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The Power of Compounding

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There are two things to direct your attention to.

  • First, the power of compounding. A 12% return in one year isn’t life changing, but stay invested for 20 years and, on average, you’ve grown your capital nearly ninefold.
  • Second, notice that the lowest number on the chart is the worst one-year return, a 39% loss. As the time extends, not only do the average results improve, but the worst losses also get smaller.

Over the long-term, the worst 20-year S&P 500 returns result has been a gain of 155%. The fact that risk decreases with time is apparent in the annualized standard deviations, which are lowest for the longest holding periods. That means the annual returns are not independent of each other, but rather, are mean reverting. And that’s good to know after a year like this year.

That’s why buying stocks only for investors who can leave their money in the market for multiple years is encouraged. If you expect to cash in your stocks in just a year, you expose yourself to a loss that is multiples of your expected gain. If you can wait five years to cash in, your expected gain is multiples of the worst historical loss. And if you can wait 20 years, there has never been an outcome worse than doubling your investment.

You shouldn’t buy stocks if you expect to sell within five years. And you’re  also discouraged market timing. Most investors tend to throw in the towel after large losses and go all in after large gains. History says the opposite has produced better results market tended to increase more than usual following a bear market. The average two-year increase was 33% after hitting down 20%, meaning the market had usually recovered more than all its losses within two years. Further, that 33% gain was nearly double the median two-year increase. This positive outlook can be hard to wrap your arms around given that most advice you hear, especially from professionals, is to get more cautious after the market has fallen.

The tendency of good periods following bad and vice versa is part of the reason why the long-term risk-return characteristics of equities have been so favorable. The table below shows the average 1-, 5-, 10- and 20-year total returns for the S&P 500 for the past 77 years and the best and worst returns for each period.

References:

  1. https://oakmark.com/wp-content/uploads/sites/3/documents/2022-0930_Oakmark-Funds_Annual_Report.pdf

What is bourbon

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Bourbon is a corn-based, aged spirit that, while legally can be produced anywhere in the U.S., is Kentucky’s signature liquor. In fact, Kentucky distilleries make 95% of the world’s bourbon.

Because of the liquor’s aging process variation, bourbon’s colors range from light amber to dark caramel and each bottle must contain at least 40% ABV.

Bourbon can only be called bourbon if it’s aged in an oak barrel; barrels must be new and are pre-charred to help the liquid extract as much flavor as possible from the wood.

The difference between bourbon and whiskey

Bourbon is a whiskey — but because of the stricter standards set for bourbon distillers, most whiskies are not considered bourbons.

While both whiskey and bourbon are made from the same base ingredients (a predominantly corn mash, yeast and water), a spirit can only be called bourbon if it’s crafted in the United States, surpasses a minimum 40% ABV and is aged in new, charred, white oak barrels.

Bourbons are generally on the younger side of the whiskey family (compared to older whiskies like scotch) and thus deliver a sweeter profile.

A “barrel proof bourbon” means no added water to lower the proof or dilute the flavor after it’s been distilled.

References:

  1. https://drizly.com/liquor/whiskey/bourbon/wild-turkey-rare-breed/p5417
  2. https://www.wildturkeybourbon.com/products/rare-breed/

Southwest Airline’s Operational Meltdown During the Holidays

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“We are past the point where they [Southwest Airline] could say that this is a weather-driven issue. What this indicates is a system failure, and they need to make sure that these stranded passengers get to where they need to go and that they are provided adequate compensation.”  ~ U.S. Transportation Secretary Pete Buttigieg

Southwest Airlines has cancelled thousands of commercial flights during the Christmas holiday period after a severe winter storm created an operational crisis that left passengers stranded during the Christmas holiday travel season, one of the busiest travel periods of the year.

While all U.S. airlines experienced flight cancellations en masse due to extreme winter weather, most other airlines were able to resume normal flight operations after the conditions cleared up ― while Southwest’s cancellation rate got worse, all during one of the busiest travel weeks of the year when people fly around the country to be with family for the winter holidays.

The Texas-based airline’s troubles appear to be tied to its uncommon operational configuration, The New York Times reported.

While most airlines have their planes return to a “hub” airport after flying out to other cities, Southwest typically has its planes fly from city to city without returning to a hub ― making it difficult to strategize and arrange plane availability after weather causes mass delays.

Southwest CEO Bob Jordan commented that his company is in the process of regrouping and he hopes operations will resume normally before the week’s end.

“Our plan for the next few days is to fly a reduced schedule and reposition our people and planes,” Jordan said. “We’re making headway, and we’re optimistic to be back on track before next week.”
But that does little for stranded Southwest passengers who’ve had to drop large amounts of money booking new flights with other airlines and paying for lodging while they wait for Southwest to rebook them.

On Southwest’s website, the company posted the following “under” statement:

“We are currently experiencing operational disruptions and are working diligently and safely to restore normal flight schedules as quickly as possible.”

According to aviation experts, the Southwest Airlines meltdown has its root in outdated technology that analysts and its unions have warned about for years. The carrier’s operations created chaos at airports across the nation. And the ripple effects for travelers could last for some time.

References:

  1. https://www.huffpost.com/entry/buttigieg-southwest-airlines_n_63ac8dc3e4b0b2e1505d973a/amp
  2. https://www.southwest.com/traveldisruption/?clk=TA-IRREGULAR-OPERATIONS-MWEB&channel=mweb&pageId=home-mobile-index&datachannel=mobile

Gratitude Is An “Affirmation of Goodness”

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“Gratitude is “an affirmation of goodness”. When you practice gratitude, you acknowledge the good things in the world and the gifts you’ve received in your life.” ~ Robert Emmons

Gratitude is more than just a overused feel-good buzzword. In fact, gratitude is a surprisingly powerful force. It’s an attitude and practice shown to improve your mental, physical, and emotional health.

Gratitude is often defined as the expression of a deep appreciation for something or someone that is given freely without expecting anything in return.

Showing appreciation and gratitude for the things and people in your lives can help you adapt to change, cope with difficulties, increase your business success, regulate your emotions and improve your mental and physical well-being.

According to Robert Emmons, psychology professor and one of the leading scientific experts on gratitude at the University of California, Davis, gratitude is “an affirmation of goodness”. When you practice gratitude, you acknowledge the good things in the world and the gifts you’ve received in your life.

“This doesn’t mean that life is perfect,” Emmons says, “it doesn’t ignore complaints, burdens, and hassles. But when we look at life as a whole, gratitude encourages us to identify some amount of goodness in our life.”

And identifying this goodness has a big impact on our brains, bodies and well-being. Studies show that people who practice gratitude experience more positive emotions, improve their physical health, build stronger relationships, and better deal with adversity.

The Effects of Practicing Gratitude

1 | Gratitude Boosts Positive Emotions

Gratitude can help you experience more positive emotions. When we practice appreciation for the people, things, or experiences around us, we become more present and engaged with life and the joys and pleasures it has to offer. Gratitude interrupts the mental cycle of negativity bias helping to decrease anxiety and depression and shift your mindset towards more ease. With consistent practice, this positive mindset becomes a new habit, helping you experience more of the “good stuff”.

2 | Gratitude is Good For Your Body

Gratitude can improve not only your mental health but your physical health as well. Studies have shown the practicing gratitude can lead to lower blood pressure, stronger immune systems, and better sleep. People that practice gratitude are also reported to experience less aches and pains and seem to take better care of themselves with more regular exercise and check-ups at the doctor.

3 | Gratitude Improves Relationships (not just romantic ones)

Research shows that practicing gratitude can make our romantic relationships more satisfying, help us feel more invested in our friendships, and lead us to be more helpful coworkers. Beyond just feeling more positive about one another, gratitude helps us feel more comfortable expressing concerns about the relationship and motivates us to work harder and show up more fully in our relationships and jobs.

4 | Gratitude Makes Us More Resilient

Grateful people are more resilient when stressed. Studies show that a grateful disposition can help a person recover more quickly in the face of serious adversity and suffering. Given the physical, emotional and relational benefits described above, it doesn’t come as a surprise that people who practice gratitude feel more able to deal with the challenges they face. Staying connected to the resources in and around us helps guard against the anxiety of life’s stressors.

How to Actually Feel Grateful (and shift towards a gratitude mindset)

Whether you are a naturally grateful person or you find yourself more on the pessimistic side, a gratitude mindset is a skill we can all develop. The benefits of gratitude build up over time, so finding small and easy practices that you can commit to each day is the best way to feel the effects in your life. 

Start actively tuning into the positive events in your life and anything that make you feel good. Try one (or more!) of these tips today:

  1. Get into a habit of writing down three things you’re grateful for daily.
  2. Text/tell a loved one why you appreciate them. Bonus: It’ll probably make their day too.
  3. As you fall asleep or in quiet moments, make a mental gratitude list starting with each letter of the alphabet.
  4. Start a daily gratitude journal.
  5. Visualize something you love (a person, place, pet or object) and let your imagination bring it to life. Let yourself fill up with warmth. 

Bottomline, Gratitude Is An “Affirmation of Goodness”

References:

  1. https://www.calm.com/blog/why-gratitude-is-good-for-your-mental-healthhttps://www.calm.com/blog/why-gratitude-is-good-for-your-mental-health
  2. https://www.mindful.org/an-introduction-to-mindful-gratitude/

💙

Practicing Gratitude

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Practicing gratitude has incredible effects, from improving our mental health to boosting our relationships with others.

Practicing gratitude can have far reaching life-enhancing effects, from improving your mental health to boosting your relationships with family members and friends.

Living your life with gratitude helps you notice the little wins—like the bus showing up right on time, a stranger holding the door for you, or the sun shining through your window when you wake up in the morning.

Each of these small moments strings together to create a web of well-being that, over time, strengthens your ability to better notice the peace, joy and good in life.

Building your capacity for gratitude isn’t difficult. It just takes practice. The more you can bring your attention to that which you feel grateful for, the more you’ll notice to feel grateful for!

1. Start by observing. Notice the thank yous you say. Just how much of a habitual response is it? Is it a hasty aside, an afterthought? How are you feeling when you express thanks in small transactions? Stressed, uptight, a little absent-minded? Do a quick scan of your body—are you already physically moving on to your next interaction?

2. Pick one interaction a day. When your instinct to say “thanks” arises, stop for a moment and take note. Can you name what you feel grateful for, even beyond the gesture that’s been extended? Then say thank you.

Robert Emmons, psychology professor and gratitude researcher at the University of California, Davis, explains that there are two key components of practicing gratitude:

  1. We affirm the good things we’ve received
  2. We acknowledge the role other people play in providing our lives with goodness

Research has linked gratitude with a wide range of health, mental and emotional benefits, including strengthening your immune system and improving sleep patterns, feeling optimistic and experiencing more joy and pleasure, being more helpful and generous, and feeling less lonely and isolated.

“Gratitude is “an affirmation of goodness”. When you practice gratitude, you acknowledge the good things in the world and the gifts you’ve received in your life.” ~ Robert Emmons

References:

  1. https://www.mindful.org/an-introduction-to-mindful-gratitude/

Lessons of Warren Buffett

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An understanding of the investing lessons of Warren Buffett.

1. Value investing works. Buy bargains which involve buying assets at a price below the asset’s intrinsic value. Value investing takes time, focus, discipline and patient, and is a hard process to implement and follow. It requires a lot of work to determine the fair value of a particular business. If investors could predict the future directions of the stock market, they would certainly not choose to be value investors. But no one can accurately forecast future prices. Value investing is a safe and successful strategy in all investing environments. The biggest obstacle for a value investor is to remain disciplined and patient in every circumstance the market and life might throw at him. Most people quit value investing and long- term investing for this exact reason: because they lack the discipline and cannot sit through periods of poor performance.

2. Quality matters, in businesses and in people. Better quality businesses are more likely to grow and compound cash flow; low quality businesses often erode and even superior managers, who are difficult to identify, attract, and retain, may not be enough to save them. Always partner with highly capable managers whose interests are aligned with yours.

3. There is no need to overly diversify. Invest like you have a single, lifetime “punch card” with only 20 punches, so make each one count. Look broadly for opportunity, which can be found globally and in unexpected industries and structures.

4. Consistency, discipline and patience are crucial. Most investors are their own worst enemies. Endurance and long-term perspective enables compounding.

5. Risk is not the same as volatility; risk results from overpaying or overestimating a company’s prospects. Prices fluctuate more than value; price volatility can drive opportunity. Sacrifice some upside as necessary to protect on the downside.

6. Unprecedented events (or Black Swan events) occur with some regularity, so be prepared.

7. You can make some investment mistakes and still thrive.

8. Holding cash in the absence of opportunity makes sense.

9. Favor substance over form. It doesn’t matter if an investment is public or private, fractional or full ownership, or in debt, preferred shares, or common equity.

10. Candor is essential. It’s important to acknowledge mistakes, act decisively, and learn from them. Good writing clarifies your own thinking and that of your fellow shareholders.

11. To the extent possible, find and retain like-minded shareholders (and for investment managers, investors) to liberate yourself from short-term performance pressures.

12. Do what you love, and you’ll never work a day in your life.

13. “The first rule of investing is to not lose money, the second rule is to never forget the first one,” states Warren Buffett. Loss avoidance must be the cornerstone of your investment philosophy. Investors should not stick to bonds or avoid risks at all, but rather that “an investment portfolio should not be exposed to losses of principal capital over five to ten years”, according to Klarman. This, concentrating on avoiding big losses is the safest way to ensure a profitable investing outcome.

14. Ignore Market Price Fluctuations which are completely unrelated to the value of the investment or asset. When the stock’s market price goes down, the investment may be seen as riskier regardless of its fundamentals. But that’s not risk. Investors should expect prices to fluctuate and should not invest in securities if they cannot tolerate market volatility.

15. Avoid Leverage At All Costs.

References:

  1. https://hollandadvisors.co.uk/wp-content/uploads/2021/03/what-ive-learned-from-warren-buffett-seth-klarman.pdf
  2. https://medium.datadriveninvestor.com/how-seth-klarman-achieved-a-20-annual-return-for-30-years-8cd0f39da208

‘Bomb Cyclone’ to Hit the U.S.

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A massive winter storm, ‘bomb cyclone’, will bring blizzard conditions, ‘life-threatening’ cold, extreme wind chills and travel headaches for large parts of the Lower 48 states

A powerful winter storm is moving across the country this week, bringing a mix of strong wind, rain and snow, including blizzard conditions, that could make travel dangerous ahead of the holiday weekend.

The developing cyclone will deliver heavy snow and blizzard conditions and downpours between Wednesday and Friday night, all coming at a time of year when more than 110 million Americans are expected to take to the roads and air. The combination of snow and wind will bring visibility down to near zero at times.

Travel could “become extremely dangerous and life-threatening, particularly in light of the bitterly cold temperatures during the height of the storm,” wrote the National Weather Service office serving Chicago.

Nearly 50 million Americans are under winter storm warnings, watches and advisories. The anticipated storm system will explosively strengthen, at a rate sufficient to qualify it as a “bomb cyclone” — which is the most intense breed of mid-latitude storms.

“In summary, this is still looking to develop as a high end, life-threatening event,” wrote the Weather Service office serving Minneapolis.

The Weather Service office serving Buffalo is calling it a “once in a generation” storm system.

The storm will drag a historically cold December air mass — sourced from Siberia — over much of the Lower 48 between late Wednesday and late Friday, sending temperatures plunging some 30 to 50 degrees below average. Readings in the teens could slosh all the way to the Gulf of Mexico, with a dangerous flash freeze turning wet roadways into sheets of ice in some areas.

More than 50 million people are also under wind chill alerts, from the Rockies to the nation’s midsection. Projected wind chills on Friday morning include: 2 degrees in Houston; minus-7 in Dallas; minus-14 in Memphis; minus-32 in Kansas City, Mo.; and minus-45 in Sioux Falls, S.D.

“Dangerously cold wind chills, as low as 50 below zero” are expected in the Dakotas, wrote the National Weather Service. “Stranded motorists will face the threat of frostbite, hypothermia and even life-threatening exposure.”

References:

  1. https://www.washingtonpost.com/weather/2022/12/21/bomb-cyclone-blizzard-arctic-blast/

Interest Rates, Cost of Capital and Recession

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Interest rates are often called the price of money. They determine how expensive capital is to access for companies, but also for individuals and even governments. ~ Jonathan Schramm

The Federal Reserve controls what is called the federal funds rate, which is the rate banks pay to borrow from other banks. Other interest rates throughout the system are based on that rate.

When an economy is in recession or unemployment is high, the Fed lowers rates. This is meant to encourage investment and spending, pushing more money into the economy.

Inflation is a sign there is too much money in the financial system and economy. One way to reduce the monetary supply is to give people and businesses an incentive to take on less debt. A good way to do that is to raise rates. And this is just what the Federal Reserve is doing.

Interest rates affect stocks in two main ways: the impact companies’ bottom line and impact investor’s behavior.

Many companies “roll over” their debt. This means they never really pay their debt, just pay the interest and renew their old bonds with new ones. In this case, rising rates mean the new bonds will cost the company a lot more in interest expenses going forward.

Some companies are also highly reliant on cheap debt to keep afloat or grow. Others rely on customers spending on credit cards. These companies’ profits might suffer in an environment of rising rates.

This is why a rising rate environment favors skilled stock pickers. A solid balance sheet, low debt, cheap valuation, or high profitability will be very valuable in an environment of rising rates.

Higher interest rates are a disincentive for investors to plow borrowed money into asset markets. That’s one of the main reasons why stocks, cryptocurrencies, and other assets crashed in 2022.

Rising rates for borrowed money tends to cause capital flow out of markets, depressing the values of even quality companies. That hurts investors who bought at the top, especially if they bought at the top with borrowed money. For others it creates a valuable entry point.

Overall, rising interests rates and tightening the money supply are a useful tool to help bring inflation under control. But the recent interest rate increase might not have been enough and there’s probably more to come. If inflation stays high, we would need rates continue to rise to curb inflation.

The positive aspects for US investors:

  • Rising rates support a stronger dollar.
  • A strong dollar makes US imports cheaper.
  • A strong dollar support consumers’ spending by decreasing import costs.
  • Rising rates might help to keep inflation under control.

The negative aspects for US investors:

  • Currency devaluation can hurt overseas investments measured in USD.
    Overindebted companies and consumers might not be able to manage higher rates.
  • Rising rates decrease demand for big-ticket items like homes and vehicles.
  • Rising rates increase the risk of a recession.
  • Rising rates make US exporters less competitive.
  • Rising rates restrict the use of borrowed money by investors, decreasing demand for assets across the board.vehicles.
  • Rising rates increase the risk of a recession.
  • Rising rates make US exporters less competitive.
  • Rising rates restrict the use of borrowed money by investors, decreasing demand for assets across the board.

References:

  1. https://finmasters.com/rising-interest-rates-effects/

Margin of Safety

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“A margin of safety is achieved when securities are purchased at prices sufficiently below underlying value to allow for human error, bad luck, or extreme volatility in a complex, unpredictable and rapidly changing world.” ~ Seth Klarman

Berkshire Hathaway CEO and Chairman, Warren Buffett, is known for his value investing approach, which involves finding companies that are undervalued by the market and investing in them for the long term. To invest like Warren Buffett, there are a few things you need to know.

  • First, you need to have a clear understanding of what value investing is and how it works.
  • Second, you need to be patient and be willing to hold onto your investments for the long term.
  • Third, you need to have the discipline to stick to your investing strategy even when the market is going against you.

When deciding on how to invest in a company, the first step is to determine its worth or intrinsic value. According to Warren Buffett, the best companies to buy are those that are inexpensive to buy. His investment strategy is based on a few simple principles:

  • Buy quality companies that have a competitive advantage (moat),
  • Buy them at a reasonable price with a margin of safety, and
  • Hold them for the long term.

These principles of margin of safety have helped Buffett generate incredible returns over his career. Margin of safety is a strategy that involves investing only in securities at a significantly lower intrinsic value than their market price.

The margin of safety (MOS) allows investors to avoid overpaying for an investment or asset, and it protects investors from the potential of loss if the market price of the asset falls. Buffett has said that the margin of safety is the key to his investing success.

The margin of safety is a measure of how much room there is between the price of the stock and its inherent value. The wider your margin of safety, the less likely it is that overly optimistic valuation inputs will harm your investment.

Value investing is the process of making investment decisions using margin of safety. It is critical for value investors to find a high-quality, easy-to-understand company with good management priced below its intrinsic value.

The purpose of using a margin of safety in buying is twofold.

  • If your investment does not grow as quickly as you originally anticipated, you may be forced to make more conservative investments in your portfolio. If your estimates are correct, you will be able to achieve a better rate of return over time due.
  • If you purchased the investment at an extremely low price.

Discounted cash flow (DCF) is a method of valuing a company or asset using the principles of time value of money.

The objective of DCF is to find the value of an investment today, given its expected cash flows in the future. One popular way to value a company is using the discounted cash flow (DCF) method. This approach discounts a company’s future expected cash flows back to the present day, using a required rate of return or “hurdle rate” as the discount rate. The idea is that a company is worth the sum of all its future cash flows, discounted back to the present.

The DCF formula is: Value of Investment = Sum of (Cash Flow in Year / (1 + Discount Rate)^Year)

The “discount rate” is the required rate of return that an investor demands for investing in a company. This rate is also known as the “hurdle rate.” There are two ways to calculate the discount rate.

There are two ways to calculate the discount rate.

The first is the weighted average cost of capital (WACC). This approach considers the cost of all the different types of capital that a company has, including debt and equity.

The second way to calculate the discount rate is the discount rate for equity. This approach only considers the cost of equity, which is the return that investors demand for investing in a company.

Once the discount rate is determined, the next step is to estimate the cash flows that a company is expected to generate in the future. These cash flows can come from a variety of sources, including operating income, investments, and financing activities. After the cash flows have been estimated, they need to be discounted back to the present using the discount rate.

The present value of the cash flows is then the sum of all the future cash flows, discounted back to the present.

“If you understood a business perfectly and the future of the business, you would need very little in the way of a margin of safety. So, the more vulnerable the business is, assuming you still want to invest in it, the larger margin of safety you’d need. If you’re driving a truck across a bridge that says it holds 10,000 pounds and you’ve got a 9,800 pound vehicle, if the bridge is 6 inches above the crevice it covers, you may feel okay, but if it’s over the Grand Canyon, you may want a little larger margin of safety.” ~ Warren Buffett

References:

  1. https://www.merchantshares.com/margin-of-safety-the-key-to-warren-buffetts-investing-success/
  2. https://www.merchantshares.com/the-dcf-method-of-valuing-a-company/
  3. https://www.merchantshares.com/how-to-win-warren-buffett-39/

Blockchain and Cryptocurrency Scam / Ponzi Scheme

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“Cryptocurrencies are like ‘pet rocks’.” ~ Jamie Dimon, CEO and Chairman, J P Morgan Chase

A blockchain is a digital ledger associated with an asset, recording the history of that transaction in that asset…who bought it and from whom. In other words, blockchains are simply append-only spreadsheets maintained across decentralized “peer-to-peer” networks, writes Sohale Andrus Mortazavi, in an article entitled “Cryptocurrency Is a Giant Ponzi Scheme”.

What distinctive about blockchain is that the ledgers are supposed to be decentralized: they aren’t sitting on the computer ‘or ledger’ of a single bank or company. They are in the public domain, sustained by protocols that induce many people to maintain records on many servers.

Cryptocurrency blockchains allow users to maintain a shared ledger of financial transactions without the need of a central server or managing authority. Users are thus able to make direct online transactions with one another as if they were trading cash.

Cryptocurrency blockchains generally don’t allow previously verified transactions to be deleted or altered. The data is immutable. Updates are added by chaining a new “block” of transaction data to the chain of existing blocks.

In theory, blockchain and cryptocurrencies were supposed to offer a lower cost and more secure method to keep track of transactions. But, cryptocurrencies don’t produce anything of material value. Investors can only cash out by selling their digital coins to other investors.

Which makes them an experiment in the “greater fool” theory of investing, in which investors attempt to profit on overvalued or even worthless assets by selling them on to the next “greater fool”. Price manipulation plays as much or more of a role than demand in driving prices higher.

Furthermore, the parent company of Tether and Bitfinex, is printing tethers from thin air and using them to buy up Bitcoin and other cryptocurrencies in order to create artificial scarcity and drive prices higher. Sam Bankman-Fried’s company FTX imploded due to similar fake proprietary tokens artificially inflating and propping up risky trades by FTX’s affiliate Alameda.

Tether has effectively become the central bank of crypto. Like central banks, they ensure liquidity in the market and even engage in quantitative easing — the practice of central banks buying up financial assets in order to stimulate the economy and stabilize financial markets. The difference is that central banks, at least in theory, operate in the public good and try to maintain healthy levels of inflation that encourage capital investment. By comparison, private companies issuing stablecoins are indiscriminately inflating cryptocurrency prices so that they can be dumped on unsuspecting investors (greater fools).

Cryptocurrency has been one of the greatest destroyers of wealth in the financial history of mankind. ~ Jay Adkisson

This renders cryptocurrency not merely a bad investment or speculative bubble but something more akin to a decentralized Ponzi scheme. Unbacked stablecoins are being used to inflate the “spot price” — the latest trading price — of cryptocurrencies, like Bitcoin, to levels totally disconnected from reality. If cryptocurrency and NFT markets cannot keep luring in enough new money or capital becomes to expensive due to rising interest rates to cover the growing costs of mining (think Ponzi scheme), the scheme will become unworkable and financially insolvent.

Cryptocurrency has been one of the greatest destroyers of wealth in the financial history of mankind, writes Jay Adkisson, in Forbes.

“Many Bitcoin promoters are simply shilling and attempting to pump the price of Bitcoin up because they themselves are invested in cryptocurrency companies.” ~ Jay Adkisson

“It is hard to imagine cryptocurrency being a suitable investment for all but those who are sufficiently wealthy that they can burn wads of cash off a bridge and not be distressed by it,” writes cryptocurrency watcher Charles Padua. Many Bitcoin promoters are simply shilling and attempting to pump the price of Bitcoin up because they themselves are invested in cryptocurrency companies.

Bottomline, Bitcoin itself may not be a total fraudulent scam, but how Bitcoin and all cryptocurrencies are being promoted and sold by its legions of ‘conflict of interest’ advocates to the average retail investor is the definition of a scam and Ponzi scheme.

References:

  1. https://jacobin.com/2022/01/cryptocurrency-scam-blockchain-bitcoin-economy-decentralization
  2. https://www.forbes.com/sites/jayadkisson/2018/11/20/the-great-cryptocurrency-scam/?sh=fc556be359fe