Numba go up. Solana has more than doubled in price since I started this paper trading experiment on December 11, 2023. I bought into it at $69.65, and it was $147.80 today when I took some profits.
Just a reminder, this is a paper trading exercise, which began with this blog post, on December 11, 2023. I opened a Coinbase account, but was unable to put any money into it, because of my cheap ass phone. That really pissed me off, since I knew the next big Bitcoin/crypto bull market was already underway. I decided to to pretend I had $10,000 to invest in anything, and do a paper trading experiment instead. This whole thing started with this November 14th, 2023 post, about the coming Bitcoin bull market potential, due to the BTF spot ETF's and the upcoming Bitcoin halving. So I don't actually have $10,000 invested in crypto, and this experiment should not be taken as investing advice. See the Disclaimer above.
Anyhow, I clicked on the news today and saw that Bitcoin was up over $72,000 per coin, a new all time high. I knew Solana, the early star of my pretend portfolio of cryptos, was about double from where I bought in, on December 11th, 2023. Sure enough, about 8:25 am PDT this morning, Solana was $147.80 per coin. I initially bought into SOL at $69.65. Here's where my portfolio stood after the last trades, in this February 21st, 2024 post. So here's today's actions:
I sold 7 SOL (Solana) @ $147.80. That came to $1,034.60, minus the 5% gas fee I'm figuring per transaction, which was $51.73. That left me with $982.87.
I took that $982.87 and bought 405.97 APE (Apecoin) at $2.30 per APE, after a $49.14 fee, that cost me $933,73.
Now, my crypto (paper trading) portfolio consists of:
.011995 BTC (Bitcoin)
.2259 Eth (Ethereum)
7.647 SOL (Solana)
56.931 AVAX (Avalanche)
74.962 DOT (Polkadot)
595.298 Matic (Polygon)
2,685.31 APE (Apecoin)
490.196 SAND(Sandbox)
510.204 MANA (Decentraland)
The total value of this portfolio, that started with $10,000 on December 11, 2023, now ads up to :$14,017.97
So it's up over 40%, after gas fees, in three months. I'll take it.
At this point, my 7.647 Solana are completely paid for by profits from selling Solana. So I'm "playing with house money," as a gambler would say. I own those free and clear in this portfolio. I put the profits into more Apecoin, because I'm a big fan of Yuga Labs, and think APE is a solid bet, that could go 3X to 14 X from here, based on its past prices. It could go up even more. Time will tell.
Again, this is a paper trading portfolio, these are pretend investments. This is an experiment, since I couldn't put money into an actual account to buy crypto when I really wanted to.
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Blogger's note- 3/24/2024- When I wrote this post, I didn't link all the previous posts about my $10,000 investment paper trading experiment, or the original post from last November, which led up to this post. So now, on March 24th, I'm adding those links, but not changing anything else in this post, not one character. So here are the links of the previous posts in this series.
March 11, 2024- Bitcoin was about $ $69,000, after an intra day peak of over $72,000
March 24, 2024- Bitcoin is $69,633 today, as I was adding this note to this post. Bitcoin, and other cryptos, have largely backed off the last few days. It's the end of March, 2024, and the Bitcoin halving is supposed to happen sometime in April.
Much like before the Bitcoin ETFs got approved in January, the price rose up before the event, and then backed off shortly before the ETF's got approved, and then started moving up again a short time afterwards. I expected Bitcoin to take a break for a while before the halving, since there's been such a good rally. Yes, the peak around $72,000 could be the top of this Bitcoin bear market. But I, personally, don't think so. The trough to peak spread on the last two Bitcoin bull markets were 18X in 2017, and 17X in 2021. If that happens again, Bitcoin would hit $282,000 to $298,000. I think it's unlikely Bitcoin will grow that much this cycle, but those numbers make a rise to $120,000 to $150,000 at the peak, seem quite plausible. I think Bitcoin, and crypto in general, is just taking a break, which could very well be manipulation by Wall Street, pushing down prices so the companies that opened up the Bitcoin ETF's can buy more BTC before the halving, at a cheaper price. That might be what's going on right now. My educated guess is that Bitcoin will chill out for a couple of weeks, maybe a month or so, then, after the halving, continue the bouncy upward rise that has been happening the last 2-3 months. Again, this is speculation on my part, this is not meant at financial advice, it's simply one person's opinion. Read the Disclaimer linked above, and always do your own research and due diligence before making any investment decisions.
I'm writing this post a little after 8:00 am, Pacific time, on December 5th, 2023. This clip above is talking about Bitcoin hitting $42,000 per Bitcoin yesterday, and hovering around $41,000 and change. Bitcoin bottomed out, in the last trough, in December of 2022 at around $16,600 per Bitcoin. As I write this, Bitcoin is $42,304. So Bitcoin is up about 155% in less than a year. Why? It continues to attract investors as a store of wealth, a "digital gold," as some people call it. But mostly, financial giant BlackRock will probably get the approval for a Bitcoin spot price ETF (exchange traded fund), possible as early as January 8th, 2024. If not in January, that ill most likely happen in mid March, 2024. That will allow major institutional investors (hedge funds, pension funds, etc.) to invest in the ETF, based on the price of Bitcoin, as easy as investing in any other stock or ETF. That's BIG. BlackRock has also applied for an Ethereum spot price ETF, as well, so the same could happen for Eth, most likely at a later date.
This post is written for entertainment and education purposes only, and should not be taken as investment advice. Do all needed due diligence, and consult needed professionals, before making any investment decisions. Please read the disclaimer linked below.
But Bitcoin is not even the big news in the market today. The real news is another huge decline in bond rates. The benchmark U.S. 10 year treasury bond, was paying 4.98% in interest on October 18th, 2023. To put that in perspective, on January 5th 2020, pre-pandemic, it paid 1.79% in annual interest. In August of 2020, that rate of return dropped to about .53%, one half of one percent interest paid on your money each year. That's not much.
The bond market is HUGE, much bigger than the stock market. This is where the Big Boys (and Big Girls) play, where institutions with billions of dollars (euros, yen, yuan, kroner, whatever) put large portions of their money. Now, bonds have an inverse relationship between price and interest rates, which is tricky to get your head around. When prices go up, when buying bonds is popular, the interest rates go down. When investors sell bonds to buy other things, the interest rate paid goes up. So, in the last month and a half, enormous amounts of global money have been going into bonds, and that has pushed the interest rate on the U.S. 10 year bond (a good gauge of the overall market), from almost 5% interest, down to 4.17% right now.
At the same time, gold prices have soared. They had hovered around $1,950 (per troy ounce)for a long time, then dipped down to around $1,850. Now gold is up to $2,013. It spiked up to $2,148 the day before yesterday.
What does it mean when the biggest institutional investors in the world pour hundreds of billions of dollars into gold and U.S. government bonds? They're scared. This is called a "flight to safety." The most sophisticated investors in the world are running for cover. They know a global recession is here in places (like Germany), and that's it's coming to pretty much everywhere else. They smartest investors in the world are hunkering down for a financial storm, an economic hurricane. They're protecting their wealth from loss, until the storm blows over, and the big damage is done. Then they'll look for new opportunities, when things settle down.
Here's what that means for all of us regular people. Here's how I see the next couple of months playing out:
Stocks- The U.S. stock market is at or near all time highs, about the same levels it was at two years ago. But now our dollars are worth about 20% less, due to all of the inflation. So stocks are actually worth less than they were in 2021. It's December 5th. On Friday, December 8th, the window for most companies to buy back their own stock closes, because the next earnings season is approaching. So the biggest driver in stock prices, businesses buying back their own stock, will mostly shut off this coming Friday. I expect stock prices to really begin dropping next week.
Virtually every economic indicator has been flashing red, recession warnings, for months now. The stock market has ignored this. Starting next week, it looks like reality will begin to set in. After the holidays, reality will REALLY set in on stocks. I personally expect 30% to 50% drops in stocks in the next few months, overall.
Gold- Back in July, somewhere, I said I expected gold to pop up to around $2,150, maybe $2,200, and then back off. I think we are near peak gold prices now. It may get to a solid $2,200 for a week or two, maybe. But I DO NOT think gold will soar to $3,000 an ounce. Sorry gold bugs. I like gold, over the long term, but our inflation is turning into disinflation now, and probably outright deflation come January. I think gold will settle at a new level, a bit over $2,000 an ounce, and stay there for most of 2024 and into 2025. Silver? It should pop higher, maybe to $35-$40 and ounce, but it's stuck at $25 right now. I don't see it soaring either. Silver is also a good hedge against future inflation, and affordable to average people, at $25 (plus premiums) an ounce. But I don't see it taking off in 2024.
Interest rates- Here's the good news, for average people, interest rates, overall, should drop quite a bit in 2024. The Fed will begin lowering rates, because of the recession that we are already in (in my opinion), but that hasn't been officially recognized yet. A banking crisis will force The Fed's hand, in early 2024, and interest rates will probably drop 1% to 2% in 2024, generally speaking.
Credit- The bad news about interest rates dropping is that this recession will hammer the banks, who are already in sad shape. The banks have totally tightened credit. They will tighten more, making it harder for everyone to get loans. Cash is king in 2024. It will be hard to get mortgages, car loans, and credit cards, because there will be a record level of defaults and foreclosures as the recession becomes obvious in early 2024, and continues to play out. So even though interest rates will drop dramatically, it will still be hard to get loans, unless you have excellent credit, and a low debt to income ratio. This goes for businesses and individuals. Alternative financing options will be huge in 2024. Non-traditional ways, owner financing, etc., will be the way to purchase big items (which will be at huge discounts).
Crypto- Crypto hardcores are chomping at the bit right now. Crypto winter is over, and we're well into crypto spring. Even though we are heading into a massive recession, huge amounts of money will pour into crypto in early 2024, because of the BlackRock ETF's, (Bitcoin and most likely Ethereum), and potentially Bitcoin ETF's by other companies. Major crypto coins will be the only "major asset" giving good returns in 2024, in my opinion, though even Bitcoin is not a "major asset" to most investors yet.
All investors, large and small, will be drawn to crypto, because that's where the good returns will be. Also, the Bitcoin halving happens in about April, which also usually leads to higher Bitcoin prices, in time. You can research that for more info. In this post, about three weeks ago, I wrote about the Bitcoin ETF, and the case for Bitcoin going forward. Bitcoin was $36,366 per BTC. Bitcoin has gone up $5,938 per BTC, or over 16%, in three weeks. Just sayin'. I think we'll see $100,000 per Bitcoin in 2024, almost certainly. I, personally, think the next peak will be in the $150,000 to $180,000 per Bitcoin range, maybe in 2025. $200,000 isn't out of the question, taking all things into account. It'll plummet after, to a new higher low. But that's the area where I think it'll peak.
Real estate- Want to buy a house from a disgruntled Millennial who paid $40K over asking price in 2021 because of the FOMO hype? What to buy a former Air BnB home at 50% off because the owner has 12 of them that aren't renting? 2024 is your year. If you have CASH. Want to buy a 20 year old office building for 80% off, or a dead mall? 2024 is your year... if you have CASH. Otherwise, forget real estate and watch the crash from a distance. It's going to be brutal.
Collectibles- If you're into any kind of collectibles, keep and eye on Craigslist or eBay, there will be lots of people selling collections of one kind or another, after getting laid off, in 2024. So, IF you know that particular market, from sports cards and comic books to exotic cars, there will be deals to be had... if you have CASH.
OK, that's my outlook on the financial world, overall for December 2023, and into January, and farther into 2024. This post is written for entertainment and educational purposes, and should not be taken as financial advice. Do your own research. Do your own due diligence. Consult professionals wherever and whenever needed, before making any investment decisions.
Buckle up. We've now have four years of warm-up craziness. Now things are about to REALLY start going nuts.
Bridges, like most things humans make, are built to withstand much more stress than what they will endure on a day to day basis. Time wears down the steel, concrete, and components slowly. Accidents can damage to them. Extreme levels of wind and water can create higher levels of stress than usual. Still, by and large, bridges just stand there, most of us use one of more of them daily, but we never think of them. Bridges just stand there and do their job. Until they don't. Sometimes it's a visible event, a massive flood, high winds, or maybe a landslide nearby, that leads to a collapse. Other times, they look fine, but years of wear finally hit a breaking point, and they just collapse, unexpextedly. Everything I see in the economy points to a "bridge-style collapse" at some point this year, in 2023. Things look normal, and then some unseen event pushes it to the breaking point.
As I wrote in the last post, 2022 was a pretty easy year to make economic predictions for, there were big moves (inflation, interest rates, stock market, crypto, real estate) getting ready to happen. I could see the pressure building for these, as did several other people. Then they happened. Inflation was going up. After basically ignoring it for months, the Federal Reserve (aka The Fed) raised interest rates to slow down the economy, and eventually help lower inflation (that they caused by creating too much money in 2020-2021). The Fed also stopped buying "assets," which decreases the total money supply, which also helps slow down the economy. Stocks and crypto went down dramatically last summer and fall, and real estate topped out, and began its descent to slowing sales and lower prices in places. Investors didn't know where to put money, it seemed everything was losing ground. For a bunch of reasons I won't get into, we are now in a financial Never Never Land, unlike most any time in memory.
Now we are in the barrage of the ripple effects of the fastest interest rate increases in U.S. history. The thing about these kinds of actions, like The Fed raising interest rates, generally, they take 12-18 months to really show up in the everyday economy, and the economic data. The Fed dramatically increased the money supply, creating $5-$6 trillion out of thin air in 2020 and 2021. That money went to major banks first, then bailouts of the banking system, major corporations, cities and towns, and eventually us everyday people, through stimulus checks and PUA, PPP, and similar programs. We all got high on The Fed's supply... of free money.
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Then in March 2021, close to a year after the first wave of newly created money, inflation began to go up. That new money spread through the economy, and began to drive prices up. Increasing the money supply devalues every dollar (or euro, yen, kronor, yuan, etc.), making them worth less buying power. Eventually prices rise to compensate for the lower buying power of each dollar. But it happens in different places, bit by bit, unevenly, not all at once. So while stocks, crypto, and real estate values have gone down quite a bit, rebounding somewhat, overall, inflation is still high. It's officially over 6% per year. Unofficially, it's probably still around10% per year, overall.
The Fed started raising interest rates in March of 2022, to fight inflation. That began to affect new home loans very quickly. But most other effects happen under the radar, slowly. We should see the first big effects of the interest rate increases in May-June-July of 2023, about a year after the first large interest rate hikes. Those effects will keep getting stronger as the year goes on, as people, businesses, and local and state governments, start paying much higher interest rates, as they roll over, or refinance their debt. The big problem is, there is more debt than everat all levels... in human history. Paying back debt, all kinds, has been getting more expensive, for everyone, for almost a year. Interest rates are still being raised by The Fed, as of their last meeting. So lots of payments, at all levels, are being missed now, everyone's personal, business, and government debt is getting harder and harder to pay. The pressure is building, minute by minute, day by day, like the pressure on those bridges in the video above.
Something, somewhere in the system, will reach the breaking point, and that collapse, of some major corporation, some non-bank lender (mortgage or auto loan companies), a foreign bank (Credit Suisse and Deutsche Bank are being watched closely by many investors), the junk bond market, or perhaps a small country, will not be able to pay its debt. Something big will go bankrupt. That collapse will seem to come out of nowhere, it will be in something we don't expect, and it will spread quickly. At this point, there's far too much debt to be paid back in tough times, and now too much pressure, for a collapse not to happen. Something big, economically, will break this year. Then we won't be wondering "are we in a recession?" It will be obvious.
When that happens, we will see big drops in stocks, crypto, and lower quality bonds, very quickly. Gold and treasury bonds will be where major investors head for safety, for a while, during the turmoil. Central banks and smart investors have been buying up a lot of gold in the last few years. When there's a big enough collapse, The Fed will have to pivot, and begin to lower interest rates again. That's what they usually do when we are heading into a recession. Raising rates into a likely recession, like they've doing for almost a year, is very unusual, and part of why we're in a Financial Never Never Land, unlike previous downturns.
The Fed has said several times in recent months that it plans to keep interest rates high, and not lower them at all, in 2023. If there's one thing we can count on these days, it's The Fed changing its mind.
I believe they will pivot, and begin to lower interest rates, in 2023. If it's a really extreme crisis that makes this necessary, they will soon begin to create more new money, to bailout the banking system and corporate America. Since we have a Decomcratic White House, and a Republican House and Senate, they probably won't pass major stimulus money for us regular people. They'll throw money at Banks and Big Business, but don't expect stimulus checks this time around. They'll argue about it, but it won't happen, most likely.
Then the real, gnarly part of this recession hits us, and it hits hard. There tens of thousands of more layoffs, more small, medium, and large business bankruptcies, and some major troubles for many countries (already struggling in many cases, because of a strong dollar), and local and state governments across the U.S., particularly in rural, small town, and small city America. It will probably be something like the Lehman Brothers collapse in 2008, but worse, overall, in the beginnings.
So everything, investment-wise, should tank, right? Not necessarily. The stock markets are looking for any reason to rise, yearning for another late 2020/2021 boom to happen again. I think we will see a big stock drop, in mid to late 2023. But the S&P 500 and the Nasdaq may not go lower than last years lows. The Dow might drop lower than the 2022, but it's a tough call. Because the coming bailout will mean more money in the financial system, and lowering interest rates. Stocks will drop, but they will want to rise back up very quickly afterwards, because the bailouts will mean more new money into the economy. This will push inflation to begin rising again, before long. Then we will have a crazy recession, and a rising stock market, like after March 2009. Except, there will be much more new oney being created, and inflation already, so stocks will go up much faster than in 2009. It will be choppy, but when The Fed begins creating new money, stocks will start climbing, overall. This could be late 2023, or early 2024.
I think crypto has seen its bottoms, in late 2022, the major cryptos, anyhow, like Bitcoin, Ethereum, and the top 10 or so most popular coins. Unlike the stock market, crypto is a major new technology realm, and it is innovating, and has incredbile organic growth potential, while most large, major corporations are now either low growth, or full on "zombie corporations" at this point. I think the big gains in the next 2-5 years will be in the blockchain/crypto/Web 3/DeFi/NFT world. We're heading into recession right now, but crypto and NFT's are innovating, and trending up again. This current trend will stall, but there will be a solid rebound after the big crash.
Normally, in a major recession/depression, people flock to gold and silver. Gold has kept its value over pretty damn steady for over 5,000 years. It's said that an ounce of gold would buy a top quality men's suit of clothes in ancient Rome, and in 1800 or 1900, and that's true today. But the ancient world, or even in the 1930's Great Depression, didn't have Millennials and Gen Z digital natives, and we didn't have crypto and MMORP games and multiple emerging metaverses.
Here's what the economists, policy makers, and big players in today's economy don't see. Digital assets DO HAVE INTRINSIC V ALUEto people under about 30-35 years old. Millennials and Gen Z adults and teens won't buy a bunch of gold when the recession hits, they'll be betting on crypto, mem stocks, NFT's and online gaming, and cool metaverses. Like I said in the last post, we are heading into the Information Age people, these technolgies are today, in 2023, what the internet was in 2001.
Today's younger adults grew up playing video games, often huge, online multi-player ones. Building on The Sims, games like World of Warcraft, and Grand Theft Auto, and Minecraft and Roblox, and Fortnite, are the first metaverses. Younger people, now up into their 30's and even 40's, are used to wandering those cyber universes, buying skins, in game weapons, and attributes. So even in the depths of the recession, I think there will be some growth in the blackchain/crypto space, online gaming, and the emerging metaverses, like Sandbox, Decentraland, Minecraft, and Yuga Labs Otherside. Mark Zuckerberg/Meta's metaverse looks like a fucking cyber shopping malls, and shooping malls have been dying in the real world for 20 years. I wouldn't bet on that one, personally. My point here, the Millennials are the largest U.S. generation ever, they're in their high earning years of life, tech savvy, and 72 million strong, edging out the Boomers by 2 1/2 million people, or so. The Millennials, Gen Z, today's smartphone, social media tech, and blockchain/crypto will make this recession much different than previous ones, including the Great Recession of 2007-2009.
Yeah, the governments want to outlaw crypto. They won't be able to, it's already a major part of society, worldwide. When The Fed puts new money into the system, a lot will find its way into crypto, because that's where the huge returns will soon be. There will be lots of losers in crypto, like all other investments, those who ape in and don't do their due diligence. But there will be huge wins as well.
Another thing the older generations haven't figured out about Millennials and Gen Z. They grew up in a world where working traditional jobs for 40 years isn't even a thing, and jobs under $80-$100K a year don't make you a good living. If you're not in tech, making at least $100K+ a year, you're struggling, if not actually poor. These 72 million+ young people are gamblers, the rise in Gamestop, AMC, and other meme stocks in 2020, 2021, showed us that. Lots of young stock and crypto "traders" (gamblers) made a year's income at their old job, in a month or two, from stocks or crypto, in 2021. They remember that. As the economy goes down, millions and millions of people under about 35 will go looking for big scores, like in 2020 and 2021.
If The Fed begins to create new money again, those opportunities will come back. Fed money creation is THE THING that leads to stock market increases (like October 2019- Repo Market "liquidity" led to stocks rising, then the stimulus money later in 2020-2021).
This will be a recession like no other. Real estate will be tanking, new cars and higher value used cars will still be out of price range, because that whole industry got fucked by easy credit and people buying cars they knew they couldn't afford. But the big collapse will lead to a Fed bailout, which will lead to rising stocks (The top Ten of Tech should lead the way), and soaring crypto, soon after stocks take off. NFT's are already rebounding, and it will lead to millions of low wage jobs STILL not being filled. There are millions of jobs in the U.S. that are simply not worth working anymore, even in a recession, because the compensation just won't pay rent and bills. In the 2020 shutdowns, millions of people learned alternative ways to make money. They haven't forgot those, even if they are harder during a big recession.
So... in review. There's a big crash, a "bridge collapse" moment coming. Late Spring to mid Fall 2023, is the most likely timing, in my opinion. There will be a big crash, stocks and crypto will drop. Real estate continue to drop more, and keep dropping. This is starting in the West, Florida, and some Southern cities. Other parts of the country will see smaller drops, or a long period of stagnation.
Then comes the banking and corporate bailout, and lowering interest rates and new money being created by year end, 2023. Stocks will probably be near where they are now by year end, after a big drop, but it's tough to make a solid call. Gold will rise, but I don't think it will spike like in 1980 and 2011. I could see $2,000 or $2,100 an ounce gold, and maybe $35-$40 an ounce silver. But not $3,000 gold and $100 silver. Soon after the crash (2-4 months) stocks begin to seriously rally, after the crash, and then crypto will really take off. Old School investors will dive into Treasury bonds, like Titanic passengers into lifeboats. So bond prices go up, driving yeilds down, early in the crash. All of this will be going on around the later months of 2023, or into early 2024. That's the best call I can make. It'll be nuts, but a different kind of nuts than 2020, 2021, and 2022.
OK, no hard numbers this year, there are too many effects of last years big moves rippling back and forth around the economy. But these thoughts are my best educated guess as to how the economic world will play out for the rest of 2023, and into early 2024. We'll see what happens. Thanks for reading.
I hate eggs. I never buy them, even when living a normal life, unless I'm doing some baking, which I do like doing at times. But I like to laugh, and I make memes. Eggs have jumped an insane amount in price, 60% or more, and lots of people are making jokes about it. This is my entry into the expensive egg meme fest.
And just to prove I'm Old School at food memes, here's a meme with my video still of me making Oreo pancakes, way back in 1990. Tips... use Double Stuff Oreos, break into big chunks, add to batter and cook. No syrup needed.
I have a new blog called Adaptive Reuse SoCal, about finding new uses for old, abandoned, and unused buildings, as well as the economy, and commercial real estate in general.
