Earlier this year I bough Bitcoin for the first time. I wrote about it here in June. Since I bought Bitcoin, the price has fallen 50%, and risen again by almost 150%. I wrote at the time:
My investment is worth half of what it was when I first invested. Am I selling? No. Am I buying? I probably should, and will regret not buying when it jumps in price again, but no. I don't know enough about it just yet, and quite frankly I don't know anyone who does.
The investing world right now is full of regrets. At the same time, it's full of envy, resentment, and despair. FOMO is at nose bleeds levels, and the so called amateurs have taken control of the investing world.
In the weeks and months gone, I've learned a lot from a handful of younger folk that would generally turn to me for financial advice. This last week however, my mind has been blow. What is happening in the world of crypto, tokens, NFTs, and the blockchain is blowing my mind.
Just this week, someone asked me if I wanted to buy a plot of land in a syndicate. This piece of land was not land that you and I would know. It's metaverse land. Metaverse land that you own. Land that you can meet on, host games on, create housing, or offer social experiences to the community. I was literally like WTF!? You don't believe me? Check it out here. It's called The Sandbox. And it's totally weird - in my humble opinion.
But hey, why does my opinion matter. Ironically, Michael Batnick wrote a piece the other day and shared this tweet, which I thought fit perfectly for my piece:
It looks like the tweet completely backfired. Bitcoin up over 460%, and gold, well, gold was down -4.97%. Nice one, dad.
The point is, is that the world we live in today is not the one we lived in 10 years ago, or 5 years ago, even 3 years ago. I mean, crypto enthusiasts crowdfunded a bid for a copy of the US Constitution. They raised $40 Million worth of Ethereum in a matter of days for a document that was valued at $15-$20 Million by Sotheby's. Fortunately or unfortunately for them they were out bid. The document sold for $43 Million.
Raising capital has never been easier. You no longer need to go public to raise capital. Starting a business has never been easier. Backing a business has never been easier. Forget billion dollar companies, we're now talking trillion dollar companies. And a cohort of people who had absolutely no idea about finance seem to have taken control of the cockpit. And man I think we're flying pretty high.
Sure, we may be flying pretty high, but we're still flying. And if safe altitude is at 35,000 feet, maybe we're flying at 50,000 feet. I have no idea, I just made that number up. The point I'm trying to make is that I don't think we necessarily need crash the damn plan just because we're flying higher than we should be. The way I think about it is the first 20,000 feet is made up of traditional investing - the stuff that took almost a century to get us to where we are today. The next 10,000 feet are the developments over the last 5-7 years with technological enhancements - the stuff that took 50 years to get from 0 to 10,000 feet, just happened in 5. The next 5,000 feet happened during the pandemic, it's made up of fast tracking of the last 5 years - technology plus. And altitude in excess of this is the hype and mania.
To say there is no hype and mania in any of this is ignorant. To say we have learned nothing over the last few years in the world of investing is even more ignorant. The hype in these sh*t coins will come to an end. I have no idea when. And for the record, this statement is not profound at all. What I am learning and accepting is that the world has changed. I did not believe this 12 months ago as much as I do today. And if we, as financial advisers, and as investors, do not want to be left behind, we need to keep a very open mind about how we look at things both now and into the future. If the almost $1 Trillion company, Facebook, or now Meta, is investing billions of dollars in its ambitions to build the metaverse, you need to pay attention. Only time will tell whether we were right about all of this, or be reminded of how very wrong we were.
If you're still talking about Bitcoin and the blockchain being a fad. I'll just leave this here for you. That train has left the station.