Hey friends,
Polling the audience; are there any topics or money situations you would like to explore? Respond and I will catalogue them to discuss in upcoming journals.
Have a great weekend.
Eddie
Personal Finance
A response to my journal last week:
“Sorry but I can’t resist chiming in here. “ 200% levered long energy” is obviously lunacy. Very, very few practical investors would ever take a position like this, so you are using hyperbole to make a point. Fair enough. However, isn’t a 40% US tech-heavy investment also imprudent? No proper asset allocation exercise would ever recommend this as anything but a heavy “bet” on one sector and you certainly wouldn’t see it in any textbook example of proper diversification. Yet that is what investors get today with the S&P 500”
My response:
“Lol, I get it. The energy idea is to highlight how a lot of young men will put all of their net worth on a stupid idea. And with respect to the S&P 500, I can’t always thread the needle and explain exactly my portfolio position but for me it’s 25%. And when I reference S&P 500, I suggest that it’s a great place to start, I never suggest allocating 100% of one’s entire net worth into the S&P 500. When it might seem like I’m referencing that, could be when I say how to turn $87,000 into $11 million using the SP500. So yeah in that case start with 5000 on birthday 0 and $100 a month for 780 months and earn a 10% average return. I’m totally cool with putting it THAT all into the S&P 500. Over 65 years I’m pretty confident one gets to that 10% return. The reality is I hope that most people as they get to their 30s and 40s are able to earn way more in their careers and that $100/month isn’t a stretch and they are developing their portfolios to suit their needs or match their expertise etc. In my case 50% private real estate, or into a business like MJ is doing with Casa Maria, or whatever they so choose that works for them. I think I’ve mentioned you before, for people that buy my investing course I discuss diversification outside of SP500 and how to set up a proper portfolio, depending on age and circumstance and things like that. The newsletter subscribers are free readers and therefore my mind doesn’t spend hours and hours into each weeks production to spell it all out; it’s more a hey here’s how to think about the relationship with money and easy ways to get on track.”
I think I explained myself ok?
Bitcoin
Dad calls me last week and he goes, “I guess you know this already but bitcoin is down about 50% from it’s all time high?”
Yes pops, it is.
If you’ve followed my writings for some time, you know I mostly discuss broad stock markets and low cost ETFs as a great way to invest for your future.
But I have also been involved in Bitcoin for several years and have written a select few articles on this topic (see: Bitcon is Dead, Ultimate Bitcoin Argument, Why I Own Bitcoin, The Best Bitcoin Book, Bitcoin is Inevitable)
Because Bitcion is a relatively young asset class and still highly volatile and speculative in nature, I don’t go pandering and recommending it to people that haven’t asked. I will only explain my rationale if people ask me directly.
But since my dad is wondering, maybe some of you are as well.
I’m going to write in point form and not necessarily in any particular order.
Bitcoin is a digital currency that allows people to store and send value without limits across any border and any time without permission. It represents a stark difference from the current monetary system because it is decentralized in nature; meaning there is no central party that controls it, nor can print more of it and therfore devalue it on command by circulating more dollars into the economic system to artificially prop it up. Nor can it be confiscated. As long as you have ‘the keys’ (password), you control it, full stop.
It was invented in 2008 during the financial crisis by the still unkown creator, Satoshi Nakomoto. The first cash transaction for an individual bitcoin was $0.00076USD and 18 years later is trading at $60,000 USD.
Since 2008, Bitcoin has gone through several major booms and busts - ie crypto winters (see chart at bottom):
Jun 2011, peak of $30. November 2011, down 93% to $2.00.
Jun 2013, peak of $1,150. By January 2015, down 87% to $152.
Dec 2017, peak of $19,800. By December 2018, down 84% to $3,150.
Nov 2021, peak of $69,000. By November 2022, down 77% to $15,500.
Oct 2025, peak of $126,000. By April 2026, down 50% to $62,000.
If you are new to bitcoin, you are alarmed by your first crypto winter. Most likely you bought when everyone was talking about it at the peak, and you get subsequently run over by a truck. Most will become disheartened, and sell. This leads to the downturn accelerating.
If you have been in bitcoin for a few cycles, you understand this is par for the course. You get hardened to the crypto winter news flow that this time Bitcion is really dead.
Despite the drawdowns, the network and wallets continue to expand. Institutions are now paying attention. Even the United States government is moving in this direction. ETFs products that own and track bitcion are being created as the wall street crown is identifying the asset as something useful to portfolio allocations.
Some people like to call it digital gold. Backed by nothing else but scarcity and it’s representation of wealth and ability to trade it for goods and services should the traditional monetary system fail. Some might call it a cult, I can’t quite argue there. Like gold, it has no cash flows or calculable “intrinsic value” other than the monetary policy properties it contains that it is storable, transferable, and there is a limit to its monetary issuance (unlike gold, which continues to be “found in the ground”, Bitcoin supply is capped at 21 million. So the belief it continues to “go up in value” is predicated on a system of belief rather than corporate economics. Hard for many to understand this.
When I send money using bitcoin, or avoid waiting in line at a bank to send a wire and instead can send bitcion, I explicity understand the value. How can you argue that’s not valuable, even if incalculable in the traditional sense?
Quantum computing is a risk, some reports say as soon as 2030 Quantum arrives, some say it’s far later. While quantum is a risk, Bitcoin can update its properties to include quantum encryption. I am incapable of opinining on these technicals. What i can say is that Bitcoin has survived a great many attacks since its inception.
Bitcoin could be a $10,000,000/coin or $20,000,000/coin one day. It could go to zero.
My belief is that the monetary system that has gotten out of hand with money printing, control, obfuscation, and that Bitcoin is a natural progression to solve these issues in the digital world.
It takes a while to understand it but once you see it you can’t really un-see it.
I do maintain an upper band limit of 25% of my networth in this asset since there is always a possiblity it could go to zero.
Bitcoin is down 50% from its most recent all time high. It could continue to get hammered. So too it could reach historic highs in many years.
Last thought: bitcoin is not a substitute for owning assets like business (stocks) or quality real estate. It is a speculative monetary asset that is extremely volatile, with a very asymmetric potential. That means the upside can be grand, but the downside is 0. That’s why, if you choose to get involved, position sizing and patience matter more than your ideals.
Hope this was somewhat interesting for some readers today.
source: coin market cap. & me.
Real Estate
From time to time we come across value-add real estate opportunities where there may be room for a small number of new high net worth investors.
These are typically better suited to people who understand private real estate, have a long term mindset, and are comfortable with illiquidity over the 5 years we typically hold these projects. Minimum participation would generally be in the $250,000 to $1,000,000 range.
If this is something you would ever like to learn more about, feel free to reach out directly.
1 Quote
“It’s not about how much you earn, it’s about how much you invest”
—overhearing an old man at the golf club
A Question
Do you have some favourite quotes? Share them!
Ways I Can Help You Invest Better
Learn to do it yourself Simply Investing, my course. Everything I'd tell a good friend, in one place: what to actually buy, which accounts to open, and how to put it all on autopilot so your money grows without you babysitting it. Built for beginners, and the ~100 people who've gone through it have loved it. It's $200, a rounding error against what getting this right is worth over a lifetime.
For your kids SmartMoneyKids an AI-powered financial literacy app for Canadian kids ages 6 to 18. TFSA, FHSA, saving, investing, business, in language they understand.
For your specific situation wrestling with something particular? Let's talk it through → Book a 1-on-1 call
Just getting started? The simplest first move is opening a brokerage account. Wealthsimple is what I use, and you'll get $50 with code PRGS3Q.
