When exactly should you start worrying about bitcoin volatility? Online trading platforms are beginning to get concerned about the crypto-currency's meteoric rise. Hannah Murphy writes for the Financial Times: Bitcoin’s value has risen more than 850 per cent from about $1,000 at the start of the year to a high on Monday of $9,747, an ascent that masks dramatic drops along the way. IG Group, the world’s largest online trading platform, told the Financial Times it had suspended trading of some of its bitcoin derivatives on Monday after roaring demand for the products left the company facing … [Read more...]
What do I think of Bitcoin? Part III
The late great Richard Russell, writing about the third phase of a bull market, called it the speculative phase. The third phase was when the average Joe couldn’t stand missing the boat. The third phase was when momentum would take over, and any reasonable measure of valuation would be kicked to the curb. Bitcoin certainly seems to me to be in a third phase, but it also feels too young to even begin measuring which phase we’re in—the whole thing feels like a speculative third phase to me. Steven Russolillo of the WSJ, an expert on bitcoin writes, “Bitcoin, which started 2017 at … [Read more...]
What do I think of Bitcoin? Part II
While I don’t like bitcoin as an investment, blockchain technology is here to stay. What is blockchain technology? Imagine all the costs, paperwork, and third parties involved to buy a home. Just to refinance a mortgage costs around a percent, to do what? Answer: To make sure there is trust. To make sure there’s a system of recourse in case trust isn’t enough. Blockchain technology allows two parties to do business by locking an agreement into a public ledger for all to see. Sound crazy? So did the internet back in the early 90s. So did Airbnb. Let someone stay in another person’s house for … [Read more...]
States Scrambling to Refinance before Tax Reforms
With the possible elimination of tax exemptions for state and local debt in the tax reform bill being pushed through Congress, states that rely on debt refinancing are scrambling to borrow before the end of the year. Any investor or stakeholder in industry tied to a government tax break or subsidy should consider this a wake up call. What the government can give with the stroke of a pen, it can also take away with the stroke of a pen. Ethanol mandates, electric vehicle subsidies, renewable energy programs, R&D tax deductions, and on and on. If your business, or a business you invest in … [Read more...]
Broke States Trying New Tricks to Wrangle Lending
With faith quickly disappearing in the ability of Illinois and Connecticut to pay their general obligation debts, the states are employing a new method that draws directly from tax revenues to secure financing. The Wall Street Journal editorial board provides the example of Puerto Rico as a warning that this gambit may not work out as well as intended. The editors write: Detroit’s Chapter 9 bankruptcy in 2013 set a precedent by subverting GO bondholders to pay public workers and retirees. Prior to Detroit, creditors considered GO bonds sacrosanct and figured courts would compel local … [Read more...]
Trust in Money, Store of Value
How is the trust level in our current monetary system as a “store of value?” Not good, especially if the price of bitcoin or record art sales are any indication of investors looking for places to stash their money. Da Vinci Christ Painting Sells for $450 Million Bloomberg's Katya Kazakina writes: “Jesus Christ.” That was the reaction of mega art dealer Larry Gagosian after a rediscovered painting by Leonardo da Vinci became the most expensive work ever sold, soaring to $450.3 million at a Christie’s auction in New York on Wednesday. Alex Rotter, the auction house’s … [Read more...]
November RAGE Gauge Tells Me Investors are Too Comfortable
My goal for you with my monthly RAGE Gauge is to provide you with a quick reading of how risk is being perceived right now—how risk is being interpreted. In my line of work, there is never enough attention given to downside protection—keeping what you have—too much energy is wasted thinking about keeping up with the other guy. In that world, the grass is always greener because of: How much “they” have, where their kids go to school, what they do for a living, and where they live. “They,” take up an enormous amount of energy. A more efficient use of energy focuses on what you do to … [Read more...]
What do I think of Bitcoin? Part I
In light of recent events, it's worth reexamining this series I originally posted November 15, 2017. I’ve been asked the question “What do you think of Bitcoin,” as much as any question I’ve received about my website www.yoursurvivalguy.com or my series on the S&P 500. I’ve been in the weeds studying bitcoin (the currency) and Bitcoin (blockchain tech) and I’ll tell you, I haven’t had that “Aha!” religious-like moment experienced by, I’m told, its cult of followers. Count me in the “still skeptical” camp, with a distinction. Bitcoin, the technology, or blockchain, is here to stay … [Read more...]
The Truth Behind the S&P 500: Part IV
This is the time of year when you need to be extra careful about what you invest in, especially when you’re buying a so-called passive index fund that tracks the S&P 500. I have many concerns about the S&P 500 index approach, as I point out here, here, and here. Add one more issue to the list: “Passive” investors paying for someone else’s actions. Recently, the PNC S&P 500 Index Fund announced it will pay out $4.19 in cap gains per share, as pointed out in by Jason Zweig in his weekly WSJ column The Intelligent Investor. “This week, the fund’s per-share value was around … [Read more...]
You’ve Read the Last Issue of Intelligence Report: Back to Investors Yield: Part II
“Well I remember the mood of euphoria that gripped the stock market back in the holiday season of year-end 1965,” writes Dick Young in his September 1987 issue of Richard C. Young’s Intelligence Report. “I had just entered the investment business and was a broker at a Boston based member firm of the New Your Stock Exchange. It was an exciting period. The market had climbed by nearly 50% in a three-year period end 1965, and investors were spending their profits literally before they were booked. It was a period of casino mentality—no one could lose. The party ended with a thud, and the … [Read more...]
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