Pay Crypto Attention!

Over the last 20 years of my life, I have been an avid follower of equities, i.e. stocks.  I have seen a number of different examples of how buying and holding great companies can transform your wealth over a number of decades.

As I’ve said in the past, I believe that now is the greatest time in history for the average individual investor.

The access to investment vehicles has never been as diverse as it is today.  Platforms like Robinhood make it super easy for anyone to invest.  There are at least 5 to 7 major investment themes that are at the beginning stages and have the potential to become absolutely enormous.

These themes include artificial intelligence (deep learning), robotics, autonomous driving, cloud computing, genomics, biotechnology, fintech, and cryptoassets.

I would like to take this time to focus a little on cryptoassets, more commonly known as cryptocurrency.

Whenever a new technology is introduced, without fail, it goes through what Gartner has coined “the hype cycle”.

Image result for hype cycle

Now, I will admit that in the beginning, I did not closely follow any cryptocurrencies.  I was, however, very aware of the enormous price appreciation that occurred from 2012 on.

When bitcoin was around $1200, I started to periodically track the price.  What I found was that every big drop in price was followed by a surge, in which the price would exceed that in which it had traded prior to its fall.

In 1997, I was a trader at Spear, Leeds and Kellogg, and we traded Amazon when it went public.  We watched it go from $19 per share to over $300 in a matter of months.  Over the next two years, it would go to $456 per share.

By the beginning of 2000, the Internet frenzy reached its peak.  Everyone and their grandmother were purchasing dot coms.  This was a signal that the bubble was about to burst, which it did.

Although the bubble had popped – and the price of many stocks like Amazon fell 70 percent – the promise of the Internet was still very much alive, as evidenced by the performance of Amazon and other Internet-related companies today.

I see similar parallels in the evolution of bitcoin and other cryptocurrencies.

I knew from experience that when the price of bitcoin hit $19,000, a severe crash was about to take place.  How did I know, you ask?  Not because I’m a genius, or because I’m brilliant.  I knew because a loved one, who had never in her life called me about any investment, called to ask me about whether or not she should purchase bitcoin.

That may not be very scientific, but that’s the way hype cycles operate!

Since bitcoin’s plunge of over 50 percent, I have not heard a peep from anyone in my circle about it or any other cryptocurrencies.  What that tells me is that the frenzy has passed, and now might be the time to take a serious look at the cryptocurrency opportunity.

Most retail investors want to buy when prices are rising.  That’s just the psychology of investors.  But the best time to buy is after the frenzy is over and the price seems to have found a bottom.

I cannot say with any certainty that the price of bitcoin has bottomed.  Neither can anybody else.  However… one thing that I can say, with 100 percent certainty, is that cryptocurrencies are here to stay.  They present an incredible opportunity.  If you are not taking a look at them now, you need to start.

Investing in cryptocurrencies was something I really never seriously considered until recently.  I was watching a program on CNBC called “Fast Money”.  One of the traders, Brian Kelly, recommended a particular cryptocurrency called Cardano.

Kelly recommended Cardano because it has a really well respected development team and it is considered to be a serious threat to Ethereum.

After doing more research, I decided to take the plunge and buy a few thousand Cardano coins.  All told, I plunked down $335 to buy 2261 Cardano coins.

My thought process is that if Cardano reaches even 10 percent of bitcoin’s current value – which would be around $800 per coin – I will make about $1.8 million in profits.

So to wrap up: 95 percent of my investment portfolio will always be in stocks.  But with potential returns like these, it is worth it, in my opinion, to take even a hundred dollars and invest it in various cryptocurrencies.

Please share your thoughts in the comments.  Until next time!

*IMPORTANT NOTE: This post describes my personal experience of investing in Cardano and is in no way a recommendation.  

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