What the heck is going on with bitcoin?
That’s the question concerned Cut readers started asking us even before Wednesday’s rout of the crypto market.
We won’t run all the emails we received, but here’s a good example that came in after Monday’s issue of The Daily Cut… followed by a response from our own world-renowned crypto expert – Teeka Tiwari, editor of Palm Beach Confidential.
Reader question: Hi Chris! I just finished reading “How We Predicted Bitcoin… 12 Years Before It Launched,” and I was surprised to see that Jeff Clark said: “I could be wrong, of course. But I don’t see bitcoin trading back up to $20,000 for a very, very long time.”
This statement runs in complete opposition to Teeka’s call of $40,000 by the end of the year (as stated in his webinar with Glenn Beck a few months back).
Has Teeka gone back on his prediction?
– Gareth V. (Legacy Research member)
Teeka’s answer: When I went on air with Glenn Beck and said, “Look, bitcoin’s going to $40,000,” it was based on my research of multiple ETFs and companies like ICE (which is the owner of the New York Stock Exchange), Fidelity, TD Ameritrade, and other institutions and endowments coming into this space.
Of course, we’re not at the end of the year, but it would take something quite miraculous for bitcoin to go to $40,000 by then. It’s not completely out of the realm of possibility, but certainly doubtful now that we’re in November.
But with the information that I had in front of me, I wouldn’t have changed that call. That call still stands in the sense that everything you would want to have happen on a fundamental basis to lead to rapid price appreciation is in place.
I would’ve loved to have seen it happen before year end. I will own the fact that I got that wrong. I misjudged the depth of how bad investor sentiment was. My estimation was that by November or December, investor sentiment would’ve much improved and we would’ve seen a much, much larger increase in the price of bitcoin, relative to the fundamental news. That hasn’t happened.
I would be more concerned if we were rallying on no news… or, if none of these other bullish events, such as the institutional on-roads and onramps that’re being built right now, had been announced.
Knowing that we’re going to have approximately 465 million to 500 million new buyers being able to get into cryptos through traditional financial platforms is exciting.
I’m always going to give you my best thinking. Not tell you what I think you want to hear, or what I think will make me look good later. I want to give you the benefit of my best thinking all the time, good and bad. Because that’s why we’re in this relationship. That’s why you’re with me. And that’s why we’re working together.
Before we finish with cryptos, here’s a question we haven’t heard before… along with an answer from Doug Casey’s go-to crypto expert – Marco Wutzer, senior analyst of Disruptive Profits.
Reader question: Just cashing out of cryptos in Canada is becoming exceedingly difficult. Visa and Mastercard Canada will not support buying. Canadian banks will not allow accounts to be hooked up with crypto brokers. Nor is PayPal an option. Brokers are unable to cash out in Canadian dollars.
Is this happening in other countries? Is this the beginning of the end for cryptocurrencies?
– Patrick L. (Legacy Research member)
Marco’s answer: While individual financial institutions still might take an anti-crypto approach, overall, banks and brokerages are slowly adapting to the new reality: Crypto is here to stay and becoming increasingly more important.
If your bank is causing problems, I encourage you to take on a more international outlook. You should have a banking relationship outside of the jurisdiction where you live anyways in order to protect yourself from your own government.
Turning to stocks, we’ve had more than a few questions following a bumpy couple of weeks on Wall Street. And our most bullish bull – Palm Beach Trader editor Jason Bodner – couldn’t wait to respond…
Jason’s comment: “Jason, are you still bullish?”
I can’t tell you how many times I’ve heard that recently. Especially on days where the market is all red.
This volatility has been gut-wrenching for well over a month now and all along I have been touting why I am bullish on U.S. stocks. How can that be when we seem to keep going lower?
To quote Led Zeppelin: “The Song Remains the Same.”
Here are just a few reasons why I’m bullish:
U.S. companies continue to beat sales and earnings expectations for a record third quarter in a row. With a majority of the S&P 500 companies having reported Q3 earnings, 78% reported a positive earnings surprise and 61% reported a positive sales surprise.
For Q3 2018, the blended earnings growth rate for the S&P 500 is 25.2%, which, if it stays like that, will be highest earnings growth since Q3 2010.
The blended (year-over-year) revenue growth rate for Q3 2018 is 9.4% – the second-highest since 2011.
All 11 sectors have higher growth rates today (compared to September 30) due to positive earnings surprises and upward revisions to earnings estimates.
The consumer discretionary sector just reported the largest upside difference between actual earnings and estimated earnings (+15.6%). This means consumers are out there spending!
Corporate taxes are at record lows, so companies are keeping more money.
Cash repatriation continues from overseas.
Corporate buybacks continue at a mind-numbing pace on their way to $1 trillion this year.
So I say, “Why is everyone so glum?”
It’s time to get in a good mood and celebrate the holidays. There are so many reasons to be cheerful about U.S. stocks… It’s almost unmatched at any point in history. And I believe a trade deal with China will come soon and remove the last barriers of uncertainty to lift the market higher.
But if all that’s not enough, I still always fall back on my “ace in the hole.” Just do yourself a favor and look at a 100-year chart of U.S. stocks. It should tell you all you need to know… The game is rigged to the upside.
So cheer up and eat some turkey!
If you’ve been reading The Daily Cut mailbag throughout the week, you’ve seen that your fellow readers are sharply divided when it comes to marijuana legalization and investing in cannabis companies.
For those who haven’t been following along, the two emails below are good examples of what’s being said on both sides of the argument…
Reader comment: Anyone who promotes marijuana does NOT love America.
You are either not as smart as you believe, OR you are extremely devious/evil.
Reader comment: I trust the newsletters I buy to provide me with the appropriate information relative to stock sectors, trends, and the like. Pot stocks, though controversial, are a part of the trending information flow.
You cannot legislate morality. If you want to invest in only “green” or “politically correct” stocks, you’re probably better off leaving the market.
I’m here to make money. The available information relative to that is overwhelming and best not complicated by political or moral viewpoints.
– James R. (Legacy Research member)
Finally, Legacy Research member Luigi N. writes…
Just a quick message for Bill Bonner if you can pass it along:
It was a pleasure meeting you at the Legacy Investment Summit in Bermuda last month. Really appreciate all the thought-provoking writings and the great investment newsletters. Thank you and hope to see you next year at the annual Legacy conference.
Thanks for the note, Luigi. We passed it along to your favorite satirist… rancher… vintner… dot-connecter…
And we’re looking forward to seeing you at next year’s Summit. We should have a date and location to announce before the end of January. So stay tuned.