Keep Your Perspective (Crypto)

  • WaPo concern trolls the folks feeling crypto pain
  • NBC: If you like crypto, you might be a white supremacist
  • What the 2018 crypto meltdown tells us about what’s next
  • More buys after the latest stock correction (3 free tickers)
  • Semiconductor peril: Five days to shutdown?
  • No one is anti-GMO and pro-vax? Paging Neil Young
  • Waiting on the Fed… Microsoft’s earnings beat… a political cartoonist who might actually be funny… and more!

Sheesh, here we go with the concern trolling for everyday folks who took the crypto plunge within the last couple years…

The Washington Post

If you’re unfamiliar with the term, “concern trolling involves someone opposing an idea or viewpoint, yet acting like they’re an advocate for the cause,” says dictionary.com. “A concern troll offers undermining criticisms under the guise of concern.”

So in this context, The Washington Post professes concern for the welfare of people who’ve taken a bath in crypto since November… but the unspoken subtext is, “Look at these rubes who got taken in. Betcha most of them are anti-vaxxers and insurrectionists who got it coming!”

You think we’re exaggerating? “Bitcoin Surge Was a Windfall For White Supremacists, Research Finds,” said an NBC News headline in December.

The article cited a “study” from the Southern Poverty Law Center that was a tour de force in drive-by guilt by association.

“There’s a pretty strong libertarian streak that runs through the far right,” said the SPLC’s Megan Squire. “Crypto looked to them like an interesting toy and a way of being in charge of their money and not having to use central banking.

“Then when you layer the antisemitism, on top of that, as in ‘the banks are controlled by the Jews,’ it makes a lot of sense why these early adopters, these libertarian-styled guys, would get involved in Bitcoin so early.”

Anyway, a lot of well-intentioned crypto newbies are feeling some pain right now. But they’re simply learning what experienced crypto hands learned themselves the hard way.

“Bitcoin is currently down 50% from its all-time high” acknowledges our resident crypto geek Chris Campbell.

But by the same token, Chris reminds us Bitcoin experienced a 56% drop in August 2012… a staggering 87% drop in November 2013… and more recently, a one-year slide of 84% between December 2017 and December 2018.

Let’s turn back to that vicious 2018 drawdown… and compare with the present moment.

What’s not changed: Bitcoin and Ethereum are the go-to cryptos… while 90% of “altcoins” will get flushed. “In 2021,” says Chris, “we saw incredible speculation into NFTs and dog coins. This was an obvious signal of market excess. Ninety percent-plus of the crypto market — dog coins especially — will end up pretty much worthless.”

What has changed is the potential for mass adoption: “In 2018, nobody was using blockchain networks for anything,” Chris explains. “Today, they’re slowly beginning to find practical use for DeFi, supply chains, 3D modeling, distributed networking and much more. Unlike in 2018, the tech is there. And they have the potential to solve BIG problems.

“Even if Bitcoin went down to $20,000… mass-adoption of any crypto could cause it to skyrocket.”

What’s also changed is the potential for Bitcoin and Ethereum to become safe-haven assets. “Unlike in 2018,” says Chris, “Bitcoin and Ethereum could begin transitioning from risk-on to risk-off assets.”

That is, when people become scared about the stock market, they’ll run to crypto instead of away from it. Even the mainstream is waking up to that possibility: Bloomberg senior strategist Mike McGlone sees Bitcoin “becoming global collateral” this year — propelling it to at least $100,000.

Our point today: Even if Bitcoin fails to achieve that safe-haven status this time around, a handful of select cryptos are set to soar. “For some of them,” Chris explains,” mass adoption is closer than anyone understands.”

Identifying that handful is what our high-end crypto research is all about. And for the next five days, you can secure that research at a handsome markdown. Click here to claim a $512 credit we’ve applied toward your account.

Markets are in a state of suspended animation as we write — awaiting the latest pronouncement from the Federal Reserve.

Yesterday, the major stock indexes staged another comeback from a sharp sell-off. But unlike the day before, they still ended the day in the red.

Ahead of the Fed’s policy statement this afternoon, the averages are in the green — propelled in part by Microsoft’s quarterly numbers. MSFT delivered “beats” on both earnings and revenue; it’s up nearly 4% on the day.

Microsoft has helped propel the Dow to near 34,600… the S&P 500 past 4,400… and the Nasdaq above 13,800.

Crude is shooting higher after the Energy Department’s weekly inventory numbers. A barrel of West Texas intermediate is up 2.6% to $87.86. Once again, we’re at “highest since 2014” levels.

Alas, gold’s getting slammed — down about $15 from this time yesterday at $1,832. Silver is oscillating around the $23.80 level.

Major cryptos continue their recovery, Bitcoin above $38,000 and Ethereum over $2,600.

By the time you read this, the Fed will have done its thing. We’ll follow up on the market fallout tomorrow…

The stock sell-off in recent days has delivered even more bargains in the eyes of our Zach Scheidt.

He remembers times like these from his hedge fund days: “At some point, we typically had a day or two where everything was under pressure as some investors bailed out and swore off investing for good.

“This was the moment of opportunity where our hedge fund created the most wealth for our clients. During those short days when the quality stocks got hit as well, we set up new trades to profit from the best companies that didn’t deserve to be sold.

“Then as investors finally came back to their senses and bought back the quality stocks, our investments grew and our clients made money.”

With that in mind — and on top of the three names Zach mentioned here yesterday — here are three ETFs worth your consideration right now…

  • SPDR S&P Bank ETF (KBE): If interest rates are headed higher, banks can only benefit. “Higher interest rates allow banks to charge more for the loans they offer customers,” says Zach. “And that means more profits for the year ahead… This is one of the first areas I expect to rebound”
  • SPDR S&P Oil & Gas Exploration ETF (XOP): “Many investors left this area for dead and decided to invest in renewable energy plays instead,” Zach reminds us. “But while renewable energy is certainly the growth area for the future, we’re still going to have to get there first. And that means demand for oil and gasoline will continue for years and years to come”
  • Vanguard Value ETF (VTV): As we said yesterday, Zach was one of the first to spot the rotation from growth stocks into value stocks last year. “Shares of VTV hit a new all-time high earlier this month while the rest of the market was pulling back,” he says.

“Despite this relative strength, VTV finally started pulling back last week as selling picked up in earnest. But the fund only pulled back to the spot where it broke out in mid-December.” Again, now’s the time to play the rebound.

Zach’s bottom line: “Don’t let your emotions cause you to miss an opportunity. Instead, look for the pockets of strength in today’s market and invest wisely to protect and grow your wealth.”

How severe is the semiconductor shortage? The Commerce Department says for many manufacturers, what was typically a 40-day supply in 2019 is now… a five-day supply.

“A disruption overseas, which might shut down a semiconductor plant for two–three weeks, has the potential to disable a manufacturing facility and furlough workers in the United States if that facility only has three–five days of inventory,” says a new report.

The scarcity is most acute in broadband gear, medical devices and — no surprise here — auto manufacturing.

“While chip manufacturing companies are working on building new manufacturing plants, lead times on the development of new plants tend to be about five years,” says our tech specialist Ray Blanco.

“Considering that the average automotive manufacturing plant can be up and running in about six months, there’s quite a lot more work that goes into building a chip manufacturing plant,” Ray points out.

Especially the one Intel announced last week in the Columbus, Ohio, area. Yes, it might be the biggest in the world — when it’s done. But as I mentioned to readers of The Profit Wire yesterday, the site is currently empty; even on an accelerated timetable, first production won’t be until 2025.

But wait, there’s more: “Given the complexity and fragility of semiconductor chips,” Ray says, “it takes about five months for a plant to process and fulfill an order. Making it difficult for manufacturers using these chips to plan ahead, especially with rapidly changing market conditions.

“Also, most chip manufacturing plants run for a full 24 hours a day, 365 days a year. So simply adding overtime shifts isn’t a possibility to force our way out of the shortage.”

The upside for investors is that amid the shortages, select chipmakers are able to command premium prices. Ray has a favorite in his Technology Profits Confidential portfolio, in fact.

More back-and-forth about GMOs and COVID vaccines in our mailbag: “Are we now rolling out the fourth shot in many areas around the world because the first three were ‘spectacular successes’?

“And GMOs (mostly made by Monsanto) are AKA Roundup Ready, so sales of Roundup soared to 1.8 MILLION TONS in the USA… ANUALLY!

“That is 128,571 dump truck loads! Ninety percent of food products now contain Roundup, says our own USA government. Is that a spectacular success also?”

The 5: Hey, guess what — we have a celebrity entrant in the “anti-GMO, pro-vax” sweepstakes that started this whole thing.

As perhaps you heard, Neil Young is demanding that Spotify pull his songs from its streaming service as long as it continues to foster “false information about vaccines” via the enormously popular Joe Rogan podcast.

“They can have Rogan or Young,” Young wrote to his manager and label. “Not both.” (Twitter wags rightly wonder whether Neil Young fans even know what Spotify is. Burn.)

Sure enough… Young released a concept album in 2015 called The Monsanto Years. Its best-known single, “A Rock Star Bucks a Coffee Shop,” calls out Starbucks for its use of GMOs.

Leaving GMOs aside, the irony is still thick — as Luke Gromen, one of the more interesting finance people on Twitter, points out…

Luke Tweet

Which reminds us of something else we saw going around social media a while back…

Modern Left vs Old Left

Huh… It appears the cartoonist is one Henry Payne from TheDetroit News. Never heard of him until we looked into the cartoon’s provenance today.

A few years ago, your editor started looking at editorial cartoons again after taking up small-town life and subscribing to a physical newspaper for the first time in a decade. What’s striking these days about editorial cartoons is how unfunny they are — wherever the cartoonist falls on the political spectrum. Michael Ramirez on the right and Mike Luckovich on the left? Equally tedious.

Skimming his body of work, Henry Payne might be a refreshing exception…

Best regards,

David Gonigam

Dave Gonigam
The 5 Min. Forecast

Dave Gonigam

Dave Gonigam

Dave Gonigam has been managing editor of The 5 Min. Forecast since September 2010. Before joining the research and writing team at Agora Financial in 2007, he worked for 20 years as an Emmy award-winning television news producer.

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