Tuesday 12th September 2017
What championship boxers can teach us about cryptocurrencies….
Mike Komaransky is 38-years-old – and retired….
How did he pull that off? In a word – bitcoin….
This professional trader began trading cryptocurrencies in 2010. The stellar gains in his portfolio over the last couple of years enabled him to give up work this summer….
He’s tight-lipped about the extent of his gains. But they clearly amount to a life-changing sum.
Komaransky has shipped his family to the south of France where they can look forward to a life of sun-drenched leisure….
- Preaching the bitcoin gospel….
Roger Ver bought 25,000 bitcoins at $1 per coin back in 2011….
Ver was attracted to the idea of a new currency that no individual or government could manipulate….
Such was the fervor of his advocacy for the cryptocurrency that people started to refer to him as ‘bitcoin Jesus’….
Ver has since sold his 25,000 bitcoins for the grand sum of $30 million….
As far as bitcoin is concerned, Ver saw the light, kept the faith and the high-flying market has delivered him into the promised land….
- Success stories abound….
Komaransky and Ver sensed the way the wind would blow early-doors and they were swift to act.
They got in at the bottom. They got out at, if not the top, then certainly at a more-than-acceptable level. Full credit to them.
Others didn’t act until the wind was up in earnest and already blowing leaves from the trees. Many have done well for themselves too….
Take American, Ryan Wilson. He’s not a professional investor. He drives a school bus for a living.
But he recently put a swimming pool in. ‘Bitcoin paid for it,’ he told NBC News reporters….
Now his mother and his brothers, all of whom work in nursing, are investing their money in the cryptocurrency….
Greg Salerno is an ironworker. He put $1600 in bitcoin and now his investment is worth $20,000….
Work colleagues have started approaching him for investment advice. They want to leap onto the profitable merry-go-round themselves….
- Past results are no guarantee of future performance….
Of course, it’s hard to knock any story with a positive outcome. Success is success.
Mr. Wilson and Mr. Salerno put their money on the table, watched the wheel spin and walked out of the casino better off than when they walked in. Fair play….
You don’t have to be a professional investor to win in the markets….
But I’m mindful that neither man had any investing pedigree to speak of prior to their recent bitcoin successes….
They put down hard-earned cash hoping for – or perhaps even expecting – continued rises in the value of a new currency they probably don’t fully understand.
Their respective risks paid rewards. But I wonder whether the bus drivers, nurses and ironworkers now attempting to replicate their success will enjoy the same results.
Winds don’t blow one way only. They can turn. And to devastating effect….
- The shoeshine boy effect….
I’m reminded of the story told about Joe Kennedy in the late 1920s – ahead of the Great Depression, the largest economic downturn in history.
Kennedy was having his shoes shined ahead of a day’s work in the office….
As the shoeshine boy put the finishing touches to Kennedy’s shoes, he offered the noted investor a stock tip. ‘Buy Hindenburg,’ he told Kennedy.
Kennedy took it as a signal to sell his entire stock holdings. ‘You know it’s time to sell when shoeshine boys give you stock tips. This bull market is over.’
The story might be apocryphal. But it contains an important lesson nevertheless….
When a market – any market – has moved to the point where the average man on the street is itching to get in on the action (whether he understands the true nature of the action or not), that is a good time to think about getting out….
Or not getting in to begin with….
The secret weapon that beats the bookie….
Peter Mac used to work for the bookmakers – as an odds compiler….
Now, he works for the opposition – digging out winning ante-post bets at value prices….
His secret weapon is ‘Monte Carlo modelling’ which he uses to root-out the prices the bookies have got wrong….
And the bookies are currently bracing themselves for yet another battering….
- The Celebrity Big Brother school of investment….
Telltale signs that the recent ‘nosebleed’ rise of bitcoin and other cryptocurrencies might be the result of a speculation bubble are not hard to uncover….
The media provides such indications with the same frequency a bird returns to the nest with fresh worms for its hungry chicks….
Floyd ‘Money’ Mayweather, a fine boxer but not a man previously noted for his acumen as an investor, has been busy promoting the recent Hubii and Stox.com ICOs to his 7.7 million followers on Twitter and on other social media accounts.
An ICO (Initial Coin Offering) is the cryptocurrency equivalent of the IPOs (Initial Public Offering) used by companies to raise cash during the dot-com bubble.
It’s how a new cryptocurrency venture raises capital – with investors sold digital ‘tokens’ in exchange for real-money investments.
Mayweather knows how to throw a left-hook. But I wonder what he understands about blockchain technology or the regulatory environment cryptocurrencies might one day have to operate in. Probably not much….
He might have been paid for his promotional support. There’s no evidence he invested a cent of his own well-documented money. Nevertheless, he reached out to his Instagram followers saying, ‘You can call me Floyd Crypto Mayweather from now on….’
Ahead of the recent Stox.com ICO, he posted a picture of himself on a private jet with a caption reading: ‘I’m gonna make a $hit t$n of money on August 2nd on the Stox.com ICO.’
Other previously unheralded investment gurus wading into the cryptocurrency action include footballer Luis ‘bite your legs’ Suarez, socialite Paris Hilton and the actress Gwenyth Paltrow….
I don’t know about you, but when I see that market momentum is being maintained and refueled by the sage market wisdom of a cast of characters that reads like a wish-list of Celebrity Big Brother participants, it only strengthens my belief that cryptocurrencies are in the grip of a speculation bubble….
- Just a bump in the road – for now at least….
The crypto-bubble is not a new theme for this column. I first made the point that bitcoin was in a bubble in August….
So, given that last week bitcoin fell in value by a mighty-sounding 12% on the back of China’s decision to clampdown on ICOs, you might expect me to be saying ‘I told you so’.
But I haven’t been proved right. Not yet, in any case….
Last week’s drop represents nothing more than a blip when you consider that bitcoin had risen 650% over the previous year.
Bitcoin is still worth $4184.92 as I write – hardly reduced to chicken-feed….
The Chinese action may be a sign of things to come in a regulatory sense. But right now, it is a mere bump in the road. One from which bitcoin values can recover….
- A rare treat for gourmets….
John McAfee, founder of the McAfee anti-virus software company, has promised to eat his own genitalia on national TV if bitcoin is not worth $500,000 in 3-years-time.
Naturally, as a keen amateur chef, I’m fascinated to see how McAfee prepares this flamboyant dish….
Will he grill it, lightly seasoned, in garlic? Or will he flambé it in brandy? Decisions, decisions.
Sadly, we might never get to savor this truly gourmet experience….
There is still plenty of time for bitcoin to meet the ambitious target McAfee has set for it. He may never need to reach for the carving knife or the tourniquet….
And the truth is that the value of bitcoin – wherever it goes from here – and the eventual fate of McAfee’s manhood are only part of the bitcoin story….
A popping of the current bubble does not necessarily signify the end of bitcoin or cryptocurrencies generally. Cryptocurrencies are very much part of the future – up or down in here-and-now value….
That’s what I discover as I dig deeper into the story emerging behind the bubble….
Fortunes may be won or lost in the markets in the months and years ahead. But the deeper trends probably have most significance….
More to follow on this next Tuesday….
In the meantime, bitcoin isn’t the only ‘easy’ money in town. If you’re looking for a way to make a few hundred pounds in extra cash – quickly and without any attendant risk – I may have uncovered just what you’re looking for.
I’ll be in touch on Friday with more on that….
That’s how it looks from here….
All the best,