The Wolf Den #863 - This Addiction Is Killing You
Cash isn't always king.
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In This Issue:
This Addiction Is Killing You
BTC Thoughts And Analysis
Altcoin Charts - Weekly Levels
Legacy Markets
A Random Thought On $COIN
The Dog Is Getting Old
You Need To Watch This Commerical
This Is What Evil Looks Like
If You Own Bitcoin, You’re A Bitcoiner (Sorry Maxis) W/ Udi Wertheimer
This Addiction Is Killing You
'Professional' investors relish discussing the times when holding cash allowed them to step up to the plate and take a powerful swing at the ‘perfect’ pitch. Plug your ears if you're ever forced to listen to one of these stories ,because out of every 10 investors addicted to cash, only 1 portfolio survives.
In the investment world, cash addiction is a real phenomenon; some argue it could even be considered taboo if you really peel back the layers. If you know the signs, identifying this addiction isn't challenging, but addressing and overcoming it can be, much like any addiction Hence, it requires a direct and proactive approach.
If you are anyone you know suffers from an addiction to cash, have them type their email in the link below for immediate help:
Before delving into the signs, it's crucial to underscore the widespread nature of this issue, especially if you happen to be an unaffected investor who has not encountered this problem previously. My evidence will be anecdotal, but VERY often, I receive messages that start something like this:
The market is in a decline, I’m expecting further falls, and cash serves as my safety net.
The market is on an upswing, prices are too high and will eventually correct, cash is my safety net.
My gut tells me there are A LOT of investors out there who tend to think the same way. To clarify, while there are occasional instances where this line of thinking can save someone a substantial amount of money, it tends to be the exception rather than the rule. Most individuals labeled as 'investors' addicted to cash find themselves unable to casually engage in such positions; instead, these addictions persist for years.
Let’s examine the signs:
Immense Timing Pressure: Building a cash position creates the unwanted consequence of added pressure to correctly time decisions. This anxiety intensifies with a growing cash position, making them increasingly hesitant to commit to specific investments. With an expanding cash position, there may be a tendency to overanalyze potential investment opportunities, which leads to my next point.
Obsession With Diversification: If an investor can break free of the paralysis, they might face a nasty obsession with diversification. Don’t get me wrong, diversification can be a good thing, but there’s a point in which it becomes a waste of time, energy, and capital. This preoccupation prevents the investor from making focused and strategic choices.
Overthinking the Tax Implications: A cash addicted investor typically overthinks potential tax liabilities and implications. Furthermore, timing investments for a more favorable tax year becomes a hindrance and ultimately counterproductive when it hurts the bottom line. The missed opportunities and potential growth from holding cash often outweigh the perceived tax advantages.
Overemphasis on Liquidity: This is where an investor places a disproportionate focus on maintaining immediate access to funds. This fixation on liquidity, while providing a sense of security and flexibility, may come at the cost of potentially lucrative long-term gains. In today’s current landscape, this is the investor who only buys short duration bonds and misses out on everything else that outperformed.
By now, you've likely begun to identify some unmistakable and overlapping signs of the addiction, such as apprehension, hubris, and pessimism. The positive aspect is that once the problem is recognized and addressed, it can be rectified. While I am not a licensed financial analyst or therapist, as a friend, I recommend seeking the assistance of a professional, automating your investments, and doing all you can to ignore your portfolio.
In essence, take that initial step of addressing the problem, and then let someone else actively combat the addiction on your behalf. Rarely will cash take you where you hope it will. Keep what you need for a year or so, store some under your mattress if you have to, have a bit for dip buying and put the rest of it to work. I will always be clear with all of you when I do substantially move towards cash, right now, I am not there. You own your cash; it doesn’t own you.
Remember - time in the market is more important than timing the market.
BTC Thought And Anlaysis
It is nearly impossible to predict when a correction will come for an asset that has gone parabollic. That said, we have overbought RSI with confirmed bearish divergence, whicg should give us some downside.
I would NEVER short this, I am looking for reasons to find dips to buy.
Altcoin Charts
For those who are new here, I share SETUPS and not SIGNALS. These are ideas that I am watching - if a certain thing happens, then the trade triggers. I am not telling you what to buy or when. I am showing you how I am watching certain charts and what has to happen for me to take a trade.
As discussed yesterday, I will share a few charts with their key larger time frame levels, to give us some context on what is likely to come for these coins. Remember, lines are not exact - they are more like areas or zones.
Legacy Markets
The stock and bond markets experienced fluctuations, with a notable surge in the Japanese yen (shown above, USD/JPY), driven by speculation that the Bank of Japan (BOJ) might soon end its negative interest-rate policy. This speculation arose following comments from BOJ Governor Kazuo Ueda about challenging policy decisions ahead. The yen's rise was its most significant in three months, causing Japanese bonds to sell off sharply and the rate on the 10-year note to increase.
This market movement indicates skepticism about central banks' readiness to pivot towards rate cuts. Market analysts, like Mohit Kumar from Jefferies International, suggest that the bond market rally might be overextended, considering the likelihood of only a mild recession and persistently high inflation.
In individual stock movements, Chewy Inc. saw a decrease in premarket trading after lowering its sales forecast, while Advanced Micro Devices Inc. experienced a rise after announcing new accelerator chips. Meanwhile, gold prices rose, the dollar weakened, and Bitcoin's value fell below $44,000.
Additionally, the Swiss franc reached its strongest level against the euro since the Swiss National Bank abandoned its currency cap almost nine years ago, reflecting changing interest-rate expectations and growing confidence that the European Central Bank will cut rates before the Swiss National Bank.
Key events this week:
US wholesale inventories, initial jobless claims, Thursday
Germany CPI, Friday
Japan household spending, GDP, Friday
Reserve Bank of Australia’s head of financial stability Andrea Brischetto speaks at Sydney Banking and Financial Stability conference, Friday
US jobs report, University of Michigan consumer sentiment, Friday
Some of the main moves in markets:
Stocks
S&P 500 futures were little changed as of 5:46 a.m. New York time
Nasdaq 100 futures rose 0.1%
Futures on the Dow Jones Industrial Average fell 0.3%
The Stoxx Europe 600 fell 0.2%
The MSCI World index fell 0.1%
Currencies
The Bloomberg Dollar Spot Index fell 0.2%
The euro was little changed at $1.0768
The British pound rose 0.2% to $1.2580
The Japanese yen rose 1.7% to 144.84 per dollar
Cryptocurrencies
Bitcoin fell 1.4% to $43,194.53
Ether fell 0.6% to $2,235.51
Bonds
The yield on 10-year Treasuries advanced four basis points to 4.14%
Germany’s 10-year yield declined two basis points to 2.18%
Britain’s 10-year yield advanced four basis points to 3.98%
Commodities
West Texas Intermediate crude rose 1% to $69.97 a barrel
Spot gold rose 0.4% to $2,033.66 an ounce
A Random Thought On $COIN
Let’s have a brief discussion about COIN and my thoughts on selling. In April 2021, at the time of its IPO, Coinbase boasted a market capitalization surpassing $85 billion. Today, its market cap stands at $33.93 billion. On the day of the IPO, the opening price was $381, reaching a peak of $429.54 before embarking on a prolonged decline.
My perspective on this is straightforward: if investors deemed Coinbase stock worthy of its high prices based on the information available to them at that time, how will they reevaluate its value considering the present facts and the trajectory of the cryptocurrency market in this current bull cycle?
Coinbase has yet to undergo a genuine price discovery cycle publicly, and that's why I'm committed to holding onto this position for the long term. While it's wise to take profits periodically, I see no compelling reason why this stock can't reclaim its all-time highs and potentially set new ones. Investors may not always promptly recognize what's right in front of them, but over time, I have faith that awareness will set in.
The Doge Is Getting Old
In human years, Dogecoin is celebrating its 10th birthday, but in dog years, the meme coin is approaching its 60s. To commemorate crypto's enduring and beloved meme, here are a few entertaining tidbits. Did you know that Dogecoin originated as a fork of Litecoin, which itself is a hard fork of Bitcoin? In the meteoric rise of 2021, Dogecoin witnessed an astounding surge of over 26,000%, and even the Dallas Mavericks embraced it as a form of payment. Perhaps the most fitting fun fact is that Doge is currently trading at 10 cents on its 10th birthday. Perhaps, since the dog is getting old, it’s time for the frog—time will tell.
You Need To Watch This Commerical
Regrettably, I forgot to share the Coinbase commercial unveiled six days ago, which garnered significant attention on Twitter. What’s notable about the commercial is that Coinbase is doing the entire industry a solid with these advertisements. There's likely no better way to mend any negative sentiments retail might harbor against our space than through a creative, compelling, and relatable advertisement. The community owes a lot to Coinbase; we wouldn't be here without them.
This Is What Evil Looks Like
Jamie Dimon's expertise in the banking world is noteworthy, but when it comes to Bitcoin and crypto his views warrant complete disregard. No government has the capability to shut down Bitcoin or the broader crypto space entirely; at most, they can exert control over the on and off ramps. However, such actions in the U.S. would likely provoke resistance from influential entities like BlackRock, Fidelity, Coinbase, and other major industry players.
More importantly, watch what they do, not what they say. JPMorgan is HEAVILY invested in crypto and using the technology.
“I've always been deeply opposed to crypto, Bitcoin, etc. The true use case for it is criminals, drug traffickers, anti-money laundering, and tax avoidance. It is somewhat anonymous, not fully. You can move money instantaneously because it does not go through all these systems, we've built up over many years KYC, sanctions, OFAC, and it can bypass all of that. If I was the government, I would close it down.”
If You Own Bitcoin, You’re A Bitcoiner (Sorry Maxis) W/ Udi Wertheimer
This stream is likely to trigger laser eyed Bitcoin Maxis. Sorry. Udi Wertheimer and I discuss the future of Bitcoin - both as an asset and as a network.
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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.
That was an interesting article on an unrealized addiction. “Things that make ya go, hmmm”