Hey Finance Fam,
Happy 2018 to everyone! Because cryptos have become a nice bubble, everyone who has reaped a capital appreciation windfall is of the opinion that they're pretty much God's gift to financiers. Then they go read a couple trash articles from sites like The Street and spout on things that are just plan silly. Tip to identify this type of person: the more butthurt someone gets when you disagree with them, the less they actually know about what they're trying to force down your throat.
I was going to write a big long Facebook post with some random financial thoughts, but figured a quick blogpost would be more apropos. Just a quick cud for you guys to intellectually chew on.
-Warren Buffett has never sold a single share of Berkshire Hathaway. You'd be surprised at what his salary is too. This is the case because he doesn't spend lavishly on himself: basically his entire life and livelihood is tied up in the company he created and built painstakingly.
-Let's look at actual arguments for major Cryptos:
-Last thing: Making a quick buck can be easy to do, keeping a quick buck is pretty difficult (been there when I was trading on 3X Vix options *sadface*). If you're a young person looking for an investment, look for something that uses compound interest. You know how banks charge you 2.5% on your mortgage, and you're like, "oh, that's nbd." It is a bd:
That's all for now.
Love you guys,
Swarles
Happy 2018 to everyone! Because cryptos have become a nice bubble, everyone who has reaped a capital appreciation windfall is of the opinion that they're pretty much God's gift to financiers. Then they go read a couple trash articles from sites like The Street and spout on things that are just plan silly. Tip to identify this type of person: the more butthurt someone gets when you disagree with them, the less they actually know about what they're trying to force down your throat.
I was going to write a big long Facebook post with some random financial thoughts, but figured a quick blogpost would be more apropos. Just a quick cud for you guys to intellectually chew on.
-Warren Buffett has never sold a single share of Berkshire Hathaway. You'd be surprised at what his salary is too. This is the case because he doesn't spend lavishly on himself: basically his entire life and livelihood is tied up in the company he created and built painstakingly.
1) Some CEOs sell stock to finance their personal endeavors or diversify their assets. Jeff Bezos sold about 1 billion worth of Amazon stock a couple short months ago. It rather begs the question, if the person that knows the most about something sells a share of his ownership in that something, he must see a more attractive investment in that object to be obtained, no?
2) Charlie Lee, founder of litecoin, sold all his holdings in the Cryptocurrency (rumor has it he did this out of disgust when realizing he could have named it "litcoin" instead). So the guy who knows the most about the asset decided he would be better off not owning any of that asset, but rather transmitting those paper gains back into US dollar. He did this because he said "there was a conflict of interest." I agree: the conflict arose from his status as founder of an overvalued bubble and his future financial well-being. Possibly the dumbest thing I've heard so far in 2018.
-Let's look at actual arguments for major Cryptos:
1) Bitcoin: Store of value. If I have a good chunk of money I want to safeguard, I might be a bit nervous about having these funds in only one basket. If my wealth is in the USD and the United States implodes and bank accounts are frozen (yes, the government "can" and will do that), I'm up a certain creek with a leaky vessel, no paddle, and no Sacagawea. Bitcoin is accessible via the internet anywhere, highly mobile, and can only be accessed by one cypher.
A) You're storing your assets in something that doesn't physically exist. If you think the USD doesn't exist, I think the trillions of transactions that occur might be a nice trail of breadcrumbs to discredit that view, as might be the GDP of the issuer of the currency.
B) "Bro, the Winklevoss twins put all their money in bitcoin and said they still think it's one of the best investments out there, and they're billionaires." Bro, the Winklevoss twins were stupid enough to let Zuckerberg steal Facebook for basically nothing and you put your credence in these bozos?
2) Bitcoin Cash: Was the exact same as bitcoin, until they decided to fork off
the blockchain and focus on facilitating transactions. Good idea, but others do it better...
3) Ethereum: Ethereum first of all has a badass name, plus it's represented as being a gnarly shade of purple. Kidding, (absolutely not kidding). The value of Ethereum lies in it's ability to trigger smart contracts. It's kind of like a boolean cryptocurrency used to fulfill contracts without a middleman (bank) gouging both parties for guaranteeing the transaction. Basically Winklevoss A agrees to pay Winklevoss B X amount of ethereum if and only if a condition is met. Once that contract is entered into the ethereum blockchain it cannot be altered unless agreed upon by both parties, (since it is a public ledger this results in a new link in the blockchain) Once the condition is fulfilled the transaction takes place instantly, unequivocally, and securely. Pro tip, I absolutely believe in the financial value of ethereum and the next crypto to mention. I bought $20 of ethereum because of my long term belief and to better track it when I started harping on bitcoin on December 13; ethereum has since appreciated roughly 50%, while bitcoin in the same span has fallen 16%.
4) Ripple: Last legitimate one for today's discussion, Ripple uses a netting of blockchain technology to couple with the banking system currently in place. It's kind of like if everyone in the world had the same bank, it would just be a matter of changing numbers as a debit from one account to a credit into another. I said earlier that Ethereum is up 50% in (roughly) a month and bitcoin down 16%; Ripple is up 256%. This is because it is likely to be the first crypto to have a widespread transactional usage. I don't like to use the argument of "this has appreciated this much vs. this vs. this, but I do it here because as the bitcoin bubble is bursting smart money is going into what I believe is the real winners.
5) Other Cryptos: There are a bunch that are absolute garbage (dogecoin). Value is tied to utilization.
-Last thing: Making a quick buck can be easy to do, keeping a quick buck is pretty difficult (been there when I was trading on 3X Vix options *sadface*). If you're a young person looking for an investment, look for something that uses compound interest. You know how banks charge you 2.5% on your mortgage, and you're like, "oh, that's nbd." It is a bd:
 |
| On a 300K mortgage you pay $332,154.40 in interest |
1) Re the above exorbitant interest you pay over the life of the loan, the bank can invest that in 30 year treasury bonds currently at 2.85% and also get 2.85% compounded over 30 years for just over 409K.
2) You can compound interest too! Find a company that will be around for awhile, that pays a (rising) dividend, and can fend off competitors (strong moat). Call me crazy, but this boring way of investing can create amazing returns. An investment where you put 1K in O (The Realty Income Company), and a further $100 a month, reinvesting the monthly dividends back into your holdings you would have socked away $28,800. Not bad, eh? Well it's now worth $238,195.66; thanks compound interest (do your due diligence and don't just go buy Realty Income because I threw past returns in front of your eyeballs).
That's all for now.
Love you guys,
Swarles
Comments
Post a Comment