Last week, most of your fellow Daily Cut readers were asking about the electric vehicle revolution – what it means… how it’ll play out… and how to profit from it…
This week, everyone is asking about cryptos. Well, almost everyone…
Before we get to your crypto questions, one reader asks for some simple insight about pensions…
And Nick Giambruno (The Casey Report and Crisis Investing) steps up to the plate with an answer… as well as some sound advice.
Reader question: Could you please explain how the coming financial collapse will affect pensions? Specifically, union pension plans, without making it too complicated.
– Matthew A. (Legacy Research member)
Nick’s answer: Unfunded pension liabilities in the U.S. are surging. They’ve surpassed $5 trillion. And that’s during an epic stock and bond market bubble.
With interest rates near all-time lows, bond prices are at all-time highs. That benefits pension plans by pumping up asset values, making the funds look more solvent.
On the other hand, matching liabilities with fixed-income investments has become impossible, thanks to the Fed and the historic bubble it’s created in the bond market.
In the ’50s and ’60s, pension funds were, on average, over 90% invested in bonds and cash.
Most importantly, they were structured so that assets matched future liabilities. It was conservative, and it made sense.
That’s not how pensions look today.
Today’s artificially low interest rates make it very difficult to match future liabilities with income from bonds at a reasonable cost. So, pensions have turned to riskier assets like stocks, real estate, and alternative investments.
That has made them even more flimsy. The next major correction in the stock market will collapse many pension plans.
That’s why I’ve spent the last few years urging my readers to prepare for the looming pension crisis. And the best and safest way to do that is by investing in gold.
When the feds try to “solve” the pension crisis by hiking taxes and/or printing money, people will rush into gold.
Gold has been a reliable safe-haven asset for thousands of years. Unlike paper money, it has intrinsic value. That value does not depend on a politician’s promise.
I think gold will reach not just multiyear highs, but all-time highs.
That’s why you should position yourself now.
I think everyone should own some physical gold. Gold is the ultimate form of wealth insurance. It’s preserved wealth through every kind of crisis imaginable. It will preserve wealth during the next crisis, too.
And now… for your crypto questions, we turn to Marco Wutzer (Disruptive Profits).
Marco’s been involved with digital currencies since before bitcoin was even created. And first up, he takes on an important question about passwords…
Reader question: Being active in the crypto biz requires a lot of credentials for exchanges, wallets, etc.
Do you recommend using password managers like 1Password to simplify this process and to increase security?
– John D. (Legacy Research member)
Marco’s answer: We all have a lot of passwords to remember. That’s why a lot of people use the same basic password for everything. This is probably the biggest security mistake you can make. Avoid reusing passwords at all costs.
Since it is almost impossible to remember dozens of different, strong passwords, a password manager can help. I recommend using one of the following password managers:
LastPass – The free version is fine. If you want to access its premium features, you can upgrade for as little as $3 per month.
KeePass – KeePass is free. Simply download the latest version (the first one on top of the Downloads page).
1Password – You can try 1Password free for 30 days. It will cost you $3 per month if you want to continue to use it after your free trial.
That said, you will need to create a master password to log into your password manager.
Your master password needs to be very strong. It should consist of at least 15 characters and use lowercase as well as uppercase letters, numbers, and at least one special character (such as # ! ?). Here is an example of a strong master password: #GjjLVMx3348sE!
Write your master password down on paper and double-check that everything is spelled correctly. Then make a second paper copy in case something happens to the first one. (You never know. The ink might fade, or you might misplace one of the copies.)
Store both copies in different physical locations. This could be a personal safe, a safety deposit box, or between the pages of a certain book in your bookshelf.
Hide those papers wherever you think they are safe from theft, loss, and potential damage from flooding or fire.
And never save a digital copy of your master password.
Our next crypto question is about competition in the crypto markets. And Marco Wutzer’s on hand, once again, with the answer…
Reader question: In light of the fact JPMorgan is rolling out JPM Coin, Oracle has Oracle Blockchain Applications Cloud, and there are other unique coins rolling out as well to their business, what prevents everybody in the world from developing their own coins, which, in turn, will make our coins less desirable for any sort of use?
– Patrick S. (Legacy Research member)
Marco’s answer: Nothing prevents it. You, too, can clone bitcoin or any other open-source cryptocurrency and call it PatrickCoin.
What’s important to understand is what gives a true cryptocurrency its value:
Decentralization and immutability – JPM Coin, OracleCoin, or whichever other CorporateCoin has just one entity behind it. So, in essence, it is no different from airline miles or fiat currencies such as the dollar. It can be inflated and manipulated at will.
But a decentralized network, like bitcoin, has many participants. No single entity is in control. This ensures that no one can censor or manipulate the network.
Network effects – The second major aspect that gives a cryptocurrency its value is the size of its community. The more people use a cryptocurrency the more valuable it becomes.
You can clone the bitcoin code and call it PatrickCoin. But with a total user base of one person, would anyone accept it as a form of payment?
And even if all of JPMorgan’s 35,000 customers adopt JPMCoin, they’re still irrelevant compared to the more than 20 million bitcoin users around the world.
Next up… a reader wants some specifics about blockchains after reading the June 29, 2018 issue of Daily Cut editor Chris Lowe’s paid advisory – Legacy Inner Circle.
So we turned to our Silicon Valley insider, Jeff Brown (The Near Future Report and Exponential Tech Investor), for the answers…
Reader question: In the “How to Fight Back Against the Feds’ Online Snooping” issue of Inner Circle, you state: “That’s another big advantage of the decentralization and encryption of your personal data using blockchains – you retain control of it. Your data and your files are split into pieces, encrypted, and distributed across the network.”
It would be great to know if anyone is working on a system that will enable users to organize their personal data, and even sell it if they choose.
– Christopher G. (Legacy Research member)
Jeff’s answer: Over the long haul – say, a decade from now – we’re going to see a dramatic reversal in the data economy.
How it works now is that Facebook and Google offer their services to you. In return for these services, you hand over one of your most valuable assets – your personal data; basically the “content” you produce every day. And Facebook and Google collect all the profit.
But the tables are turning. And blockchain technology will be a part of the solution…
With blockchain-based internet apps, you’ll no longer hand over your data unwittingly to Big Tech. Instead, you’ll be able to choose whether or not you hand over your data to these platforms.
And you’ll get paid for doing so.
It may sound far-fetched, but there are already apps that work like this.
One interesting project is headed up by Sir Tim Berners-Lee. He was the guy who invented the World Wide Web and implemented the first “hyperlinks” – what we now just call “links.”
Berners-Lee and his team have been developing a technology called Solid. When you sign up for the service, you’re given a virtual “pod,” which houses all your data. This pod allows you to keep all your data in one place and decouple it from whatever applications you’re using online.
It means you won’t have to enter any information when you use new apps for the first time. No more typing your name, email, date of birth… none of that. You’ll simply share whatever data from your pod you want to make available to the app.
It also means that you’ll get paid for the content you produce. Information you share online about your lifestyle – things you like to do, products you’re interested in – is information advertisers are willing to pay for.
In September, Berners-Lee and his team announced a new startup called Inrupt. It designs and develops online apps that use this Solid technology.
The goal is to tear down the walls that these gatekeepers, such as Google and Facebook, have created on the internet and return control to the 4 billion people who use it.
It’s not happening next year or even the year after. But it’s absolutely possible within five years. Just think how quickly the use of Facebook spread. A well-designed new service that pays its participants for contributing would grow just as quickly, if not more so…
And here’s another one for tech expert Jeff Brown…
Reader question: Thank you for your wonderful, insightful outlook. Can you please give your opinion on Apple stock, even technically? Thank you so much.
– Adi B. (Legacy Research member)
Jeff’s answer: Apple is going to struggle this year.
It has always been a late adopter. It waits until it can pretty much ensure a consistent experience across all phones before launching a feature.
Apple is not going to launch a 5G phone this year. Yet there will be more than 100 markets around the U.S. (and even more around the world) where there will be 5G networks.
Samsung, LG, and the Chinese smartphone vendors are going to all be launching 5G-enabled phones in 2019, and my prediction is that we’ll see Apple’s smartphone market share decrease.
What 5G offers is far too compelling. Many consumers simply won’t be willing to wait until fall of 2020 to get their 5G Apple phone.
Apple did the same thing with 4G and followed the market by an entire year… And it was two years late on the adoption of NFC (near field communication) technology as well.
In short, while this will hurt Apple’s market share in the short term, it will recover any lost market share when it releases its 5G version in 2020.
Before we go, one final comment from a satisfied reader, following Tuesday’s Daily Cut – “Two Reasons to Buy Bitcoin Now”…
Reader comment: There was a link on one of my recent emails that was to an updated introductory guide to cryptos… Where to buy them, where to store them, etc. It was great.
– Chris E. (Legacy Research member)
Thanks, Chris. We passed your praise along to our Palm Beach Research colleagues who put it together.
And if any of your fellow readers missed the crypto quick-start guide when we first mentioned it… here it is again.
As always, don’t forget world-renowned crypto investing expert Teeka Tiwari’s (Palm Beach Letter, Palm Beach Confidential, Alpha Edge, Crypto Income Quarterly) advice…
Cryptos are a classic asymmetrical bet. That means you only need a tiny grubstake for the potential to make life-changing gains. So don’t bet the farm.
Just put $200-$400 in each crypto position or $500–$1,000 if you’re a larger investor.
That’s all for today. Have a good weekend.
P.S. There’s never a shortage of things to read from Legacy Research, but the one that always tops my list is Jeff Clark’s Market Minute. In the two years that we’ve been publishing Jeff’s free e-letter, he’s taught me more about how and why the market moves than any other expert on the planet.
Now… If you read Jeff, too, you already know why. But if you’re not a Jeff Clark reader, you don’t have to spend the next few years following his Market Minute e-letter like I did… Instead, you can catch up on everything that makes Jeff such an expert in just about a half hour.
You see, Jeff recently took the stage to show an audience how he skipped college… became a professional gambler in Nevada… and finally discovered a “unique form of trading” that helped him bank so many millions he retired at 42. Watch Jeff explain it all right here.