We’ve been receiving countless emails, regarding what’s happening with cryptocurrencies in recent weeks.
Portfolio Wealth Global is one of the first newsletters to cover the rise of digital assets on the blockchain. We covered Bitcoin in 2017, when it traded for $413 for the first time. By attending the conferences in the early innings of the mania, we learned about Ethereum, the smart contracts platform, when it was $16 per token and immediately alerted on it.
These two alerts alone have generated generationally-high profits and their prices are still many multiples above their original alert price.
2017 was a mania. Denying it is the classic pattern of the investor, who has still not come to terms with it.
Nowadays, valuations reflect the underlying assets more appropriately, yet there are countless worthless projects with millions of dollars invested in them, which will end up lost forever.
Be extremely cautious because there’s no telling how low prices can go. Yes, we’re 85% down from the peak, but it could easily be 95% as well. There are people out there, who own Bitcoin at $413 (as you might be one), so they could easily take profits, especially if their stock market portfolio tanks in Q1 of 2019, and they’re forced to fund the account, due to margin calls.
Secondly, January 24th is shaping up to be a monumental day for this industry. International Exchange Inc., the company, which owns the New York Stock Exchange, is set to launch Bakkt, which will allow billions of dollars to enter this sector. Microsoft, Starbucks, and others have invested in this platform. It’s a big deal.
My personal strategy is to wait and see how Bakkt impacts the industry.
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What I really want to touch upon today, though, is how unprepared the U.S. economy is to handle a domestic recession, let alone a global one. In the first place, the federal budget is already so disproportionate compared to the incoming tax receipts that we’re in emergency status already, even before a recession slows down payrolls, capital gains tax, and corporate taxes.
What’s truly unique about the state of affairs, though, is that snapping out of it could be like walking through a dark jungle.
Not only will the way not be visible to policy-makers or to the private sector CEOs, but the pace of progress will be slow and filled with a general lack of confidence.
Just like a dark jungle, you have no idea exactly where you are or what dangers lurk ahead, and all you want is a flashlight and an experienced guide to take you out of there.
The flashlight that the American people will immediately grab, at the first sign of darkness/recession, is the allure of public works. The government will put people back to work, building infrastructure, mostly. If the political tide is there, perhaps the wall on the Mexican border will be discussed more seriously.
Jobs make the unemployed feel like the government cares, but it won’t be enough.
With only a flashlight, there is no way of knowing what the RIGHT way to go is, just that the total darkness has been dispelled.
Therefore, the next president will exert much more power than ever before. He will be a guide. Instead of upholding the constitution and allowing the economy to sort out imbalances, the “national priorities” will become more important than the individual ones – collectivism over individualism.
Don’t count out price controls on essential items, more austerity measures and more tariffs on foreign goods, thus incentivizing local manufacturing and government-private initiatives to revive distressed cities and towns.
I expect the next few months to be the worst, concerning volatility and a vicious news cycle, filled with sensationalistic headlines.
Stay the course. Hold cash. Use big down-days to accumulate cheap assets, trading at a bargain. Let panic service you, instead of joining it.
Best Regards,
Tom Beck
Research Partner, PortfolioWealthGlobal.com
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This work is based on SEC filings, current events, interviews, corporate press releases and what we’ve learned as financial journalists. It may contain errors and you shouldn’t make any investment decision based solely on what you read here. It’s your money and your responsibility. The information herein is not intended to be personal legal or investment advice and may not be appropriate or applicable for all readers. If personal advice is needed, the services of a qualified legal, investment or tax professional should be sought.
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