In my Part 1 of my series on meme stocks, I explained how Elon Musk is using the new communication form of Internet memes to drive up the price of both Dogecoin and Bitcoin. The TL;DR version is:
· Memes are the way a new generation of investors communicate;
· Memes spread like viruses;
· Like viral DNA, memes pack a lot of meaning into a short encoded picture or video.
When memes are used to promote specific stock market investments (GameStop) or block market investments (Dogecoin) where there’s very little underlying value, we have a problem, because things can…
Elon Musk has big ambitions.
He’s not only trying to move the planet to electric cars, he’s trying to get humanity to Mars. This “cars and Mars” strategy, of course, requires a lot of money. Fortunately, Musk has perfected the art of meme marketing, first driving up the price of Tesla stock, then recently dogecoin and bitcoin.
Today I’ll take you on a weird trip that explains how meme marketing works, how Elon Musk uses it so effectively, and what this all means for bitcoin investors (short answer: it’s good news).
Let’s end short selling in the crypto markets.
Shorting the stock market, of course, is perfectly legal: it’s the cause of the recent drama around GameStop. Big hedge funds thought GameStop was failing, so they bet on its demise. (In a short sale, you bet that a stock price will fall — unlike value investing, where you want the stock price to rise.)
When the Reddit r/wallstreetbets community saw this greedy (and possibly illegal) behavior by the hedge funds, they grouped together to buy GME: in essence, driving GameStop’s stock price in the other direction, and forcing the hedge funds…
This isn’t investing. It’s gambling.
If you haven’t followed the drama around GameStop (GME) stock this week, I’ll explain briefly what happened, how it happened, and who’s going to emerge the winner from this (hint: it’s not GameStop). I’ll also explain why smart investors are staying out.
Investing 101: smart investors understand what they are buying. When you buy stock in a company, think of it like buying the company itself. Is it a good company that makes a good product? Is it run by good people? Does the company have good financials and a bright future?
In the case…
One of the principles of value investing — the style of investing favored by Warren Buffett and Charlie Munger — is to find “stocks on sale.” In other words, you find stocks that are trading at less than their true value. You look for deals.
In value investing, you use certain financial metrics to evaluate the health of a company, to determine whether its stock price might be a bargain. Most of those metrics just don’t apply to blockchains.
But some do.
In my How to Invest in DeFi series, I described how blockchains are much more transparent than public…
In a nutshell: The SEC dropped a 71-page lawsuit on Ripple Labs — the creators of the XRP cryptocurrency — alleging that XRP is not a decentralized blockchain investment, but an unregistered security. (Read the full document here.)
In plain English: The question is, should we consider XRP a stock? Is it part of the stock market (like Apple and Tesla), or the block market (like bitcoin and Ethereum)?
If it’s stock, it must be registered as a stock, which Ripple hasn’t done. …
Here’s my routine. Each morning I begin my day with meditation and exercise, then fix up a bowl of Bob’s Red Mill while I scan The New York Times (to take the pulse of the world) and Reddit (to take the pulse of the Internet).
The Reddit community usually upvotes cute cat photos and funny GIFs (here’s one that will make you laugh). This week, however, the following post made it to the homepage of Reddit, where it quickly went viral (warning: language).
I want to shout it from the rooftops: ALL BLOCKCHAINS HAVE NETWORK EFFECTS!
People are pouring money into the blockchain market again, but they’re forgetting this one simple rule: the more people that use a blockchain, the more useful that blockchain becomes.
Today I’ll show you how to avoid their mistake — and a simple principle for investing in this new Gold Rush.
Network effects mean that every time someone joins the network, the network becomes more valuable for everyone. (Think the telephone, the Internet, or Facebook.)
For this reason, networks that are healthy and growing are usually good investments.
“What’s the price of bitcoin going to be next year?”
I get this question All. The. Time.
I have a few stock answers. “I promised Satoshi I wouldn’t tell anyone.” Or, “My prediction is there will definitely be a price.”
I don’t know of anyone who predicted all that would happen in 2020 (with the possible exception of Bill Gates back in 2015). The future is hard to predict, which is why fortune tellers live in trailer parks. It’s also why good financial writers don’t give investing predictions, they talk about investing principles.
Principles are better than predictions, because principles…
As blockchain investors, how do we know if we’re getting a good deal?
I am convinced about the long-term value of Ethereum: it’s the “Infinite Machine” that these new blockchain apps are being built upon. Like Windows or Android, Ethereum is the operating system for the new world of money. That makes Ethereum very valuable indeed.
But how valuable?
CoinDesk just ran an interesting series of webinars on How to Value Ethereum. Because you don’t have time to sit through two hours of videos, I’ll summarize them for you below, along with the relevant takeaways at the bottom. …