Dear Reader,
Cryptocurrencies and technology stocks investing have many things in common. Cryptocurrencies are essentially an information technology that allows you to invest in the projects of the company that has issued the cryptocurrency. Bitcoin is the grandmother and a bit different, though.
Both in cryptocurrencies and technology stocks investing the most important thing is risk management. Just look at Zoom Video Communications(ZM)'s stock. It went up more than 50 % in two trading days, just to fall approximately 20 % from its most recent peak again in the space of two trading days.
Cryptocurrencies exhibit even greater volatility than technology stocks due to both lack of participation in the bankruptcy estate of the company and the still limited liquidity of cryptocurrencies. It is very difficult to apply Warren Buffett and Benjamin Graham's concept of long-term investing to technology stocks and cryptocurrencies. Yes, Netflix, Amazon, Microsoft, Apple, Google, Facebook, Nvidia and other technology stocks have proved great investments if you held them for more than 2-3 years. But the Nasdaq Composite and technology stocks look now like dangerous bubbles. One can enter at the top and quickly, in the space of 3-4 months, lose more than 40% of his or her investment.
The 'problem' with Warren Buffett and Benjamin Graham's concept of long-term investing mantra is that the market has always recovered in the last 70 years. However, if we enter an economic depression, which the coronavirus could easily trigger, holding your stocks and cryptocurrencies for the long-term might not prove a great idea since prices could simply not recover or exceed previous levels.
Cryptocurrencies are an interesting case. Some people believe cryptocurrencies are United States Dollar 2.0 or the next global currency. If cryptocurrencies really turn out the next global currency and the next revolution in money and finance, cryptocurrency investments could prove a fabulous opportunity.
Disclaimer: The blogposts and comments on this blog and posts on social networks(Twitter, LinkedIn, Facebook etc.) are not investment recommendation, are provided solely for informational purposes, and do not constitute an offer or solicitation to buy or sell any securities. The opinions expressed on the blog are Petar Posledovich's. Petar Posledovich does not guarantee the accuracy of the information presented on this blog and social networks. The information presented is "as is".
Petar Vladimirov Posledovich is not liable for any investment losses incurred by reading and interpreting blogposts on this blog and posts on social networks.
Conflicts of interest: I may possess some of the securities, currencies or their derivatives mentioned in the blogpost and posts on social networks(Twitter, LinkedIn etc.)!
Respectfully yours,
Petar Posledovich
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