Just trade what the market gives you. In other words just trade the trend, be it up or down. But bringing your opinion to the market and trying to trade that can be a costly exercise.
I think cryptocurrencies themselves are only the beginning. The tip of the investing iceberg, so to speak. Not a side show, but also not the only game in town. In my opinion the perfect blockchain portfolio includes both good cryptocurrencies and good blockchain stocks.
You may have heard of the ‘prisoner’s dilemma’. It’s a standard example in a branch of economics called game theory. Well nowadays, the classical models of economics taught in universities have proven to be poor models of reality. Which brings us to the investor’s dilemma today.
Looking through stocks that hit 52-week lows yesterday, Domain Holdings Australia [ASX:DHG] stood out like a sore thumb. That’s the same Domain group that spun off from Fairfax Media.
Understand that you don’t really know anything. The future is unknowable. Uncertainty is always around. It’s just that sometimes the market prices uncertainty differently. It succumbs to the illusion of certainty in bull markets, and recognises it acutely in bear markets.
Over the next two months, Power Ledger is about to roll out a proof of concept in Fremantle, Western Australia. It’s the first step in turning Fremantle into a ‘smart city.’ And blockchain is key to this ambition.
The golden rule of wealth creation is to generate a higher return on equity and assets than it costs to fund those assets. Because these two companies generate high returns on equity and capital, they generate significant cash. It allows them to pay a dividend, invest in growth, and pay down debt quickly if they need to, or buy back shares.
What’s a young person or couple to do, then? Buy into the most inflated asset of all time and hope interest rates stay low enough, long enough for a new generation to come along and keep the Ponzi scheme going? I think Australian society has to come together to start addressing this growing problem.
According to Bloomberg, ‘Mom-and-pop investors haven’t been this crazy for Hong Kong initial public offerings since 2009.’
While it might be too early to jump in and thumb your nose at the Amazon effect. Keep an eye out for turning points like the above. That is, when you see buying on negative news. It means the news wasn’t as bad as expected. Often this is a turning point.