Well folks, the markets have taken us investors for quite the ride this week, with a ton of riveting news across all sectors. If you’ve been keeping a close eye on our trades through this rough patch, we thank you (...and have returned you double digits), and cannot wait to see what the market brings after this much-needed weekend. Keep reading for an in-depth market talk and this week’s long-term investment recommendation!
“The problem with experts is that they do not know what they do not know”
- Nassim Nicholas Taleb, Author of The Black Swan (Highly Recommended!)
Market Talk
The market has rallied today, erasing some of the losses from this week’s sell-off with consumer discretionary, oil, and tech leading the way. However, Twitter shares have fallen sharply after Elon announced his deal to buy the social media company has been put on hold.
Furthermore, Saudi Aramco has overtaken Apple as the world’s most valuable company, underscoring the recent surge in oil prices that have boosted this energy giant over the last fiscal quarter. Stay tuned for more on the energy sector as the Coachmen are eager to provide a pick for your portfolio!
Bitcoin (BTC/USD) - The Truest of Inflationary Hedges, Digital Gold at a Discount!
Unprecedented times create unique opportunities and this week is one such case - resultantly, our long-term recommendation is not a stock, but instead a cryptocurrency, the one that started it all: Bitcoin.
For those of you who aren’t too tech-savvy and haven’t been properly introduced to the idea of digital assets, we recommend you read this excellent article by the BBC on how the underlying technology functions - the rest of you can keep reading for our rationale in this recommendation.
First, despite its name, Bitcoin is a commodity more similar to oil and gold than to any type of currency - it was meant to be a truly sovereign asset class but has developed into much more. Primely, it has deflationary qualities as the amount minted periodically decreases until the pre-set 21,000,000 Bitcoin cap is hit; given the periodic decreases in the amount minted, it’s projected that we won’t hit the maximum until the year 2140, so don’t scramble just yet! Moreover, given these deflationary qualities, it is an apt store of value and as a result of its digital nature can function as a medium of exchange if need be. Stemming from this, as we edge closer and closer to a mainstream-metaverse society, BTC’s intended utility as a digital medium of exchange will further factor into its price as the internet’s currency. Regardless, materially in the now, Russia even said it will accept Bitcoin as a method of payment for its oil exports when it discontinued the use of petrodollars at the inception of the Ukraine-Russia conflict. Bitcoin is here to stay, it should replace the gold in your portfolio, and right now is the perfect time to buy due to its price being dragged down recently with the TerraLuna fiasco (another crypto that lost 98% of its value, not linked to BTC whatsoever, read more here).
Despite this, it is still well within three standard deviations of the stock-to-flow model [which assumes a relationship between the amount of a precious metal that is mined each year (flow) and the amount already mined previously (stock) but has been adapted to digital assets] which it has never broken and places Bitcoin on track to hit $1,000,000 USD by the end of 2026. It may never be this discounted from the stock-to-flow model again, so get in while you can and remember, not owning any Bitcoin is the biggest risk that you can take in this digital age. Thanks, and see you next week!
Chart of the Day: ARK Innovation ETF Price Since Inception
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