The Wolf Den #644 - Teach Your Children Well
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In This Issue:
Teach Your Children Well
Bitcoin Thoughts And Analysis
Legacy Markets
Argo Announces Partial Buyout
Regulators Start To Define Crypto
MicroStrategy Wisened Up
My Recommended Platforms And Tools
Teach Your Children Well
“Stop buying your kids what you never had and start teaching them what you never knew.” - Vala Afshar
When I was a kid in the 1980s, financial education was largely ignored as part of our curriculum. We focused on memorizing useless facts about history, learning lessons that we would never use, studying the wildly inaccurate “food pyramid” that had us focusing on eating primarily complex carbohydrates and preparing for tests that offered zero indication of our likelihood of future success.
My children are too young to have advanced deeply into the school system, but I have a feeling that things have not changed.
There is no topic more important than financial literacy.
As people become more aware of the far-reaching consequences of financial illiteracy, one question becomes obvious. Why isn’t personal finance taught in school? As one considers the repercussions of financial ignorance and advantages of knowing about personal finance, this question becomes increasingly important. The answer is a general failure of the education system to identify the most relevant skills students should possess. While some point to underfunding as a response to the question of why personal finance isn’t taught in school, the education manages to fund STEM programs with expensive computers and lab equipment, but cannot find room in the budget for personal finance 101 courses.
I dug up quite a few facts about the power and importance of financial education.
One team of researchers decided to analyze the efficacy of simulations in producing behavioral change in students. Students who took Junior Achievement’s Finance park, a simulation for middle school students that sees students assume family and income scenarios, were split up into two groups after going through the park the first time. One group underwent financial education training while the other group did not. After 12 weeks, all the students went through the park for a second time. Over half the students in the group that received training were able to successfully construct a budget, a statistically significant amount over the only 1 student who was able to do so before the training (National Bureau of Economic Research).
Low-income workers attending an employer-sponsored financial education program were 11.5% more likely to participate in 401(k) plans and save more for retirement than peers who elected not to attend the education initiative (National Bureau for Economic Research).
A research study analyzing the effects of parents’ values on children found a statistically significant positive association between parents’ savings rates and children’s savings rates (University of Agder).
Parents who have three or more types of savings are more likely to have kids who discuss money with them (83% vs. 66%) and less likely to have kids who spend money as soon as they get it (40% vs. 52%) or lie about their spending (34% vs. 43%) (Money Confident Kids).
The data is clear - children (and adults!) should be learning how to manage and approach their finances from an early age. I don’t have all of the answers, but think that it is clear that the school system has almost no intention of teaching these lessons, which means that it falls on parents to educate their own children and the younger generation.
And what should we be teaching them? At the most basic level, we should teach them the importance of money, how to manage it and what money is.
Present these two types of money to a kindergartener and see which they think is superior:
Fiat money is government-issued currency that is not backed by a physical commodity but by the stability of the issuing government. It is inflationary and can be printed endlessly.
Bitcoin is deflationary and requires no trust in a centralized entity. This means that the number of Bitcoin that are produced decreases over time and even will stop eventually once supply reaches 21,000,000.
This stands in stark contrast to the inflationary model most of the world operates under.
Even a kindergartener would likely understand the difference and choose the latter.
So which model do you think will survive in the future, when our children need to understand money the most?
My bet is on Bitcoin.
Teach your children about Bitcoin.
Bitcoin Thoughts And Analysis
MONTHLY CHART
There is no level on the chart more significant than ~$13,800.
This was the all time high monthly close in 2017 (discounting wick).
This level was also the top of the 2019 rally before price returned below $4,000.
It was the launchpad for the bull run that began in 2020.
This level is yet to be retested as support. That does NOT mean that price has to go there or that it will hold if price does. That said, it's an important level to watch.
Legacy Markets
Key events this week:
US initial jobless claims, Thursday
ECB publishes economic bulletin, Thursday
Some of the main moves in markets:
Stocks
S&P 500 futures rose 0.3% as of 5:35 a.m. New York time
Nasdaq 100 futures rose 0.6%
Futures on the Dow Jones Industrial Average rose 0.1%
The Stoxx Europe 600 was little changed
The MSCI World index was little changed
Currencies
The Bloomberg Dollar Spot Index fell 0.3%
The euro rose 0.3% to $1.0639
The British pound rose 0.1% to $1.2032
The Japanese yen rose 0.5% to 133.74 per dollar
Cryptocurrencies
Bitcoin rose 0.4% to $16,576.8
Ether rose 0.9% to $1,197.08
Bonds
The yield on 10-year Treasuries declined two basis points to 3.87%
Germany’s 10-year yield was little changed at 2.50%
Britain’s 10-year yield advanced two basis points to 3.68%
Commodities
West Texas Intermediate crude fell 1.8% to $77.52 a barrel
Gold futures were little changed
Argo Announces Partial Buyout
Argo Blockchain has avoided disaster thanks to the intervention of Galaxy Digital. The crypto investment firm has acquired Argo's flagship facility, Helios, for $65m. Located in Texas, Helios is the world's largest immersion-cooled miner. Argo will maintain ownership of all mining machines and will host them at the facility. The sale will reduce Argo's debt by $41m and provide the company with a stronger balance sheet and increased liquidity to sustain operations during the current bear market. According to Argo's Q3 report, the company's total debt was $117m. The announcement of the sale caused Argo's stock to rise by 20%.
Regulators Start To Define Crypto
Regulators have faced criticism for their inconsistent definitions of innovations in the industry. However, recent developments, such as the SEC's recognition of cryptocurrencies as "digital assets" in the indictment of SBF, suggest progress is being made. The statement I am referring to reads, “crypto assets are unique digital assets maintained on a cryptographically-secured blockchain.”
If you look at the Eisenberg case, the Department of Justice cited “commodities fraud,” and added, “the defendant did knowingly and intentionally manipulate and attempt to manipulate the price of a commodity in interstate commerce.” They also included this gem - “I understand that virtual currencies, such as USDC, are “commodities” under the Commodity Exchange Act.”
While there is still a lack of consistency, as demonstrated by the Department of Justice's classification of virtual currencies as "commodities" in the Eisenberg case, positive precedents are being set.
It is worth noting that these definitions are improving, even if there is currently a lack of consensus. Overall, any progress in this area can be considered a positive development.
MicroStrategy Wisened Up
The software company also sold a small amount of the cryptocurrency for the first time.
Software vendor MicroStrategy, co-founded by cryptocurrency advocate Michael Saylor, has added approximately 2,395 bitcoins to its portfolio through its MacroStrategy subsidiary, at a cost of $42.8 million between November 1 and December 21, according to a Securities and Exchange Commission filing on Wednesday. In an effort to offset capital gains, the company sold around 704 bitcoins for $11.8 million on Thursday, before repurchasing 810 bitcoins for $13.6 million on Saturday. These transactions brought MicroStrategy's total bitcoin holdings to 132,500, worth approximately $2.25 billion at current prices, compared to the company's acquisition cost of $4 billion. This marks the first time that MicroStrategy has sold bitcoin since it began acquiring the cryptocurrency in 2020. In total, the company has spent a net $44.6 million on approximately 2,501 bitcoins since November 1. Shares of MicroStrategy were slightly up in pre-market trading, while the price of bitcoin remained largely unchanged at around $16,700.
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The views and opinions expressed here are solely my own and should in no way be interpreted as financial advice. Every investment and trading move involves risk. You should conduct your own research when making a decision. I am not a financial advisor. Nothing contained in this e-mail constitutes or shall be construed as an offering of financial instruments or as investment advice or recommendations of an investment strategy or whether or not to "Buy," "Sell," or "Hold" an investment.
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