In the Crypto Corner, we’re not going to focus so much on the cryptocurrencies themselves — but on the public plays.
That way, even if you have no intention of investing in the Wild West of crypto, you can still make incredible gains from crypto’s rise.
That’s right. You can invest in crypto from your regular old Fidelity account. And I’ll give you a virtually foolproof way to invest in the crypto industry right here in this chapter.
First, though, let me give you the broad overview of how I view crypto investing. It’s important you understand my perception if you plan to read any of my investment research.
===> VALUE-BASED INVESTING:-
I take a “value-based approach” to crypto. You might ask: How do we estimate value in crypto? The same way any value investor would:
• Supply and demand, which are often determined by trustworthiness as well as usefulness. (e.g., you go into a McDonald’s anywhere in the world and you trust that you will have the same experience. Plus, it solves a big problem — hunger).
When supply and demand are temporarily misunderstood for identifiable, irrational reasons, this creates a trading opportunity
• Lots of reading, studying and talking to other trusted players in the space in order to make estimates on the above.
===> HOW TO BUILD A CRYPTO PORTFOLIO:-
We’ve gone through this a little bit in previous chapters but it’s worth a quick refresher in this context.
A. To build a proper crypto portfolio, you must be able to determine which coins follow the pure cryptocurrency philosophy.
These legit coins belong in a diversified portfolio of cryptocurrencies. But it’s VERY DIFFICULT to determine what’s legit. (See previous chapters for the more technical descriptions of these portfolio-worthy coins.)
B. TRADES: Because of the great volatility as the world tries to determine intrinsic value for this brand new asset class, we can take advantage when volatility creates a big gap between current price and our estimation of value for each legit currency in the portfolio.
Why does volatility create opportunity? Because it’s rare that intrinsic value changes very quickly from day to day.
Example: We know everything there is to know about McDonald’s, and thousands of analysts research the company.
The intrinsic value of McDonald’s will almost certainly never go down 20% in a day. But if the stock went down 20% in a day (example: A 9/11 event occurs, causing a mass-fear sell-off across all stocks), then McDonald’s becomes a value buy because the volatility exceeded the normal change in value.
Volatility is a mainstay of the cryptocurrency world. And it presents plenty of opportunities for skilled traders to make money.
But in the Crypto Corner, I want us to focus on the basics — to go for the gains that are much more guaranteed over time.
===> THE NEW GOLD RUSH
In the Gold Rush, the pick and shovel companies thrived. Some people got rich on gold. And some didn’t. And some found fool’s gold.But blue jeans thrived.
The same thing will happen here.
Chip companies, financial companies, retail companies, security companies and companies in every industry will have winners and losers in the crypto space.
The winners will go up many thousands of percent, regardless of what happens in the economy. In fact, a recession might even be good for these companies as people get nervous about their currency.
It’s no coincidence that the origin of cryptocurrencies occurred exactly at the moment that faith in the U.S. dollar was tested as a result of the financial But what if this is all theory and cryptocurrencies take decades to get accepted by the masses?
No problem.
Many of the companies that are “picks and shovels” in the cryptocurrency industry are, in fact, “picks and shovels”; i.e., they have many, many uses and are already successful companies.I’ll start with one example in this chapter. Nvidia. (NASDAQ: NVDA)
Nvidia is known for making high-performance chips for computers specializing in games. Games require high-speed graphics and the chips to handle that.
Earlier I mentioned that in a cryptocurrency transaction, there are computers that specialize in validating transactions.
Some companies have thousands and thousands of computers set aside JUST to validate transactions.
Why? Because in bitcoin and another popular currency that I think is legitimate, ethereum, computers that validate transactions get rewarded.
In very controlled ways by making more coins for their efforts. These are called “miners” (the Gold Rush analogy again).
Miners benefit when their chips are fast. NVDA makes the chips that are most popular with miners right now.
So regardless of the economy, NVDA will sell more chips each year than the year before as the rise of cryptocurrencies continues on pace.
Revenue growth is up 50% year over year and earnings growth is up 143% year over year.
Good things are happening with this company regardless.
==> MY THREE-STEP SCRIPT FOR INVESTING IN THE CRYPTO BOOM:-
Did you know that every single boom throughout history has followed a three-step script?
The stock market boom in the roaring ’20s…
The tech boom in the 1990s…
The housing boom in the 2000s…
And now the booming cryptocurrency market is following this exact same road map.
You see, every boom follows a sequence of three stages…
First, only early enthusiasts are courageous enough to invest in the new trend.
That’s Stage 1.
Then, institutional investors (the so-called “smart money”) jump in.
That’s Stage 2.
Finally, the public joins the party, triggering a massive explosion in price.
That’s Stage 3.
If you know how to use this road map, you could make an absolute fortune.
And to help you understand how this 1-2-3 sequence works…
Let me show you what happened during the 1990s boom in tech stocks.
In the mid-1990s, most people didn’t even know what the internet was.
In 1994, NBC’s morning show Today had a segment in which one of the anchors asked, “What is the internet[e1] anyway?”
While most people were dismissing the technology as a fad…
Early adopters were heavily investing in it.
That was Stage 1 of the boom!
Only when Netscape went public in late 1995 did people outside.
Silicon Valley start taking the internet seriously.
That’s when institutional investors started joining the party…
With pension funds and venture capitalists making a fortune when companies like Yahoo and Amazon went public.
The additional flow of money from the “smart money” helped pushed tech stocks even higher.
That was Stage 2 of the boom.
But the public was still not participating.
In June 1998, for example, mainstream economist Paul Krugman predicted the internet’s impact on the economy would be no greater than that of the fax machine.
It wasn’t until 1999 that the masses finally started to invest heavily in tech stocks…
With more people jumping into the market…
Tech stocks jumped even higher.
Attracting more and more people wanting to get a piece of the action.And that was the third and most explosive stage of the boom.With the Nasdaq soaring more than 85% in 1999 alone.
The so-called roaring ’20s followed this same road map.First, only early enthusiasts invested in the new technologies of the time, such as radio, the car and easy access to electric power.
Then in 1924, institutional investors jumped in… [e10]
Finally, in the late 1920s, the news started reporting stories of overnight fortunes.And regular folks started to wonder: Why not me? [e11]
They started borrowing money just to buy stocks. The result?Stocks went straight up. In 1928 alone, the stock market doubled.
The 1-2-3 Script During the Roaring ’20s
And it’s not just stocks. The U.S. housing boom also followed this script.
Take a look.
The biggest jump in housing prices happened from 2003–06.When we entered Stage 3 of the boom and flipping houses became a national obsession:And it’s not just in the U.S.
Something similar happened during the historic boom in Japanese stocks.
With the masses pushing stocks straight up during Stage 3in the 1980s.
This script is so reliable that it goes back centuries Just look what happened with shares of the South Sea Co. in 1720. And with the boom in tulip bulbs in Holland during the early 1600s.
Isn’t that incredible?
No matter what asset class…
No matter the geographic location…
And no matter what year the boom happened…
Every single boom throughout history has followed the same script.It works 100% of the time.And in each one of those booms, people who knew how to use this script walked away with a fortune.
Those who didn’t lost all their money.
I’m telling you all this because this script is playing out again RIGHT NOW in the booming cryptocurrency market!
So where are we now in this digital currency boom?
Let me you walk you through the three stages using bitcoin as an example…
When bitcoin “went public” in 2010, very few people understood the opportunity.
Much like the internet in 1994, most people dismissed it as a useless technology.
Only early enthusiasts invested in bitcoin.That was Stage 1 of the boom.We’ve moved into Stage 2 around 2014.When institutional investors, aka “the smart money,” started investing in bitcoin.And what started in 2014 has only intensified in 2017.
You see, the “smart money” is not just looking at bitcoin anymore.
With hundreds of cryptocurrencies exploding 3,475%, 21,611% and even 81,465%.
They’re now investing in these smaller, lesser-known digital currencies.Forbes even published the following headline recently.“Crypto Boom: 15 New Hedge Funds Want in on 84,000% Returns”
And went on to report:
“Given how many new crypto-millionaires have been minted.old hands in finance who want in on this new world of value are launching funds.”
Aside from these 15 new hedge funds.There are 70 more in the pipeline! Once all these 70 funds get set up, billions of new capital will flow into these cryptocurrencies.Helping push them even higher.And get this…Fidelity, which has $6.2 trillion in assets under management, has just partnered with Coinbase, the most popular cryptocurrency exchange.
Imagine what will happen if some of those trillions start moving into cryptos!
Remember, this is all part of Stage 2 of my three-step script.
And to prove my point, here’s an inside scoop…
Andreessen Horowitz and Sequoia Capital are two of the most highly respected venture capital firms in Silicon Valley.
That’s because they tend to see major technology trends before anyone else.
They’ve made billions by investing very early in social media companies like Facebook, LinkedIn and Twitter.
Simply put, when these guys invest in something new, you should pay close attention.
Well, right now, they’re secretly investing in a cryptocurrency fund called MetaStable.
How do I know that?
Because I’m good friends with one of the founders of the fund.You see, in the last 30 years, I’ve built connections that go from the head of Google X (Google’s experimental laboratory)…to Peter Thiel, founder of PayPal and early investor in Facebook …to billionaire Mark Cuban, owner of the Dallas Mavericks and Shark
Tank TV show star.
Because of my connections, I can see behind the scenes that the “smart money” is now getting heavily involved in cryptocurrencies.
Mark Cuban is planning to get involved... Google is investing in it… and so is billionaire Richard Branson.
Look, I recently had lunch with several hedge fund managers and other “Wall-Streeters” in New York…
And they wanted to give me $50 million to start a new crypto hedge fund. I declined their offer. Why? Because I’d have to give up doing the things I love, such as writing my blogs, this book, my newsletter The Altucher Report… and my podcast.
Those are the things I love to do. And no amount of money in the world can make me give it all up.But I’m telling you this story simply to prove to you that the “smart money” want to get involved in cryptos… because they know this is a once-in-a-generation opportunity.
===> BUT WHILE THE “SMART MONEY” IS GOING ALL IN… EVERYDAY FOLKS ARE TOTALLY IN THE DARK:-
Despite the massive investments from “the smart money”…Despite all the newly minted millionaires…
And despite this exploding market…
Most people don’t even know what a cryptocurrency is.
To this date, fewer than one in 10,000 people have invested in bitcoin.
Just ask your friends, spouse and neighbors what they think of ethereum, litecoin and monero.
I bet they’ll have no clue what you’re talking about.
That’s because the masses are NOT participating in this boom.Not yet!
Professor Panos Mourdoukoutas, chair of the department of economics at Long Island University in New York, agrees with me.
He says we’re still missing “a broad participation beyond the ‘pioneers’ and the ‘early adopters.’”And that’s the key to my three-step script.Remember, the biggest gains in any bull market throughout history only happen when the public joins the trend.
It’s the masses that will push cryptocurrencies to the moon.
That means these digital currencies still have a lot of upside potential.With cryptocurrencies minting new millionaires seemingly every day…
This epic boom is starting to grab some headlines.Take a look…The Guardian writes, “The booming market in… cryptocurrencies…
could now be on the cusp of mainstream financial credibility.”
And billionaire investor Michael Novogratz: “There’s so much human capital and real money being poured into the space and we’re at the takeoff point.”
CNBC trader Brian Kelly: “Cryptocurrencies are following the same exponential growth trajectory as the internet. “It’s a once-in-a-generation investment opportunity.”
And Henry Blodget, founder of Business Insider, says: “There is infinite upside.” With cryptocurrencies gaining publicity…
The masses will NOT remain on the sidelines for much longer. That’s why it’s important you get started as soon as possible.And there’s a single event that could catapult cryptos into the third and most explosive phase of the boom.
Simply put, this event will trigger a buying frenzy…
And help mint a new round of crypto millionaires.
You see, big tech companies like Microsoft and Overstock are already accepting bitcoin as a form of payment.
But what would happen if the world’s largest online retailer started doing the same?
We’re about to find out…Because with the popularity of bitcoin exploding…
With people like Bill Gates saying cryptocurrencies are “the future of money”…
And with big economies like Japan’s legalizing bitcoin as a form of payment…
Amazon WILL accept bitcoins as a form of payment.And they could make an announcement anytime.
EBay, Amazon’s biggest competitor, has already expressed interest in accepting bitcoin payment.
And according to Overstock CEO Patrick Byrne, Amazon will soon have no choice but to start accepting bitcoins. He said:“They have to follow suit…
I’ll be stunned if they don’t because they can’t just cede that part of the market to us, if we’re the only main, large retail site taking bitcoin.”
Look, Amazon Web Services has already been working with Digital Currency Group, one of the biggest investors in the cryptocurrency technology.
And Amazon executive Scott Mullins has confirmed it…
Amazon is “working with financial institutions and [crypto experts] to spur innovation and facilitate frictionless experimentation.”
Once they make this announcement, the impact on cryptocurrencies will be huge.
We’ll see a buying frenzy like never before. It’ll be like a Black Friday crowd at Best Buy.
Only those who get in early will get a good deal. Most people will be left out. That’s why I urge you to get in right now. Get ahead of the massive buying frenzy that will push cryptocurrencies straight up.
Like I showed you today, every boom follows this three-step script. First, only early adopters bought bitcoin. Then, the smart money started joining the party. And now we’re about to enter the third and most explosive stage of the boom in cryptocurrencies.
That’s why I wrote this book. To help you get started before it’s too late.
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