Cryptocurrencies were presented to investors in 2017 as “Digital Gold,” but neither they nor gold, for that matter, have held up in 2018, so far.
I want to present to you a radical approach to chaos investing, one which does not appear in the gloom media, but that has served me well in life.
It is such a primary notion in economics, finance, and investing that my biggest hope is that you devote the month of July to studying it thoroughly, as it will completely rewire how you think about portfolio management. It will also help you to gain traction in your line of work, whether you are currently a waiter, a mid-level employee, or at the top of the food chain, responsible for the future of a large business.
Gold and, to some extent, silver are monetary metals, comprised of such innate natural characteristics as to make them compatible with the attributes best suited for currency, when commerce wasn’t so complex, as it is today.
Digitalization of the gold and silver markets is certainly the future. In other words, when ownership of these metals is swiftly and digitally done, with full transparency, as blockchain is targeting to do, I believe many more people will use them. They do have a place in a well-rounded portfolio, since they retain purchasing power better than fiat currencies do, but their holding costs and lack of comfort hinder their day-to-day usage.
Cryptocurrencies, on the other hand, are fiat currencies, of course, but a centralized government does not issue them, and you own them outright, without counterparty risk of leverage.
In other words, they present a new version of a fully digital form of a medium of exchange. Many of them are basically representations of tokens or shares in a project, so the word cryptocurrency isn’t the right term anymore – what they all still have in common, though, is a regulatory nightmare in the making.
What I want to show you today is a greater form of a safe haven asset – it is the ability to detect and build a competitive advantage.
As an employee of a company, a businessman, or an investor, your real safe haven in life is being able to:
- Detect Competitive Advantages: When you become hardwired to look for the ways in which others are monetizing their business models and retaining customers, ideas will appear in your mind on how to emulate these strategies (better yet, outdo them) on behalf of your business or for the sake your employer, by making suggestions to your boss.
More than a century ago, F.W. Woolworth was working in a small store, whose owner wanted to get rid of old merchandise, which wasn’t selling very well and was sitting idly on shelves, which could be used for other purposes. Woolworth came up with the idea of creating a 10c stand, bundling up all the products, and it became a hit.
Sales grew so much that Woolworth decided to build an entire empire of retail stores, based on the idea. His first lender was his former boss, who refused to become a partner and later said that “every word I used to say NO to Woolworth has cost me many millions of dollars.”
Detecting a competitive advantage, then, is critical.
- Build a Competitive Advantage: Once you realize that there’s a way for you to attract and retain customers by using a specific barrier of entry, which hinders others from copying your model, be it by patent, by being first, by nurturing a vibrant company culture, by becoming a brand name, by possessing an economies of scale advantage (your costs are lower because you buy in bulk), by having a unique talent, by government law or otherwise, you must implement it, in full force.
Woolworth failed when he ventured on his own.
The proof of concept was intact – when he was an employee, working for someone else, the idea worked like a charm, but now he needed to draw in a crowd to experience his concept, on his own.
Success took over a decade, but it became the mother lode.
The Woolworth building is located right next to New York City Hall, in Manhattan, and is a landmark today.
Not many companies have a long-lasting competitive advantage, so you must always seek this elusive trait, when investing, when building a revenue stream, or when working under someone, bringing value to the business by initiating ideas, thus opening the door to a promotion.
This is the safe haven, which never fails.
Walmart has a huge advantage over competitors in terms of their costs, for instance. Apple has a massive advantage, thanks to customer loyalty. Disney is engrained in our minds from birth, so it retains our business.
Master this – you’ll become a rich individual, and you’ll be able to buy as many gold coins as your heart desires eventually, but as a first step, study this and look for it everywhere.
Research Partner, PortfolioWealthGlobal.com