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InvestAnswers | OCTA Drowning in Debt & Denominators | Sept 21 2023
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The M2 Denominator: Understanding Investments
Introduction:
Dividing everything by the M2 denominator is important in understanding investments. Being in hard assets is crucial due to the state of U.S national debt.
US National Debt Spiral
The US government has added one trillion dollars of debt since July. Gas prices have significantly increased, hitting people’s pockets.
Hydrogen Cars vs. Electric Vehicles
Hydrogen cars are not a viable alternative to electric vehicles due to their high cost.
Gold and Bitcoin Trends
Gold prices have been consistently down in the last 44 years with occasional minor upticks. Shorting gold from 1980 to 2002 would have been profitable. Those who held gold from 2001 to 2011 could have made significant gains. However, timing is difficult and most people hold gold for the long term. Bitcoin is up 59.67% year to date.
Tech Stocks and Higher Returns
Tech stocks have performed much better in the past 10 to 12 years. The overall trend for gold is down, with occasional blips of profitability. To be profitable, investors need to aim for more than 14% returns. Disruptive stocks are seen as one way to achieve higher returns.
Recent Strikes and Predictions
Workday has lost work hours due to strikes. Strikes are hitting car makers and other industries. 850 people have been laid off in the past two days. Predicted strikes and riots in 2023.
Housing Affordability Crisis and Bank of England
There is a housing affordability crisis in the US. The UK public is losing faith in the Bank of England.
Crypto Market Updates
The crypto market cap has increased by 2.34% in the last 24 hours, reaching $1.117 trillion. There are currently 4.7 million daily active users. The space is expected to grow exponentially in the future. 32.2 million transactions occurred in the last 24 hours, and the greed index is at 46 and climbing.
Bitcoin’s Performance and Altcoins
Bitcoin and Ethereum saw positive growth in the past week. US liquidity conditions are improving, suggesting a potential rise in Bitcoin price. Bitcoin outperformed most cryptocurrencies over the last 90 days. Many altcoins have performed poorly against Bitcoin, but some are beating it, especially the top four. Bitcoin dominance remains steady, but altcoins may start running again.
Bitcoin Market Trends
Bitcoin outflows from digital funds totaled 4.8 million last week, and there were minor outflows from altcoins. Grayscale discounts for Ethereum and GBTC have significantly reduced. Ethereum’s growth potential and diversification are attracting investors. Further analysis and accounting details can be found in the video with Michael Sayler. Bitcoin is expected to see significant movement towards the end of 2024, with increased mainstream media coverage and institutional interest. Bitcoin’s positive trajectory is supported by stacked tailwinds, including the Bitcoin halving and institutions moving towards treasuries.
Stock Market and Chinese Market
The stock market remained relatively flat in September, with no major fluctuations observed. The Chinese stock market did not perform as expected, with the CCP implementing changes and threatening short sellers, leading to a drop in the CSI 300 index.
Cisco’s Survival
Cisco was trading in the 90s and is still going strong. The ATR model shows Cisco’s assets and cycle. Cisco’s survival is surprising as it was thought to have died in 2001.
Conclusion:
Understanding the M2 denominator is crucial in investing. Hard assets, disruptive stocks, and cryptocurrencies like Bitcoin present opportunities for higher returns. It is important to stay informed about market trends, such as the US national debt, tech stocks, strikes, housing affordability, and the crypto market. Additionally, Cisco’s survival serves as a reminder of the unpredictable nature of the market. As an investor, it is essential to adapt to changing conditions and make informed decisions.
