Long-time readers will know we got into Bitcoin back in 2016, but unloaded it in March of 2021 for a simple reason. We were getting concerned that the pointy shoes would never leave crypto alone as it’s an escape route.
Looking at Bitcoin’s run this year and the myriad of bullish headlines, should we perhaps be getting back in?
Chris touched on Bitcoin and the state of the crypto market in the most recent Insider Newsletter issue. Here’s an excerpt:
To be fair, I think Bitcoin can and probably will run a bit for the simple reason that the SEC are now going after many of the unregistered securities… urgh, I mean tokens.
The rules have always been pretty clear, and the fact is many of the ishtcoins issued fall into the classification of securities under the law. They’re all going down. Bitcoin, on the other hand, is a commodity. As such, it will likely get net inflows from the crypto crowd. In the longer run (next few years), I remain somewhat pessimistic to the idea that any government of significance will allow it to remain unscathed from the pointy shoes.
As such, we remain out of this market. It simply doesn’t present the type of asymmetry we like to find. Frankly, when you can buy energy companies at valuations so cheap they defy imagination, the trade is more about relative value.
Which brings us to the next point…
WALL OF CASH
A few weeks ago, we made a confession in these missives about energy stocks.
We laid out our thesis for offshore energy stocks and said our excitement about these stocks is comparable to that of an 18-year-old at a Miss Universe wet t-shirt contest.
Now, this triggered even more people than we’d hoped, but our excitement hasn’t wavered. Quite the opposite, as the offshore oil story just keeps getting better and better. Case in point:
A wall of cash? We like the sound of that. Now, to be honest, CEOs have been known to talk nonsense all the time, but when we look under the bonnet, the numbers seem to stack up.
Right now, we just need to be patient and wait for this story to play out. Tom Petty was correct. The waiting is indeed the hardest part.
ALL THINGS TRANSITORY…
Feels like a lifetime ago, when — back in February 2020 — we started warning that lockdowns will bring about inflation and shortages. Fast forward to today, and this pesky stuff is now part of our daily lives. We recently set up a dedicated inflation channel in our Insider private forum, where members can share their own experiences with all things “transitory”.
This week, we have an inflationary update from member Sean:
So I had to renew one of my IT qualifications the other day. Usually I could pay upfront for 3yrs and it cost $255. To my annoying surprise the annual price is now $125 and I can only pay annually leaving the door open for them to increase the rates again from year 2 (ie: I can’t lock in the rate for 3yrs by paying it all upfront). Inflation increase? 47% over 3yrs IF they don’t increase it again! Make 2% inflation great again
And our very own Lucas commented on a recent Financial Times piece:
Instead of stopping activities that cause inflation, the solution is to “tax the rich”.
That way, all these parasites get to keep their jobs and pay themselves in line with the inflation they’ve created, while turning society against itself in the fight for what is “fair”.
They must know deep down that there will be a point where things become so bad that their own lives will be in danger, but either believe it’s too far off in the future to affect them personally, too obfuscated for them to be personally blamed, OR they ignore it, given they believe money and power comes from taking forcefully, rather than trading voluntarily for actual value.
The world needs to be rid of this psychopathic mentality as it’s by nature antithetical to freedom, equality and prosperity.
Teach your kids, as they likely won’t learn this outside the home.
CORRUPT, DYSFUNCTIONAL, AND BROKE?
In our last missive, we touched on the opportunities in Argentina.
Now, we know — to 99.9% of investors, Argentina is the equivalent of toxic waste. Corrupt as hell, dysfunctional, and with a broke government. But the way we see it, the assets are priced for that. As our friend and colleague Doug Casey says, “You don’t need a place to get better. It just needs to get less worse, and the returns can be significant.”
Significant indeed. The local stock market is up some 135% over the last 12 months. For comparison, the S&P 500 is up a “mere” 16% while the Nasdaq is up 23% during the same time.
Here’s a chart of the MERVAL Index against the S&P 500 (indexed in USD):
Worth a punt with a small chunk of your portfolio? We think so.