfulness can sometimes be a blessing. It may indeed be useless at times to remember the misfortunes of the past. However, it is crucial that we learn from our mistakes. Souk Al-Manakh teaches us not to be driven by greed, not to blindly follow the crowd, to take responsibility and to document our history. The question now is: Will you survive the next financial crisis?
