Observations

I need to put this in. I don’t buy or sell metals, stocks, bonds or any fiduciary instruments for third parties. I do not give financial advice other than don’t be a sucker, Caveat emptor. I read much and listen to responsible financial reportage. Other than that, it’s a nasty world out there.
I believe that the Government thinks all money is theirs. The less they know about what you have the better off you are.

In a past post on the bitcoin price plunge one of the readers made this tongue in cheek comment. “I have invested heavily in Beaniecoin, which is a virtual plush toy-based currency. I am already rich.” Actually quite insightful to the vagaries of trendy markets. He made another point which is also worth examining. What is the value of the word “rich”?

In reverse order, the value of the word ‘rich’ depends on your current net worth. A thought of hitting PowrBall to some is a Godsend. Warren Buffet wouldn’t buy a ticket. It a matter of perspective.

Speaking to investments, they’re all gossamer. You took your money and you bought paper. Yes! You bought paper with a promise that it MIGHT be worth something in the future. Nowhere is it written that it will be.
Take Exxon Mobil (XOM). Currently worth about $88±. That is a substantial company but the price does fluctuate. Depending upon your strike price you either make or lose money based on the economy and your personal financial condition.

GE is another story. A Blue Chip industrial used to be in the $30±/share range now selling for $16.45±/share and going up and down like a kid with a new Pogo stick. The SEC is investigating the company’s accounting practices from back when Immelt was CEO. I own GE as a disclosure.

The above are examples of investments where there is substantial capital backing your your purchase. Feel better? Think K-Mart, Sears, J C Penny, Macy’s, Toy’s R Us and how many other businesses that were on the stock exchanges only to have their stocks become worthless. Some of aforementioned are teetering, others are going to close. They had capital behind them too.

A different investment is EFT, Electronically Traded Funds. People buy metals this way, gold, silver, palladium copper etc. They believe they own those products. These sales are leveraged some 30 times to each ounce of metal existing. If there is a run, there is a clause in those contracts called Force Majure. This states that if there isn’t a sufficient amount of product to cover all calls, the uncovered calls get back their capital in dollars.
So much for owning metals held by some one else.

The Cryptocurrencies have nothing backing them. Pretty much like the US dollar. What you say? Yup! What is backing the good ole USD is about $20 trillion of debt. America isn’t on the Gold Standard, Nixon took us of that in 1972. The USD is a fiat currency; recognized as the world’s reserve currency simply because we have the printing press. Think about what that REALLY means. Think not just inflation by serious devaluation.
Now think Bitcoin. That is a fiat currency, worth what they say it is and those saying are numbered around 1000 people. That is who holds the most currency. You own bitcoin; you own paper.

Which brings us to the big rule of capital, investing and ownership.

If you don’t actually hold it, you don’t own it.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: