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As any savvy investor would know, diversification is key. Of course, Warren Buffett will tell you upfront that if you know what you are doing, then diversification is not the key. Just focus your money on select winners and you will make a lot.
The paradigm of thought here is no stranger to those who are well versed in investments. We don’t want to stray from basics and yet here we are presented with what the institutional investors now call a different asset class of investment – crypto. Crypto is being looked upon as a peculiar class that cannot be ignored. It is that elephant in the room. The 10 ton gorilla. Fighting against it is not only a waste of effort and energy. You are more likely to lose than to gain from the effort expanded, given that the technology itself in blockchain is the future of businesses.
So there are 3 groups of investors –
those who are from fiat, invested in the equities, and are now gaining exposure into crypto,
Those who started out with crypto, and would now want to gain exposure into equities whilst retaining their majority crypto exposure.
Those who have both from the beginning
Most folks will fall into camps 1 and 2.
But today, we would like to address camp 2 – the crypto folks entering into equities to diversify your portfolio. The academic research literature clearly shows one thing – it is very difficult to diversify within a crypto portfolio as for the most part, crypto moves in a highly correlated fashion. Bitcoin, being the progenitor and the 200 ton gorilla, sets the momentum. If it falls, it takes every one down. If it rises, the rest are given legitimacy to do so. You cannot run from that, not at least for now, as far as you can tell from price movements in the past two months.
Hence to try to buy an altcoin to balance off your Bitcoin (and vice versa) makes no sense at all. We know for a fact that the Stock-to-flow (S2F) model will work and we are likely to see a reversal upwards to a much higher price for Bitcoin. But needs to happen is that, with all good investors, getting into something else that is not correlated is important. This way, you smoothen out the price movement (fluctuations) in your portfolio whilst attempting to chalk up good gains.
If you were a crypto-first investor, then it behooves you taking the time to understand stock fundamentals. Primarily because wrong lessons can be learnt from a “mooning asset”, which could have resulted from a small gamble leading to outsized results. Crypto has now matured to a point and will continue to mature to a point where such common fare quickly becomes anomalies in the future. In other words, your #Dogecoin, #babydogecoin, #cumrocket, etc. Are going to not be seen as often. I may be wrong, as there are always gamblers who think they can outsmart the system.
But for the most part, it will be more often folks who get burnt because they learnt the wrong lessons from their previous gains.
Remember: in a rising bull market, every one thinks he is a genius.
Warren Buffett has a famous quote that it is only when the tide goes out that you learn who is swimming naked.
This is so true, especially with so many folks attempted to use 100x leverage on their crypto and when the market started to collapse, they lost more than their shorts and BOTH grandmothers.
As part of our coverage by BBA Market Perspectives, we will use occasions to educate on the stock market. You can then choose to use crypto native platforms like #FTX to try to gain a buy-in on those stocks. Or you can choose to convert some crypto to fiat (don’t be so religiously zealous over holding crypto), and register accordingly to buy stocks.
Given that you are first into crypto, there must be a future that you have seen with the initial evidence provided by Satoshi’s whitepaper, or that you understand that the dynamic in crypto will play out at some point. You are right, however you look at it. And we want to affirm you on this move.
This would also mean that our coverage on tech stocks, which are forward looking businesses will likely interest you. Again, this is not investment advice, so do your own due diligence in researching before investing!
ENTER TECH STOCKS
In the last year, electric vehicles became a mainstay narrative with stocks like TESLA taking the limelight, rising a whopping over 700% at one point. Hydrogen power – PLUG POWER took the limelight for energy stocks (its highest point was more than 1,000% from a March 2020 buy-in!). These are future-looking themes playing out in our day.
They will continue to do well, but because of their crazy valuations and how investors are now shifting out of this narrative, chances are you will not be experiencing the same effect as before. But that should not stop you from looking at different tech forms like even space technology. We are still not ready for travel to Jupiter, I guarantee you that. But to get into a space shuttle that orbits the earth and allows you to fly from LA to China in 2 hours is a possibility. To have your internet wireless data connection beamed from a satellite instead of your local telco, is also possible. They are all here and about to lift-off with these stock plays.
ASTRA ($ASTR)
Find out more here:
https://spacenews.com/astra-completes-first-day-as-a-public-company-ahead-of-launch-ramp-up/
What about ASTRA that makes it so outstanding?
This space tech company will be launching 2021 and it is traded under the $ASTR ticker. The public statement contains a commitment to 15 launches and 50 customers that are currently contracted with it. What this entails is daily launches to what is termed as Low-Earth-Orbit (LEO) in 4 years.
Astra’s emphasis will be on the scale of production which will set it apart from its competitors.
This is what we see from its financial statements that contain projections. It is likely to make losses and start breaking even by 2024. For a high growth company that is projecting nearly 1700% rise in revenue for 2022, and over 200% for 2023 and 2024, the prospects are looking excellent.
As an investor, I am all about BIG IDEAS and the NEXT BIG THING.
And if the stock ain’t worth the future, you will not hear it from me if I discuss tech stocks. Guaranteed.
Some useful links you may want to read:
https://www.marketwatch.com/story/this-spac-with-ties-to-nasa-plans-to-make-daily-runs-to-space-11616169647
https://research.investors.com/stock-quotes/nasdaq-astra-space-inc-cl-a-astr.htm
Again, do your own due diligence, but remember to tip us when you moon!!
Yours,
Chief Editor
BBA Market Perspectives
