What’s the Most Exciting Investment (that isn’t Crypto)?
Friday, 15 June 2018
By Sam Volkering
- Crypto or stocks?
- A world without crypto
- The future in a world with crypto
Let’s not beat around the bush. There’s seriously no other investment opportunity today that’s as wild as crypto.
Sure, you can still invest in stocks, property, derivatives, gold, wine or even classic cars. But really, nothing is as high-octane as crypto.
Where else can you see mania delivering thousands of per cent returns in weeks and months? Where else can you see daily volatility with insane 20–30% swings lower, then higher, then lower again?
Where else can you invest in opportunities with as little as $50 at virtually zero cost?
We’ve banged on about it for a few weeks now. But it’s true that if you compare buying stocks to buying crypto, crypto is easier.
Some people might argue with me on that point. But put it into practice, and see for yourself. The difference is crypto brings out a more emotive side in people. It’s polarising.
People hear more about the scams and dangers of crypto than the scams and dangers of stocks.
However, if you really think about it, where’s the real craziness? Crypto or stocks? Or are they sort of the same thing?
First, the markets…
Overnight the Dow Jones Industrial Average closed down 25.89 points, or 0.10%.
The S&P 500 rose 6.86 points, or 0.25%.
In Europe the Euro Stoxx 50 index finished up 47.55 points, or 1.37%. Meanwhile, the FTSE 100 gained 0.81%, and Germany’s DAX climbed 216.52 points, or 1.68%.
In Asian markets, Japan’s Nikkei 225 is up 89.16 points, or 0.39%. China’s CSI 300 is down 0.64%.
In Australia, the S&P/ASX 200 is up 72.90 points, or 1.21%.
On the commodities markets, West Texas Intermediate crude oil is US$66.92 per barrel. Brent crude is US$75.84 per barrel.
Gold is trading for US$ 1,302.33 (AU$ 1,745.74) per troy ounce. Silver is US$ 17.31 (AU$ 23.21) per troy ounce.
One bitcoin is worth US$6,614.99.
The Aussie dollar is worth 74.60 US cents
Stocks or crypto?
My background is in stocks. I love stocks. Actually, this is not 100% accurate — I love companies. Companies that build our world, that shape our future.
I typically hate government. They rule with an iron fist and tell us what to do. Companies, by contrast, typically help us to do what we want to do, whether that’s providing a good or a service. It may be through these investments that we can liberate ourselves financially.
The way I see it, companies do more good for us than governments ever will.
Libertarian capitalism is probably the closest description you’ll get to my views. But even then, I hate those definitions. They pigeon hole you into one group of beliefs.
Truth is there’s a little bit from everyone’s playbook that works. And it’s the idea that you can take the good parts from everything that I think you should apply to your investment portfolio.
The smart investor never goes all-in on just one opportunity. But at the same time, the smart investor never completely dismisses an opportunity either.
The smart investor is smart because they can control their emotions. They can control their desires and they can control their index finger from clicking on a buy (or sell) order.
For example, I’m not really a huge believer in the alleged ‘lithium boom’. Now that (in some people’s minds) is simply stupid. And I’ve been called stupid from lithium bulls.
But I just don’t see it. Speaking with the world’s car companies, they will go ‘EV’ long term, but they’re not really 100% sure if the demand will ever be there.
They’re hedging their bets. That’s why all the major manufacturers are developing ‘flexible architecture’.
That’s industry speak for a floor plan which they can drop in any kind of powertrain they like. It means if there’s huge demand for combustion engine cars, they’ll make them. If it’s hybrids, they’ll make them. If it’s EVs, they’ll make them too.
They’re ready for all outcomes, not just one. That’s smart. They may not believe in one over the other definitively, but they won’t dismiss the potential for variable outcomes.
That’s smart money at work.
And for me, while I don’t believe the full hype of the ‘lithium boom’, I can see there’s something there. So I’m not completely closed off by it. And if I think there’s an opportunity for my subscribers, then I’ll recommend it.
Likewise, it’s pretty clear I’m a massive proponent of crypto. And I think that everyone should have some kind of exposure to them. I still believe it’s the single biggest wealth-creating opportunity we’ll ever see.
But I’m also a bit like ‘flexible architecture’ as well. I may be wrong. And could completely misjudge the long term potential of crypto.
That means I regularly ask myself, what happens if there’s no crypto? That’s a viable alternative future. A future where there’s no crypto anymore. I don’t see that happening, but it’s possible.
And in that case, then what?
Well, of course companies aren’t just going to disappear anytime soon. They’ll still issue equity in their companies for people to buy. That’s one way for them to raise capital.
And you’ll be able to buy that equity. So no matter what happens to crypto, you’ll always be able to buy little pieces of companies for long term investment.
And in a world without crypto, that would be stocks. And far and away in my view, it’s increasingly tech stocks that make the most exciting area of ‘traditional’ investments.
You can quote me on this wherever and whenever you like.
If you don’t have some exposure to tech stocks as well, I think you’re probably bonkers. The companies I see that are building our future world through new tech are astonishing.
They’re pioneers of our world. But for this to come full circle, some of them are now starting to look to crypto as an avenue for their own future.
What do companies look like in a future of crypto?
Let’s say I’m right and the future is full of crypto. What does that do for the traditional companies of the world? What does that do for stocks and markets?
It radically changes the whole concept of stocks, equity and being able to buy your little slice of a company.
It’s the idea of security tokens. The ability to buy and trade crypto tokens that have the same rights, responsibilities and benefits of stocks.
It’s a big idea, and I’ve run out of time. But next week we’re going to dice deep into security tokens and how they’re going to change markets forever!