“Know what you own, and know why you own it.” – Peter Lynch former Mutual Fund Manager for Fidelity Investments
During the Dutch Golden Age in the 17th century an investing mania started. What was the valuable asset? Tulips. The bulbs to be exact. For some reason (and no one is certain why) the tulip bulbs became extremely valuable.
“At the peak of tulip mania, in February 1637, some single tulip bulbs sold for more than 10 times the annual income of a skilled artisan.”
In Europe there where actual futures markets based on Tulip bulbs. In 1841 with the publication of the book ‘Extraordinary Popular Delusions and the Madness of Crowds’, written by Scottish journalist Charles Mackay, he wrote that at one point 5 hectares (12 acres) of land were offered for a Semper Augustus bulb. In that book Mackay claims that investors were ruined by the fall of Tulip bulb prices.
According to Tulipomania (1841) it said, “Many individuals suddenly became rich. A golden bait hung temptingly out before the people, and, one after the other, they rushed to the tulip marts, like flies around a honey-pot. Every one imagined that the passion for tulips would last forever, and that the wealthy from every part of the world would send to Holland, and pay whatever prices were asked for them. The riches of Europe would be concentrated on the shores of the Zuyder Zee, and poverty banished from the favoured clime of Holland. Nobles, citizens, farmers, mechanics, seamen, footmen, maidservants, even chimney sweeps and old clotheswomen, dabbled in tulips.”
So let me ask you, “What is Cryptocurrency?” I’ll wait. I find most do not know what it is or how it works. They just know that people are getting rich from it. Cryptocurrency is created in a computer and is nearly impossible to counterfeit or double spend. In some cases, it is hard to track as well.
Cryptocurrency is has a limited amount available. (Bitcoin has 21 million coins. That’s it no more can be created) As long as people see value in it and trade it then it can hold that value and increase. Since government currencies around the world are being devalued by their treasuries, more and more people lack confidence in physical money. But cryptocurrency can not be devalued by adding more like when the federal reserve decides to print more money, devaluing what is in your wallet.
We believe that Cryptocurrency is the future of money. But a lot of caution is needed. Allow me illustrate.
Once upon a time (the 80’s) a new technology came out called the video cassette recorder. At first there where 2 types, Beta and VHS. They battled and the beta machine my family bought lost.
All the movies came out on VHS until DVD came out. Laser Disk also put up a fight as did blue ray. Then on a warm afternoon Netflix destroyed them all. Bye bye Blockbuster and Hollywood video. We held on to our VHS for awhile but had to let it go to die a peaceful death. We made sure to rewind first. (continue on the next page)
Cryptocurrency is new and will soon become regulated by governments around the world. China has outright banned cryptocurrency. Government’s will not stand for people to dump the nation’s money. That is a clear risk to your crypto coins.
I ask, are we in the Beta vs VHS stage of this rise of the computer money? There are currently 13,506 crypto’s.3 Some of the popular ones include, Bitcoin, Ethereum, Dogecoin, Binance Coin, Litecoin, Ox, BAT, and lots more. That is a lot of currency screaming for your purchase. Some of these crypto’s will go the way of Beta machines.
There are few investment vehicles that actually hold in any significant amount crypto’s. Most use futures contracts to invest in crypto’s not the actual currencies themselves. (An oil ETF that used futures, imploded last year wiping out 80% of its worth when the oil market got jacked up due to covid-19.)
Unless you use crypto as currency, we consider all crypto’s to be speculative. The market is a shoot out right now and a lot of fraud is happening so caution is recommended. We have considered crypto investments in our portfolios but have not found an ETF we are comfortable with.
If you want to try investing in crypto we suggest educating yourself. Interactive Brokers has a number of free courses on crypto you can check out. Be cautious on where you trade. Some custodian sites are frauds. Someone I know was enticed by a person he met online, to open an account on a crypto trading platform. He did a search on the platform and only found good comments and reviews on the site. When he went to fund the account there was no banking setup so he could transfer money from his bank.
He was told to open an account on another site (Coinbase) and buy bitcoin and then transfer it. This seemed odd way to do it, so he searched for more information. This time he typed; “Is ‘site name’ a fraud?” Bam! Out it came and none of it was good! SEO5 experts can bury bad news so it doesn’t come up in a search. So do your research first. Had he transferred his Bitcoin, it would have been lost forever.
Coinbase and Interactive Brokers are credible trading platforms. Most custodians do not permit crypto trading in an IRA account. Also, don’t invest more than you can afford to lose.
Remember, Past Performance is not a guarantee to future results.
Toro Bravo will permit cryptocurrency purchases in taxable accounts at Interactive Brokers, as an accommodation, in small amounts, and as a speculative trade/high risk trade. It is important to note that we do not hold ourselves out as specialists in cryptocurrency.
We believe the next stage in the development of crypto (compare to the DVD player) will probably be government regulation then time will bring the Crypto Netflix. How quickly will this happen? Not sure but I would stay paranoid with your cryptos for sure.
Learn from the Tulip Mania. Human nature has not changed in 400 years. Don’t lose it all on a crypto coin called Tulips.
Social Security Hacks
Social Security beneficiaries are slated to receive a 5.9% increase in 2022, the biggest boost in benefits in 39 years. Medicare Part B premiums are increasing from $140.50 to $170.10. If your current monthly benefit is $1,500 – $140.50 = $1,359.50 the you should see $1,500 +88.50 = $1,588.50 – $170.10 = $1,418.40.
SS is like working for the landlord. He gives you a raise in pay and also raises the rent.
Sources Citations Bibliography:
⦁ Quote in italics from Wikipedia ‘Tulip Mania’
⦁ Quote in italics from Tulipomania written in 1841 by Charles Mackay
⦁ This information is not intended to be used as the primary basis for investment decisions, nor should it be considered as advice designed to meet the specific needs of an individual investor.
⦁ This article reflects the views and opinions of the authors and may differ for other established authorities.
⦁ Source: Currency.com “How many cryptocurrencies are there?”
⦁ https://tradersacademy.online/trading-topics/crypto-courses/trading-crypto
⦁ SEO – Search Engine Optimization
Supplemental Disclaimers:
This article is informational only and is not investment advice. This is not an offer to buy, hold, or sell investments like securities or insurance products.
Securities and Investment Advisory Services are offered though Toro Bravo Investment Advisors, LLC. Life Insurance and Annuities sold as an insurance broker are not a fiduciary relationship and are not offered by Toro Bravo Investment Advisors, LLC.
Securities or Insurance are not FDIC/SIPC insured and investments contain risk plus could be subject to loss.
Losses could be short term or permanent. Numbers and figures illustrated are hypothetical in nature and past performance is not a guarantee or indication of future results/performance.
We are not affiliated with the Social Security Administration (SSA), Internal Revenue Service (IRS), or any Governmental Agency.
Do not rely solely on the Legal, Tax, or Financial information presented for it may not be suitable for your individual situation.
Consult your legal, tax, and/or financial professional before acting on any strategy or recommendation (i.e. major changes or before initiating the purchase, hold, or sale of any investment or investment strategy). Every individual’s strategy can differ depending on current circumstances and goals.