A few days ago my acquaintances Max and Jonathan asked me about possible stocks to buy. “Look at all the good deals,” they said. So many good deals.
For some reason my friends thought I was privy to information they lacked and could guide them to a land o’ plenty. And while it’s always uplifting when people think you a guru, I had to dispel their notion of me having special knowledge.
Stock bargains probably sprinkle the exchanges. Buy when blood runs in the streets and all that. “But buy what?” they were asking. And I had a ready answer but hesitated.
Financial advisors know the worst vice is advice and the truism never proved truer than with stock advice, which is always a losing proposition.
Why? This is what happens when you give stock advice:
If the recommended stock moons your buddy congratulates himself for his prescience and ballsiness. “The wolf of all streets,” he satisfyingly whispers. It is all about him and his wily ways.
But watch that same stock plunge and your now ex-friend grabs his Glock and hunts you down. Because it is all your fault naturally. There are no friends when financial advice goes wrong and even angels reach for their sidearms when money vanishes. So the dynamic is something like this: if your friend wins he is a genius. If he loses you are the Devil. And this universal constant is what makes stock advice thankless, even dangerous. It’s different if you get paid like brokers, so then it becomes an occupational hazard, but as a general rule best to stay away from offering your stock tips.
So knowing better, I told Max and Jonathan just that, I hate giving advice. Would not do it. But they insisted. “We are grown boys,” they said.
What most “grown boys” never realize is that anyone claiming knowledge of stock performance is a liar. Like Pat Robertson on television guaranteeing you a place in heaven. Nobody knows what stocks will do. Maybe the owner of that no-named private islet in the British Virgin Islands, fed grapes by a bevvy of attendees under the bougainvillea and shuttling in top DJs for all-night sets yet quickly changing the topic when asked how it is all done, maybe she knows.
But I do not. And because giving stock advice is bad I hesitated.
There are other reasons to hesitate. The Covid-19 virus has dealt powerful blows to all of us. Unemployment is high and getting worse. Businesses are idle. There is a psychological shift to less movement, buying less, traveling less, hunkering down more, fearing more, and this will have long term economic impacts impossible to predict. Our normally short memories does not mean business as usual in a few months. Who gets on a cruise ship soon? Airlines, hotels, restaurants, day care centers, concerts, sporting events, bars, festivals, discos, jazz clubs – all and more curtailed. The ripple effect will drag the economy down and with it the Down Jones and S&P 500 and more for who knows when.
To muddle matters, the open-ended stimulus of the U.S. Federal Reserve complicates matters terribly. Winners and losers are selected based on what the Fed believes is worth saving, not on merit or market forces. Centralized planning or Socialism for large corporations and capitalism for everyone else. This often ends badly.
Amid the disheartening backdrop, however, there was one investment I could recommend with heart. Volatile, quirky, relatively new, and deserving of support. Bitcoin.
You can get into Bitcoin early in is life cycle. It is only 11 years old. It is the top performing asset of the past decade and the best performing asset so far in 2020. Born of the fire of the 2008 financial crisis and coming of age in this crisis.
What’s more, a uniquely Bitcoin event takes place in a few days – the halving. This quadrennial happening cuts the issuance of bitcoin in half. And as the world’s central banks let loose with quantitative easing — making money worth less every day — bitcoin undergoes the opposite, quantitative hardening, making it more scarce, and theoretically more valuable.
Bitcoin traditionally takes a dip immediately after its halving to then rocket in the following 12-18 months, or at least that’s what it did in its last two halvings in 2012 and 2016. I suggested to Max and Jonathan to get some.
Bitcoin is divisible to eight decimal places so they could accumulate even small amounts. It is a hedge against inflation and is the best asymmetric bet around. Among its properties are portability, fungibility, programmability, and immutability. It is is non-sovereign…with ultimate scarcity. Come now.
I suggested they check out Kraken, a good place to buy bitcoin. As an aside, the platform is sponsoring an online halving celebration on May 10, 2020 with presentations throughout the day by a who’s who in crypto. I am not associated with Kraken and none of what I have said is sponsored in any way. Just speaking from what I feel is good. Anyway, I’ll be there. Here’s the link to the schedule and the goings on: https://blog.kraken.com/post/4858/krakens-vr-halving-party-the-full-lineup-revealed-rsvp-instructions/
For me, bitcoin is also part of a peaceful revolution. The resistance against a banking and financial system that is broken.
Now, you don’t need to see matters in grandiose terms to become a bitcoiner. You could be in it for the asymmetric bet or for what YouTubers like to foresee as MAD GAINS or even plain curiosity. Though you would be doing your part in ushering in a new financial system. And then of course there is a deep rabbit hole to venture down if the urge strikes.
So, all of this is what I ended up telling Max and Jonathan. Don’t buy stocks. Buy Bitcoin.
Contact: carl AT carlkruse DOT com
Check out my other blog, which is on nonprofits, charities and people doing good over at the Carl Kruse Blog On Nonprofits.