Silver Linings
With all the Dr. Dooms out there and you know there are many – it might seem like a broken record.
With the barrage of criticism thrown at crypto lately, it almost seems as if there is no future for it, but I would not agree with that.
The future path of crypto is surrounded by silver linings that investors cannot ignore and I believe that is what we need to take away from 2022.
I found it interesting that in Google’s earnings report yesterday, they singled out crypto as an important source of advertising revenue.
Google’s management acknowledged that the crypto “winter” has sullied digital ad revenue and was viewed before as a handsomely generating growth asset.
Google posted its worst revenue growth since 2013 and blaming it on the crypto underperformance is a sign that there could be a future place for crypto.
Financial firms advertise relentlessly on mainstream media channels and big media need those dollars.
Even more important than just the pure digital ad revenue that crypto generates is its audience base.
Let’s not upsell this thing, many got burnt and will never come back.
However, several surveys have highlighted Gen Z and Millennial fervent appetite for this exotic asset class.
Charles Schwab, an asset manager, published its latest survey, illustrating the preference for Bitcoin and Crypto investment by a substantial portion of Gen Z and Millennials.
According to the study, 46% of Gen Z and 45% of Millennials wish to invest in cryptocurrencies to aid their retirement plans.
Additionally, the survey found that 43% of Gen Z and 47% of Millennials have begun investing in crypto outside their 401K.
After the arbitrary lockdowns and hyperinflation over the past few years, younger people are beginning to question the traditional paths to retirement if not the whole US financial system.
Some are straight-up cynical about it as the stock market got clobbered in 2022.
Bonds haven’t done much better and this year could be one of the first years to experience a scenario in which bonds and stocks went down together.
So take the classic investment strategy of 60/40 allocation.
By holding 60% of your portfolio in stocks and 40% in bonds, the thinking goes, you get the best of both worlds: high growth potential from your riskier stocks and protection from your more conservative bonds.
In this new world with new rules, traditional nostrums are thrown out the window.
The same goes for cookie-cutter ETF index funds.
A reset is needed.
The truth is that building wealth is a lot harder in a world where stocks and bonds go down substantially because of the massive overprinting of dollars by the federal government.
There is no free lunch anymore and many upper middle class families thought they were in the free-and-clear on an easy gondola ride to retirement.
Yet, they have been dragged back into the rat race legs screaming as products and services are up anywhere from 8%-50% depending on where you live.
Yes, crypto is on life support, but don’t count it out as once the Fed pivots, Bitcoin will stage a relentless rally and I view the biggest enemy of crypto are the participants themselves.
Sadly, the percentage of American families needing to finance an evasive retirement life is inching up and the young and old shouldn’t write off crypto yet.
