The Hype
The first time I heard of Bitcoin was in 2011. I had no idea what it was, where it came from and why I was reading about it. I just saw an interesting headline in the footer of another article and started to read. Words like “crypto” and “mining” and “BlockChain” didn’t seem to have any meaning. Sounded neato, but frankly, I didn’t understand what I was reading.
The price of a single Bitcoin at that time was: $0.92 (March 1, 2011)
Sporadically, I would see articles about various things related to Bitcoin, and I learned a little more in my spare time. A couple of years had passed and the price had gone up considerably, so I became more interested but figured I had missed the boat, so I kept my dollars invested in the portfolio that we manage. I didn’t feel like there would be any reward, even though it seemed cool at the time. I couldn’t even figure out how to buy it, even if I wanted to. What did “mining” mean?
I don’t believe there were any exchanges at the time, I could be wrong. Regardless, the price of a single Bitcoin at the time was: $70.45 (March 22, 2013)
If I had invested $10,000, somehow when I first learned about it in 2011, as a nice Bday gift to myself, it would be worth $765,760.87. I remember it pretty vividly because a few years later I kind of felt a pang from FOMO (Fear of Missing Out) come to life.
That was the tail end of 2017, and the price of a single bitcoin was $16,000.
Again, had I invested in 2013, I would have $2.2 million dollars worth of Bitcoin (Bitcoins?)… or if I had the itch I could be worth: $173,913,043!!
“How could I have been so foolish!!” I didn’t think once to myself. Not one single time.
We miss opportunities all the time. Who bought Google, Amazon, Netflix? Who bought the second generation of Apple? Who bought Tesla at $4? WHO?
More importantly; who held them when times were tough?
There are more selloffs in Bitcoin and other cryptocurrencies on a daily basis than you will find in a year of trading stocks or a decade in bonds. But it keeps going up, and up, and up, and up.
When the price of Bitcoin was between $15,000-$18,000, previous to it losing over 80% of its “value” at the time. Dad and I had attended two separate meetings with David Fingold, the manager of Dynamics Global Dividend Fund and many others. These meetings were held by Industrial Alliance to support their advisor partners across the country. I attended a wider audience meeting at a seminar, dad was fortunate enough to sit down amongst a few of our colleagues at a dinner with David.
Long story short, a man who manages this portfolio of between 25-30 stocks wasn’t being asked about the portfolio, about his thoughts on dividends, why they are important, how much it costs to make a dollar of dividend. No, he was asked specifically about Bitcoin and pot stocks.
“David, what do you think about Bitcoin?” Asked one advisor, and the room nodded along as if agreeing this was pertinent. So important in fact, that they are bringing it up when it is being hyped up and the price is at an all-time high.
“David, what do you think about pot stocks? Do you think Justin will actually follow through and legalize?” Another advisor asked, to a man who leads a team that, to my knowledge, didn’t even own any Canadian stocks at the time.
These two items were all over the media at the time. Real hot ticket items to stir up conversation and debate. But David didn’t care, and this is why we like him. He didn’t care and simply responded:
“Guys, if this is what you came here for, you’re in the wrong room. I don’t care about pot and Bitcoin, anyone have any good questions?”
Funnily enough, both dad and I would ask, at different meetings, about Japan and how it was faring and why the markets there seemed to come alive recently. David then obliged.
Fast forward to today. Go online right now, find a stick and try to shake it all the Bitcoin articles. I dare you. You will die of exhaustion before the day is through. It is the HYPE again. Bitcoin currently sits at $40,602.44 as of 12:45 Monday, January 11th, 2021. (Arrrrrgh! I could be worth a cool $441,330,870!!! If only I had known!)
The hype is real. The hype is everywhere. The hype will consume you if you let it.
What I hear now is that the price trajectory is moving ahead towards $100,000 per Bitcoin. Pundits argue whether it will, or won’t. Some don’t understand why it has value, or simply state it doesn’t at all. We the people decide if something has value or not, and frankly, enough people have decided this thing is worth their money, and have invested.
My personal thoughts are that we have created an asset class like all asset classes are created: out of thin air. Gold and Diamonds aren’t scarce, we just assume they are because they have value and that value isn’t overly volatile.
We put value in paper, which is pretty much meaningless at the end of the day, but it runs our entire planet.
So why can’t this thing have value? Should we apply a specific value to the hype?
Probably not. My opinion is that this rally is simply going to be one of the craziest pump and dump schemes ever, and perhaps then an opportunity to make up for missed time will present itself. Until then, however, I would suggest looking at what is in front of us, and the things we do understand.
The so-called “RRSP season” is upon us and I know that many of you have yet to make your RRSP deposits for 2020 or have room to top up. What is in front of us, is an opportunity to invest around the globe and make some money over the coming years.
For those of you lucky enough to have owned a hyped-up asset and have made some money, good on ya. But I bet you need a tax break, so do consider investing some of that sweet hype money in RRSPs with us, and fill up your TFSAs for the year.
For those of you who simply are looking beyond the hype, let us know what you are looking for and we will help facilitate this year’s RRSP purchases and beyond.
It has certainly been a heck of a ride here the last year, and it isn’t over yet. So we have to stay focussed and stay on track. Let us not be tempted by the hype.
Thank you for reading.
Darris Cameron
President & COO
Financial Value Inc.