Amazon Future Strategy

Amazon has ridden extremely well the cloud computing wave. Its online merchandising business provides the necessary stability to finance the growth of Amazon Web Services, its cloud computing business.

Actually, much of computing done all over the world will likely move to the cloud. Amazon and Microsoft are the main leaders in this new business vertical.

The cloud computing business globally could reach 1 trillion USD in 10 years. Amazon is basically laying the ground for domination in this business. Amazon Web Services offering is excellent and has an extensive edge over its smaller competitors. Amazon and Microsoft are so entrenched in cloud computing now, they are very difficult to dislodge.

Amazon's market share of cloud computing is around 30 %. What is even more relevant for Amazon, is that the cloud computing business is extremely profitable and scalable at the same time.

Amazon has to simply continue to innovate in cloud computing and will achieve further extraordinary success.

Robinhood Markets' Future

Robinhood Markets is the largest cryptocurrency broker.

Robinhood has stated at its last quarterly earnings report that around 60% of its brokerage revenue comes from Bitcoin and other cryptocurrencies trading.

Apparently, Robinhood's future fortunes are closely tied to the future of Bitcoin and other cryptocurrencies. I personally think Bitcoin's adoption will continue growing and Robinhood Markets will benefit handsomely from that. I will not be surprised if Robinhood's market capitalization surpassed that of Morgan Stanley or Goldman Sachs'.

Basically, if Bitcoin is fully accepted as a currency, the cryptocurrency's market capitalization could reach 80 trillion USD or more than world's GDP. Robinhood is extremely well poised to earn a windfall from that likely event.

What is more, Robinhood Markets' current inroad into cryptocurrency and younger investing demographic could help the company win more stocks brokerage business which would also increase Robinhood's future market capitalization.

Are Emerging Countries Stock Markets Poised for a New Period of Growth?

Large emerging countries stock markets, like the ones of the BRICS countries or Brazil, Russia, India, China and South Africa, have posted low returns measured in growth of the main indices and the leading stocks' prices compared to developed markets, especially USA's main indices DJIA, S&P 500 and Nasdaq.

This was mainly due to smartphones and artificial intelligence which together form the fourth industrial revolution and which have driven up the prices and valuation of the large, medium and small capitalisation technology companies predominantly listed on the bourses in the USA.

In 2004-2008 the growth cycle of emerging markets stocks was driven mainly by a new up cycle for the main commodities like oil, base metals, gold, silver and agriculture. Brazil, Russia and South Africa are large exporters of commodities along with most of South America and Africa. 

Now a new mini up super cycle in oil is obvious. This will surely drive up the stocks' prices of large Russian oil producers like Gazprom, Lukoil and the Brazilian Petroleo Brasileiro. The rising prices of base metals lately will also contribute to rising stock prices of base metals miners in both Russia and Brazil, but also to companies based in South Africa

China is an interesting case. It has a large technology sector which is now pressured by the government to yield and bow basically to China's central government power and hence the falling stock prices of technology companies listed in China and Hong Kong lately.

And yes, I do agree with Goldman Sachs and Bank of America's latest research forecasts that a new growth cycle has begun for emerging markets stocks prices.

Palantir Is at the Forefront of Artificial Intelligence

Palantir could reach 200 billion USD in market capitalisation in 5 to 7 years on artificial intelligence adoption.

Palantir has the globally first scalable artificial intelligence/machine learning/data analysis product suite which is used by the US government, many corporations, hedge funds and asset managers.

The company automates model building and production by integrating information gathering, cleaning, analyses and forecasting into a seamless process.

Since artificial intelligence is at the cusp of the current fourth industrial revolution I expect Palantir's market capitalisation to surpass 200 billion USD provided that management continues to execute well on the company's strategy.

Cryptocurrencies, Bitcoin and Artificial Intelligence

The hashing algorithm is the foundation of blockchain, which underlies the mining or creation of Bitcoin and the hashing algorithm is artificial intelligence epitomised, so Bitcoin is nothing short than the cutting edge of artificial intelligence.

If one invests in Bitcoin or other cryptocurrencies which rely on Bitcoin's blockchain for their underlying infrastructure, one is practically investing in artificial intelligence. Many research analysts claim blockchain will define the future of many key industries of the global economy like banking, capital markets, real estate, healthcare, online merchandising etc. Virtually no industry could be left untouched by the hashing algorithm which seems to provide great efficiencies. That is, it saves people money, time and effort. 

Due to its distributed ledger nature, Bitcoin's blockchain is remarkably agile, adaptive and lively. Antifragile as Nassim Taleb would say. Many of the world's greatest achievements like nuclear arms or lately the coronavirus vaccines have been developed in cooperation or through global team work. Essentially game theory or the study of human interaction defends the basic idea that we, humans, are much better off cooperating with each other. And since Bitcoin is mined by the people to be used by  the people, it is bound to flourish if unforeseen highly negative impact or black swan events do not happen.

I forecast Bitcoin's price will surpass 100 000 USD in 5 to 7 years from now.

NVIDIA. A Way to Invest in Artificial Intelligence

NVIDIA Corp, the graphics processing units and computer chips maker based in Santa Clara, California, is one of the most direct ways to invest in the artificial intelligence boom or the fourth industrial revolution.

NVIDIA, basically produces the hardware on which artificial intelligence algorithms run. At 555.33 billion market capitalisation NVIDIA is already a very valuable technology company, directly after Apple, Microsoft, Amazon, Alphabet and Facebook in terms of market capitalisation. At 79.37 its Price/Earnings ratio also does not look too excessive for a fast growing technology company.

NVIDIA's future lies in developing ever faster and more efficient graphics processing units which are to be used in artificial intelligence/ machine learning computations in various industries. Extremely high growth areas for NVDIA seem to be cryptocurrency mining, self-driving cars automation, automation for various industrial processes.

Considering the very vast first mover technological advantage, edge NVIDIA has over its direct competitors, I would not be surprised if NVIDIA is worth around 2 trillion USD in 10 years, if the company's management continues to execute its strategy correctly.

Artificial intelligence is the fourth industrial revolution. I personally think artificial intelligence will bring more benefits to humanity than all previous industrial revolutions. The process simply has to be helped/guided carefully.

Bitcoin Investments Analysis

Investments in Bitcoin are susceptible to analyses mainly along two lines - broad acceptance of Bitcoin and the amount of money flowing into Bitcoin as investment.

As more and more people accept Bitcoin as a means of exchange, store of value and unit of account or money, Bitcoin's value or price will grow. 

If more and more investors invest larger sums of money into Bitcoin its price will only increase. Investors expect the value or price of Bitcoin will increase. There are mainly two types of investors - long-term and short-term. Long-term investors genuinely believe in the long-term, more distant potential of Bitcoin as money, while short-term investors are in the Bitcoin market to make a quick return on their initial investment. Short-term investors provide long-term investors the liquidity they need.

Both long-term and short-term investors hang on the general public's perception of Bitcoin. If more and more people use Bitcoin, its price will increase.

What is missing at the moment for Bitcoin's price to come close to and surpass 100 000 USD per Bitcoin is for many large companies or the government of a large, globally systemic country like USA, China, Japan, UK, Germany, France etc. to endorse Bitcoin. 

Yes, Tesla and Square have endorsed Bitcoin as a means of payment, but more effort  from corporates and governments is needed. I am positive this will happen, because both the corporations and governments will simply follow the people.

How to Value Tesla? Tesla Valuation. 24.08.2021

At approximately 699 billion USD Tesla's market capitalisation is larger than the top 5 automobile producers in the world, while Tesla is barely profitable and produces just a tiny fraction of the combined automotive vehicle production numbers of Volkswagen Group, Toyota Group and the Renault-Nissan-Mitsubishi Alliance.

How does the market value Tesla?  The market seems to think that Tesla will control in the future something like 80 % of the market with the profitability of Ferrari. What is more, investors seem to think that Tesla will break into new markets and develop the market for electric batteries not only for automobiles, but also for other electricity needs.

How realistic are these assumptions? Basically, the outcome for Tesla seems to be binary. Either Tesla becomes a market leader for car production and in part substantiates its market value or it does not live up to the expectations and the losses of Tesla's main car production business sink the company into insolvency. Yes, Tesla in the last rolling four quarters became profitable, but that includes government subsidies for electric vehicles and accounting in advance for future sales of Tesla cars for which Tesla Inc. gets only 5 000 USD up front, that is now.

In my personal opinion, Tesla is worth in the long run around 120 billion USD. Tesla's value in my view is only based on its technological know how of electric vehicle production. Electric vehicles will take no more than 10-15 % of the market in the long run, in my new, mainly because the number of kilometres on one charge is not great and it takes up to five hours to charge a Tesla vehicle.

In short, the electric vehicle market needs a technological breakthrough to become a profit making, viable market.

Bitcoin's Price Efficiency

Bitcoin's price is going up again lately and is nearing all time highs.

A question in academic finance is whether financial assets' prices efficiently reflect market participants's view on the future.

I personally disagree that financial prices can at all be efficient. It is simply impossible that the price of a stock or a bond or Bitcoin's price for that matter is able to reflect all available information.

That said, however, there are different degrees of efficiency. Large companies's stock prices are arguably much more efficient that small capitalisation stocks.

Bitcoin, in fact, as a fresh new financial asset class exhibits quite low levels of efficiency. Bitcoin's price fluctuates constantly and looks quite erratic. One of the reasons for the low price efficiency of Bitcoin is that the factors influencing Bitcoin's price are not yet fully known or studied. There are many economic, technological and psychological factors influencing Bitcoin and other cryptocurrencies's prices.

And hence the high volatility exhibited by Bitcoin's price. As with every new asset class or a new stock listed on an exchange, the people studying Bitcoin's price are not many or are not as sophisticated as for large capitalisation stocks like General Electric, for example. The same is true for the investors in Bitcoin which are predominantly technologists from information technology firms and employees of banks and brokerages. More sophisticated hedge fund managers and even asset managers' portfolio managers are also present in the Bitcoin market, but at a much lesser scale. The low relative liquidity of Bitcoin also contributes to its less efficient price character. What is more, there is still the danger of a Black Swan event of governments outlawing Bitcoin and other cryptocurrencies, which seems to be embedded deeply in Bitcoin's price and market participants' minds.

As far as I am concerned, Bitcoin is set to thrive in the future, barring a major unforeseen event, but Bitcoin's price will remain very inefficient regarding the contained therein information for the foreseeable future.

Apple's Competitive Advantage

 

Apple's current market capitalisation is 2.45 trillion USD which makes it the most valuable company on the planet.

How has this remarkable feat been achieved? Many analysts will point to Steven Jobs's genius. I agree that Steve Jobs marketing and product prowess was basically the main reason for Apple's amazing success. That said, Steve Jobs was able to perform his magic only because Apple Inc. had a loyal user base, which exhibited almost cult like behaviour in devouring fervently all products the Cupertino, California based company came up with.

Much like a religious organisation Apple built up through the years a loyal following which accepted no other companies's products as the universal truth. By being able to sell high-priced products with significant profit margins to its loyal customers Apple was able to muster financial resources which brought it safety to dive deeper to develop iPad  about which Steve Jobs said: "This would make a great phone" and iPhone came about and the rest is extraordinarily successful history.

Yes, Apple's hardware was almost always of exceptional quality and design. Here Jony Ive must be mentioned as much of the design of Apple's consumer electronics products is of his making. Ive was an industrial design genius, but also because of Apple's cult like status he was drafted in Apple's ranks in the first place. Apple has an aura of magic around it. Much if it is due, of course, to Steve Jobs' personality. However, Apple's auto could also be traced back to the company's primary decision to be exclusive, to offer high-priced high quality products not to everybody. This was, of course, Steve Jobs and Stephen Wozniak's decision. This very exclusivity brought about Apple's magnificent influence.

Yes, people like Jobs and Wozniak are who create companies, but inertia and momentum also matter greatly. Especially when the right, long-term, strategic decisions are taken at the right time.

All in all, I believe Apple is overvalued by 30 % based on its Price/Sales ratio. On Price/Earnings ratio, however, the company is only 10-15 % overvalued. In times of crisis, though, it is likely that people will try to save money and stop buying expensive products like Apple's hardware. In the coronavirus pandemic, the opposite proved through, actually. The world is moving to digital first. That said, Apple's current market capitalisation is around three years early.

Bitcoin's Value

Bitcoin is undervalued. I would estimate that currently Bitcoin is worth 100 000 USD.

Bitcoin is money 2.0. Fast, electronic, efficient and saving time, effort and money.

Bitcoin in addition is serving as cryptocurrencies' infrastructure, blockchain, which will slowly flow into other industries like banking.

A new boom in individual cryptocurrencies issuance will soon flourish again.

Cryptocurrencies minted by individual predominantly technology start ups fill up a void in seed and venture capital financing. As any other financial asset in history Bitcoin is prone to excessive price rises or price declines.

Things will settle down, however. People's psychology is the key to gradual adoption of Bitcoin.

People do like new things which save them time, money and effort. Paper money is cumbersome but still useful. Part of its role will be taken up by Bitcoin.

I see infrastructure for Bitcoin growing at many places throughout the world. 

One of the things missing is big corporations or governments standing behind Bitcoin. Facebook, Tesla and Square have already expressed support for Bitcoin in many ways.

Will Apple Buy Tesla? Or Will Apple Develop Its Own Electric Vehicle?

According to my opinion, Apple will most probably not buy Tesla, in the mid-term at least, as has been speculated by many research analysts and portfolio managers.

Simply because Tesla is an unprofitable company with a market capitalisation around one quarter that of Apple. Apple regularly achieves a net profit margin of above 20 %. Tesla is still barely profitable if one excludes government subsidies for clean energy vehicles.

And Tesla's market capitalisation at approximately 682 billion USD is more than 25 % that of Apple. With other words, if Apple decides to buy Tesla, Apple has to spend a huge sum of money even compared to Apple's highest in the world market capitalisation and still struggle to make the new Tesla business profitable.

There have been numerous media pieces of information that Apple is planing to develop its own, internally produced electric vehicle. As with iPhone these rumours claim that Apple will design the electric car and outsource its putting together manufacturing to a third party established car producer.

What is more, some analysts claim that Apple might develop an electric vehicle, that is also autonomously driven. Many analyses have shown that autonomous vehicles are sill a long way away, however.

Apple possesses extensive technological know-how and prowess and it is not too farfetched to assume that Apple could succeed in producing electric cars profitably if ever Apple Inc sets itself such a goal in earnest and starts executing on it.

Buying Tesla just costs too much money. Apple could build the electric car manufacturing capabilities for only a fraction of the 682 billion USD or more as a premium would have to be paid to purchase the whole of Tesla's enterprise.

And getting a huge new technological breakthrough product like an electric vehicle on the market will most certainly increase Apple's market capitalisation markedly.

Are Technology Stocks in a Bubble? When It Is Going to Burst?

As far as I am concerned, technology stocks are definitely in an overvaluation bubble. Technology stocks are circa 60 % overvalued measured by the current level of the Nasdaq Composite.

Some analysts claim that you can only spot a financial bubble after it bursts. I disagree. Apart from the largest five technology stocks Apple, Microsoft, Amazon, Alphabet and Facebook most other technology stocks do not make money, that is  they are not profitable.

And businesses are made for profit. Yes, the argument goes you can buy technology stocks at high valuations and prices and sell them at even higher valuations and stocks prices and make large sums of money. However, sooner or later many people will buy at the top and suffer losses of something like 50-70 % magnitude. 

Another argument goes that technology companies can grow into profitability. Yes, that worked only partially for Amazon, because the company still has a very high Price/Earnings ratio. However, technology stocks are notoriously volatile. Several years ago after earnings Facebook's stock price fell more than 20 % which was the largest wealth loss for a single listed company in history.

I personally think that 6 months to one year around the ceasing of money creation by central banks, technology stocks measured mainly by the Nasdaq Composite will crash by more than 50 %. The interesting thing is whether central banks will stop printing money at all. I f they do not stop, the global economy will resemble Japan where the Government Debt/GDP ratio is more than 240 % and the Bank of Japan is simply compelled to print money to help finance the government. Otherwise the economy of Japan can simply implode.

I personally think capitalism has to prevail. Centra bankers have to show courage and stop money creation. Yes, many weak an unprofitable businesses will go bankrupt and many jobs will be lost in the short run. But capitalism's creative destruction will prevail and later we will have a stronger, more resilient and flexible economy.

My hope is with the USA and the Federal Reserve. Yes, if the Federal Reserve withdraws the monetary support it currently provides, technology stocks and the general stock market will suffer a correction of likely more than 30 % measured by the Dow Jones Industrial Average, The Standard and Poor's 500 and the Nasdaq Composite indices.

Afterwards, however, the next Alphabet Inc, Google search engine creator, Amazon Inc or Facebook Inc will appear and increase humanity's well being.

Is Bitcoin Crises Resistant?

 

Bitcoin has so far proved resistant to medium price crashes and bounced backed quickly. 

The same goes for the other cryptocurrencies. Since 2009, however, we have not had a huge financial assets crash. Yes, 2020 with the coronavirus pandemic was a severe shock as the major US stock indices crashed around 30 % from their peaks.

But the 2009 crash had much more severe consequences. Then the economic growth was driven by financial credit and the sudden evaporation of liquidity brought on huge strains for the economy and actually threatened capitalism as the social contract itself.

Personally, I think Bitcoin will withstand a severe financial crisis like in 2009. The main way to survive a crisis, be it financial or personal is to adapt, be flexible. And Bitcoin is flexible, since it is being actually created by the people. The secret of democracy and capitalism is that it is basically decentralised decision making being split or the proverbial distribution of powers.

Bitcoin is the epitome of financial democracy. People create Bitcoin and other cryptocurrencies without a central governing body like a central bank or Ministry of Finance to authorise the process. Why decentralised decision making works is actually connected with information and ego. Each person, I am convinced, knows what is best for him or her, because they know themselves best. Ego comes into play, because everyone is unique and people want to take decisions for themselves.

Bitcoin's supply is mined according to individuals' preferences. What is more, the hashing algorithm  behind Bitcoin should be prone to adaptation by the general public. What is more, Bitcoin is efficient and low-cost, since it does not require the printing presses to be working. Bitcoin is hugely value accretive, since it makes financial transactions much more efficient and attracts many new investors to investing in financial assets.

People are slowly losing faith in the monetary authorities due to the boom and bust crises cycles we have every 5 to 10 years. Actually, these boom and bust cycles are caused by people's greed and and fear. And my findings actually show that fear is negative greed. Fear or down moves are much more severe, but short lived, because investors are very scared of loosing their money and are rushing for the exits at every hint of danger. The classical run or fight primal characteristic of human nature that has helped us survive physically through the ages.

Psychology is pivotal in financial decision making. People's greed is palpable these days as everybody is grasped by FOMO or fear of missing out on the huge moves up of various asset prices, predominantly stocks and cryptocurrencies. Bitcoin's price rise is partly a product of this fear of missing out notion. 

I believe, however, that many people that invest or drive Bitcoin are hoping to do common good apart from profiting nicely in the process. Bitcoin promises to rid us of the biases of Presidents, Prime Ministers, Ministers of Finance or central bank governors. Decentralised decision making must ensure efficiency in decision making which up till now has been compromised by the flaws of human nature. Robots or artificial intelligence are not ready yet to take up that process entirely. In fact, Bitcoin's hashing algorithm is nothing short of artificial intelligence backed by human oversight or combination of the two most popular branches of artificial intelligence/machine learning, namely supervised and unsupervised learning.

Again turning to psychology, humans are fascinated by new technologies and everything new. Much of the reasons we became a dominant species on planet Earth is that we experimented with and accepted new things. In short, we developed new technology which made us superior. That usually manifested itself in an arms race. First it was fire, then stone knives, then arrows and bows, followed by pistols, rifles, machine guns, tanks, war ships and most recently nuclear arms. Each of these developments in technology made humans stronger and better equipped to deal with life's challenges. Artificial intelligence seems like the current final frontier. Artificial intelligence promises to develop universal soldiers, who can withstand pain, survive firearms attack and in the end annihilate the enemy efficiently and protect mankind.

Bitcoin and other cryptocurrencies are the edge in this technology fight. If Bitcoin and cryptocurrencies in general live up to their promises of creating huge financial wealth for the people, humanity will be able to finance the production of much more efficient weapons and extend its domination to other planets. Bitcoin's code tries to speed up financial transactions and decision making itself by breaking it down and distributing it among almost limitless number of participants. Whatever happens, it is 100 % certain that humans will be doing the decision making in the future. Yes, they may supervise the artificial intelligence algorithms they develop but still the code will be developed by humans. It is true that now there is code which can write other computer code, but still the initial development phase was done by humans.

The Japanese' hieroglyph or sign for crisis is the same as for opportunity. The next financial crises could prove a watershed moment for Bitcoin and other cryptocurrencies in general. The obvious bubble in stocks, technology stocks especially, bonds and real estate will sooner or later burst and the largest wealth destruction in the humanity's history will follow. Afterwards, the natural disappointment of people could speed up enormously cryptocurrencies's adoption.

Ultimately, the future of Bitcoin and other cryptocurrencies's adoption depends on the one thing that money rests on - trust.

  

Apple's Technology Strategy

 

Apple at 2.41 trillion USD current market capitalization is grossly overvalued. Apple Inc.'s intrinsic worth, as far as I am concerned, is 1.7 trillion USD.

To substantiate its current market capitalization Apple has to come up with a new blockbuster product. A self-driving electric car may bring Apple's value to even above 3 trillion USD.

The current core strategy of Apple Inc. of growing via its services offering is nice, but it still hinges much on iPhones locking in the consumer.

I find it very surprising that another company is not able to develop the smartphone market, that is to come up with a blockbuster smartphone model of its own. Even now as Apple's edge has diminished through the years, partly because competitors are copying its technological know-how.

Apple's brand equity should not be underestimated as well. Apple has a hugely loyal user following which ensures the steadiness of its revenue.

Apple simply needs to move forward and develop a new hugely successful product based on information technology. Easier said than done, now that Stephen Jobs is deceased.

Apple should either take a long, deep look into its own marketing and engineering bench or bring in new talent form outside to stay competitive. Otherwise, Apple Inc. will simply fall behind, as the world is constantly moving forward.

Palantir's Future Prospects

Palantir's future lies in developing artificial intelligence algorithms. And artificial intelligence is the ultimate growth industry as computer algorithms provide efficiencies, save costs, increase profits and ultimately contribute to better processes and production results.

Palantir Technologies Inc., the artificial intelligence algorithms production company, is arguably the largest company in the world developing artificial intelligence/ machine learning algorithms that has a scalable product. And actually Palantir has several scalable artificial intelligence products. 

The problem with artificial intelligence is that doing artificial intelligence is very difficult to scale. Since every company is different one has to constantly adapt the machine learning algorithms to the specific case which involves hiring many people and basically turns artificial intelligence into a consulting business. And with the employment of many people that growing a consulting business involves come hire costs and lower profit margins which makes doing artificial intelligence difficult to scale.

Palantir Technologies Inc is trying to solve that difficulty. Yes, still large part of Palantir's revenue comes from doing AI/artificial intelligence/machine learning advisory work, but Palantir Technologies Inc has several scalable products in that area.

Palantir is still heavily loss making. Artificial intelligence, however, is a hot mega trend that is going to basically change everything. Artificial intelligence algorithms are the fourth industrial revolution. I would argue that the current fourth industrial revolution is the most important and most value creating and accretive industrial revolution in history.

And in the information technology industry often the quickest companies get almost all of the rewards. Facebook's slogan "Move fast, break things" is an epitome of that. Palantir has a huge first mover edge in the artificial intelligence area. If the company executes well on its long-term strategy, Palantir Technologies Inc's market capitalization is bound to grow multifold from the current 40.95 billion USD.

Palantir Technologies Inc, of course, has to become profitable in order to become a viable business, because businesses, after all, are opened to earn profit.

All in all, I think Palantir Technologies Inc's technology will sustain its leadership position in artificial intelligence in the near future.

Investing in Bitcoin and Other Cryptocurrencies

Bitcoin's resilience proves remarkable and every day the cryptocurrency exists and stores value increases its chances of becoming store of value, unit of account and means of exchange or with other words money.

Recently Bitcoin's price fell to 30 000 USD from 54 000 USD but now Bitcoin's price has recovered to above 43 000 USD.

All this speaks to the remarkable investing interest in Bitcoin. More and more hedge funds have electronic money invested in Bitcoin. Some mainstay asset managers are also dabbling in the cryptocurrency. Word is making the rounds of individual investors getting extremely rich from investing in Bitcoin which begets even higher numbers of individual investors investing in Bitcoin and other cryptocurrencies.

Bitcoin is the first real financial asset class developed in decades. Money is the pinnacle of the capitalist system, which basically now governs the whole world. And Bitcoin is enhanced money in purely electronic form. What is more, Bitcoin is based on a simple, yet revolutionary hashing blockchain algorithm that provides independence. And freedom. And freedom is actually the base of capitalism.

Investing in Bitcoin is fraught with risks, though. Bitcoin's price is extremely volatile as the last couple of months have shown, but so are technology stocks which regularly fall 20 % -30 % after a quarterly earning report below expectations. Actually, in two words, Bitcoin is technology money. 

The nascent cryptocurrencies asset class still in a way depends on central banks. If central banks start to wage a war on cryptocurrencies, regulators will of course loose out in the end, but such a conflict will severely slow down Bitcoin's adoption. Global progress cannot be stopped, but it can be slowed down.

The next wave of cryptocurrencies adoption should actually be a new higher wave of minting cryptocurrencies by companies. Yes, now there is still early stage venture capital that fills that financing void for start up companies, but seed and early stage venture capital money still comes with a lot of preset conditions. Cryptocurrencies, on the other hand, provide a higher degree of freedom for small and medium sized companies, which are the backbone of the capitalist system.

Yes, issuing cryptocurrencies, which are essentially another form of security without the ownership rights, should be regulated. But carefully.

Bitcoin and other cryptocurrencies will sooner or later unleash the proverbial animal spirits of the free market. Huge wealth will be created and later much of it destroyed, much as during the technology dot-com bubble. But the cryptocurrency infrastructure will remain. And on this base many new, emerging, small technology firms and companies from other industries will step on and change the world. Capitalism, at its best.



Analyzing individual cryptocurrencies investments issued by companies is actually much akin to common stocks analysis. The investor has to read the balance sheet, income statement, the cash flow statement, the annual report and all the news concerning the particular company that has issued the cryptocurrency or the common stock. On top of that, the investor should watch for the general adoption of cryptocurrencies which would also influence the value of the particular cryptocurrency in question. What is more, the investor must also consider the psychology of the market participants. Many a times investors focus on a stock mainly for psychological reasons which drives the stock's value higher. In short, the investor must forecast the other investors' perception of the individual cryptocurrency he is considering investing in, so he or she can estimate whether the value of the cryptocurrency will increase.

All this requires significant effort and I would argue that analyzing cryptocurrencies investments is actually more difficult than analyzing common stocks, because the factors that have to be taken into account are simply more.



Bitcoin and other cryptocurrencies' liquidity is the missing link for now that prevents a larger scale adoption of cryptocurrencies. Cryptocurrencies' liquidity depends largely now on pension funds and other large asset managers entering the cryptocurrencies market. There have been some news reports that several small pension funds and asset managers are preparing for investing in cryptocurrencies.

The main early adopters of cryptocurrencies are people working in information technology and finance. Technologists are natural early adopters of everything new, because technology is nothing less than a way to create new things. People working in banks, brokers, asset managers, pension funds, hedge funds and insurance companies are natural early investors in Bitcoin and other cryptocurrencies because cryptocurrencies is an exciting new asset class which holds the promise of increasing wealth significantly. Actually information technology and finance are the industry leaders of our world. And Bitcoin and other cryptocurrencies are financial information technology or fintech.

The blockchain algorithm underlying Bitcoin and other cryptocurrencies is nothing short of a revolution. It is a not so complicated hashing algorithm, but it actually provides for distributed decision making, which is nothing short than democracy. The blockchain algorithm will profoundly change many industries, provided that human beings are prepared to share power.

I forecast that Bitcoin and cryptocurrencies' market capitalization will, barring a shocking, black swan event, will one day surpass global Gross Domestic product which is now around 80 trillion USD.

Pinterest is Undervalued on International User Growth

Pinterest's stock, after falling around 20 % recently, looks undervalued currently.

Pinterest, the social networking site and application, was on a stellar run since the depth of the coronavirus pandemic in March 2020.

Since March 2020 Pinterest's stock price went up seven times which is an extraordinary run. In this blog, months ago I contemplated whether Pinterest could displace Facebook as the hottest and largest social network. While, I think Pinterest is far from competing as equal with Facebook, Pinterest has unrealized potential.

Especially now that Pinterest's stock price is down 20% in the last several trading days after Pinterest's second quarter 2021 earnings report showed slowing user growth in total and even declining user numbers in the USA.

Apparently, Pinterest's future potential lies in international user growth, females especially. This actually is a promising niche. Pinterest's market capitalization currently is 37.34 billion USD. 

In my opinion, Pinterest net intrinsic value is around 90 billion USD.

Robinhood Markets Valuation. 2nd of August, 2021

Robinhood Markets is overvalued.

Robinhood Markets, the stocks and cryptocurrencies brokerage company with clients mainly young traders, is valued now at 31 billion USD.

I estimate Robinhood Markets is worth around 17 billion USD based on its latest reported quarter Q1 2021 results.

I see two scenarios for Robinhood Markets. If Robinhood Markets becomes profitable, its market capitalization could top 100 billion USD in 5-7 years.

However, if Robinhood Markets remains heavily lossmaking as it is now, its value will hover around 17 billion USD for the next 3-5 years.

As can be seen above, I think that the current intrinsic value or Robinhood Markets is 17 billion USD. Robinhood Markets' clients, mainly young people, are taking on hugely risky trades, the risk of which I doubt they fully understand.|

Robinhood Markets' clients actively buy options, sell options short and sell stocks short. They trade with significant volumes when aggregated, which due to the several days settlement period for trades, may even endanger the entire financial system. Clearing houses which are the base of the trading financial system may all of a sudden realize they have required too loo margins from their brokerage companies clients, which could threaten the clearing houses with insolvency and basically endganger to bring down the whole financial system

All in all, I see Robinhood Markets as overvalued currently.