We’ll start this week with a story. A boring story.
“if you always do what you always did, you’ll always get what you always got”
Whatever we were doing at the time was reasonably well received, it had worked for a long time and served its purpose well. So, we successfully continued to do what we had always done…………….. and now the company no longer exists.
My arrogant colleague had used the phrase so often that I never forgot it, which is still irritating, perhaps because it is true. It is true for health and for fitness, for Einstein it was true for scientific research and its true for investing too. The easiest thing is to always do what we have always done.
There must be some part of an investment portfolio that accepts that things will be different in the future, some part that acknowledges you have to take a real risk.
That is what we are here for. Digital assets are not going away, they are different from everything that has preceded them. There is a lot of doubt and there are a lot of outright fraudulent projects. Together, those factors cause a lot of “I prefer my Westpac dividend”. If you want 5% per year, it’s out there for you to pick up off the floor.
If you want something different, if you think the future might be different, you know where to find us.
- They will inherit a lot of legacy debt
- They are forced into debt through the education system
- They will never be able to afford a house
It is wrong.
Let’s say you are 55. In 25 years, someone will come to your home to help you in some capacity. They will visit for one hour per day. In today’s money it will cost you $50 for their visit. In tomorrow’s money, it will cost you some fraction of digital asset.
Fast forward. Now it’s 2046 and you don’t have any digital assets. Workers are scarce because the working population is relatively smaller than the older cohorts. Workers refuse payment in legacy money; its value has been destroyed in a debt spiral. Consequently, you must sell your assets to acquire services via the new means of exchange. These assets have totally repriced the legacy debts, presenting both the solution (to the young who are no longer burdened by debts) and the problem (to the old who don’t hold the new exchange assets).
You are 80 now, it’s not fair that you can be held to ransom in this way. Why should you have to sell your hard-earned assets to get someone to help you down the stairs? The press pack are angry too; they “feel sorry for older people”.
Don’t think it can happen? It is happening. Nobody is going to work in a tax gulag to pay off other people’s debt’s forever. That is why we see such a large proportion of the under 35s engaging with this new asset class (over 40% of them).
Don’t feel sorry for young people. They, as the workers, will decide the price of their services in a currency of their choosing. Your job is to have some when the time comes.
The riders in the stand
No surprises from Fidelity really. Perhaps more interesting are the reasons institutions are not buying already.
The top obstacles were:
- Price volatility (53%)
- Concerns around market manipulation (47%), and
- Lack of fundamentals to gauge appropriate value (45%).
Goldman went to Family Offices. A remarkable lack of penetration in Europe and Asia actually, particularly given the interest ‘for the future’.
If the surveys are correct, there is a wall of money sat on the sidelines. Most people will be much more comfortable buying it when it’s five times the price it is now. Ridiculous but true.
The helpful charts are from Arcane Research.
Thank goodness! A digital currency with a deeply negative interest rate. No need for banking profits to fall either, because we couldn’t have that. Gert is a former banker after all and some of them were likely in the audience.
Central bank digital currencies are a trojan horse. You have been warned.
The ECB social media department is the gift that simply keeps on giving.
How it started: It started with a solid silver coin bearing the Head of Zeus from 352 BC in Olympia. The value of the coin was well understood because silver was scarce and hard to produce. To this day, these coins are very valuable.
How it’s going: The new Euro coin is made of copper, zinc and nickel. Common elements in the earth’s crust. It is valuable because the government says so, even though the cost of production is very low indeed. Its value has fallen since launch, and it will continue to fall until it is taken out of circulation because it is useless.
They really should sack these people. Honestly.