Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
Keep Calm and Carry on Buying Quantum AI Tech Stocks - 19th Feb 24
How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - 17th Feb 24
Why Rising Shipping Costs Won't Cause Inflation - 17th Feb 24
Intensive 6 Week Stock Market Elliott Wave Training Course - 17th Feb 24
INFLATION and the Stock Market Trend - 17th Feb 24
GameStop (GME): 88% Shellacking Yet No Lesson Learned - 17th Feb 24
Nick Millican Explains Real Estate Investment in a Changing World - 17th Feb 24
US Stock Market Addicted to Deficit Spending - 7th Feb 24
Stocks Bull Market Commands It All For Now - 7th Feb 24
Financial Markets Narrative Nonsense - 7th Feb 24
Gold Price Long-Term Outlook Could Not Look Better - 7th Feb 24
Stock Market QE4EVER - 7th Feb 24
Learn How to Accumulate and Distribute (Trim) Stock Positions to Maximise Profits - Investing 101 - 5th Feb 24
US Exponential Budget Deficit - 5th Feb 24
Gold Tipping Points That Investors Shouldn’t Miss - 5th Feb 24
Banking Crisis Quietly Brewing - 5th Feb 24
Stock Market Major Market lows by Calendar Month - 4th Feb 24
Gold Price’s Rally is Normal, but Is It Really Bullish? - 4th Feb 24
More Problems in US Regional Banking System: Where There's Fire There's Smoke - 4th Feb 24
New Hints of US Election Year Market Interventions & Turmoil - 4th Feb 24
Watch Consumer Spending to Know When the Fed Will Cut Interest Rates - 4th Feb 24
STOCK MARKET DISCOUNTING EVENTS BIG PICTURE - 31st Jan 24
Blue Skies Ahead As Stock Market Is Expected To Continue Much Higher - 31st Jan 24
What the Stock Market "Fear Index" VIX May Be Signaling - 31st Jan 24
Stock Market Trend Forecast Review - 31st Jan 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

If You Want To Get Rich, Invest In T-Bills, Not FANGs Or Bitcoin

Interest-Rates / US Bonds Dec 21, 2017 - 10:56 AM GMT

By: John_Mauldin

Interest-Rates

BY JARED DILLIAN : Demand curves are usually downward-sloping. That’s because people will buy more of a product when it is cheaper and less of it when it is more expensive.

Some things—like stocks and especially bitcoin—have upward-sloping demand curves, which should be theoretically impossible. But they happen in the real world. People really want bitcoin when it is expensive, but nobody was interested when it was cheap.


Every day, I hear stories and anecdotes from my readers about how grandma is suddenly interested in bitcoin’. Or maybe conservative grandma is suddenly interested in tech stocks.

When perhaps she should be interested in 1-year bills at 1.66%, which I wrote about last week. Or a 5-year CD ladder for over two percent, which will give you income that is superior to the dividend yield on the S&P 500 index. Or some ultrashort duration bond funds.

There are lots of ways to make 2% without taking a whole lot of duration or credit risk. Hardly any at all. But nobody is interested in making 2 percent! People want to make 79,000% percent, which is about what you would have made in bitcoin had you held it since inception.

You’ve seen these comments floating around the internet. “If you invested $10,000 in bitcoin in 2010, you would have $710,458,109 today.”

Go pack sand.

First of all, most of us would not have invested ten grand in a piece of computer code in 2010. Second, 90% of us would have sold it when it turned into twenty grand. The number of people who bought and held bitcoin and realized those pornographic returns are… small.

The whole purpose of statements like these is to stoke envy and resentment and fear of missing out.

Shortcuts That Don’t Exist

Back to the upward-sloping demand curve.

I’ll be honest—this tendency is not entirely irrational. If you believe that markets trend, then high prices should be followed by still higher prices. There are people who buy high and sell higher and do just fine.

But that’s not for everyone. You wouldn’t tell grandma to buy high and sell higher.

The crazy thing about today’s markets is that the people who are the most vocal crypto bulls are also the biggest Buffett adherents.  But that doesn’t make any sense!  Buffett (allegedly) buys undervalued assets that produce copious cash flows and holds them forever. 

And every shred of evidence on how to get rich boils down to one simple concept: Buy stocks with dividends that grow over time.

A humblebrag: I am wired a bit differently. When it comes to stocks, I like lower prices. Which means I miss out on most bubbles, but also means… I miss out on the busts. I stay out of trouble. I lead a relatively boring investing existence.

What we have in today is a lot of people looking for shortcuts.

But there are no shortcuts. If you’re 50, and you’re not where you want to be financially, probably the best explanation is that you didn’t start soon enough.

It’s the longest of long games, and if you’re not compounding in your 20s, then you missed out. Tough luck. Bitcoin isn’t going to save you. Neither is FANG.

Get Rich Slow

In the past few weeks, I’ve advised you to…

  • Pay down your mortgage
  • Invest in T-bills
  • Stay liquid
  • Avoid bitcoin
  • Get rich slow

It’s a sign of the times that I’m the one being accused of financial malpractice.

There are lots of lowbrow personal finance books out there. Pretty sure none of them tell you to invest in growth stocks at the top of a cycle. Financial assets are objectively overvalued. Buying overvalued assets sometimes works. Buying extremely overvalued assets sometimes works.

But the trade has a large negative expectation, which is a mathematician’s way of saying that you’re probably gonna get rinsed.

Grab Jared Dillian’s Exclusive Special Report, Investing in the Age of the Everything Bubble

As a Wall Street veteran and former Lehman Brothers head of ETF trading, Jared Dillian has traded through two bear markets.

Now, he’s staking his reputation on a call that a downturn is coming. And soon.

In this special report, you will learn how to properly position your portfolio for the coming bloodbath. Claim your FREE copy now.

John Mauldin Archive

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in