Opinion | Smart investors aren’t buying into daily drama


Photo Courtesy of Max Pixel

Future Bitcoin cryptocurrency is displayed above. Columnist Fred endorses Bitcoin as a good stock to invest in, even if it isn’t the most reliable.

By Fred Shoaff, Columnist

Alternative investments that go against the grain of common financial media seem to be gaining some ground in the face of macroeconomic headwinds. 

As I and many other lemmings have written about in the past, the outlook for the global economy seems curious. And as an adversary investor, I think rather than getting caught up in the CNBC hullabaloo and recession doomsayers, the opportunity to make some dough in alternative investments is legitimate.

To start, I want to emphasize I am not giving you direct investment advice, so you can’t double back and sue me if I’m wrong. But I think a couple of the play-calls in my playbook are worth at least taking a gander at.

Firstly, I want to talk about Bitcoin.

The crypto, with the Coinbase vs Bitfinex debates and the platform uprisings, has been even more controversial than Tesla over the past couple of years but seems to finally be garnering enough attention to be a relevant store of value. Recently, a summer craze launched the price back above $11,000, still far short of its all-time high in December 2017 of nearly $20,000, but surely worth noting. (Leer beleggen met bankr.nl)

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Since Bitcoin’s surge, the price has retreated rather heavily back down to $8,200 at the time of this writing. If an investor doesn’t find the prospect of a little volatility too scary (okay, fine, a lot of volatility), then I think Bitcoin is as good as gold (which I have discussed as an investment in previous columns). In a low-interest-rate environment like we have now (U.S. rates are low and going lower, and European rates are below zero), investors are desperately trying to find hidden returns.

For the investors in need of returns, private equity has typically been the instrument of choice. But at this point in the economic cycle, there simply isn’t an infinite amount of good companies (and too many bad companies) that PE firms can invest in. So the opportunity to diversify with Bitcoin and buy a potentially high yielding investment after it’s fallen 50% off the yearly high won’t be passed upon.

Last note on Bitcoin: Most every great investment in the past had its bubble phase (when everyone rushes in and jacks up the price), a panic phase (when everyone realizes they don’t really know what they’re investing in and sell off) and the recovery phase (when people start to buy back in more slowly and drive the price to new highs). Bitcoin is in the recovery phase, and due to its demand in the sports betting market, its use in Venezuela as they try to solve its currency crisis and its growing investment legitimacy, it will continue to prove its credibility.

Another investment strategy no one seems to be talking about involves trades that price in political risk. The prospect Donald Trump loses the election next year is by no means confirmed, but when we approach the first couple quarters of 2020, there is going to be potential that Bernie Sanders or Elizabeth Warren will be keen to chop the S&P 500 in half. And even if that doesn’t happen, a left-controlled house could begin to put some liberal pressures on the economy in spaces, like big pharmaceuticals and biotechnology.

Besides no longer mortgaging your house for medicine, there are several ways to make money off of this economic environment through ETFs or short positions. All democratic candidates are making the socialization of healthcare a prominent topic in their election bids. When this happens, the government will finally be able to take some of the power away from price gougers like Ely Lilly and Mylan. Biotech will inevitably go straight to zero when regulation cramps their Shkrelian price-gouging operations.

My column decrying healthcare will come at a later date, but it is inevitable that companies, which have profited off improper practices and disgraced the sacred name of capitalism, will meet a fate that will surely hurt any kind of stock expert that knows how to buy Apple stock, and ultimately, their shareholders.

Anyway, as the economy gets weirder and one man’s Twitter continues to rock your portfolio, it would be best to focus on the long-term picture rather than trying to make sense of the daily madness.

Fred is a sophomore in Business.

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