Bitcoin Investment Strategy

Bitcoin's price is currently hovering around 42 000 USD. Bitcoin is fundamentally undervalued.

Bitcoin and its underlying blockchain algorithm will disrupt most industries and the world we know. The best way to play this, as far as I am concerned, is to buy and hold Bitcoin for the long run. I think Bitcoin's price will rise in the long term. This is not an investment recommendation!

One has to be able to stomach between 20 % and 80 % declines of Bitcoin's price, but Bitcoin's underlying economics will eventually prevail, I am convinced.

Moderna Intrinsic Market Capitalization

Moderna, the coronavirus mRNA vaccine producer, currently has a 170.88 billion market capitalization.

I forecast Moderna could become a 500 billion USD market capitalization company. Large part of the population of the planet, especially in emerging countries, is not yet vaccinated. Which still provides a very large market for Moderna's Covid-19 jabs.

I also prognosticate that the coronavirus will not die down as quickly as some people think. People increasingly live in congested large cities, megapolises which creates higher temperatures and in general fertile environment for Covid-19. In addition the coronavirus is proving remarkably adaptable and resilient.

Palantir And Artificial Intelligence

 

Palantir Technologies has arguably the only really scalable artificial intelligence product on the market.

Palantir provides software for data mining and data analysis via artificial intelligence/AI/machine learning. The problem with statistical modelling, one of the main branches of artificial intelligence, which is also called machine learning is that is basically a consulting service, through which experts in machine learning give tailored advice to companies. Which makes artificial intelligence difficult to scale.

Palantir has partially solved that problem by embedding artificial intelligence algorithms in software. Artificial intelligence is driving the current fourth industrial revolution. Palantir is currently valued at 51.8 billion USD. 

I forecast Palantir Technologies could become a 1 trillion USD company in 10 years. Artificial intelligence can encompass virtually any industry.

The Current Information Technology Boom

Information technology currently is experiencing an unprecedented boom. 

The current plenty, I would argue, is even larger than the dawn of the commercial internet advance in 1999 and the subsequent dot-com boom and bust in 2021.

The main drivers of the current information technology boom is artificial intelligence/ai/machine learning and cloud computing.

Cloud computing is the infrastructure, while artificial intelligence provides the software algorithms to harness the available modern day computing power.

How long will the current information technology boom last? Two things are driving the nowadays technology rise, namely the drive to save costs and thus increase profits by companies and the cheap money which via money creation/money printing the leading global central banks like The Federal Reserve, The European Central Bank, The Bank of England and The Bank of Japan provide.

Actually, it will all go along until suddenly the music stops. Some minor or alternatively major event will cause people and companies to be afraid of loosing the achieved paper profits. It could be a fundamental or psychological factor which will cause the selling and running for the exit. History is littered with examples of financial euphoria, followed by the natural bust and gloom afterwards.

No, company and individuals' greed will not disappear, of course. However, what I have found is that fear is actually negative greed. And when fear sets in, fear is a much stronger emotion than greed.

I forecast the current information technology boom will last 3 more years and something will give.

Cryptocurrencies Investment Characteristics

Bitcoin and other cryptocurrencies are similar to stocks. Yet, they are different to equities, since cryptocurrencies do not participate in the capital structure of the company.

Bitcoin actually provides value currently as the infrastructure for the cryptocurrencies market. Bitcoin's public acceptance, Bitcoin being the most famous cryptocurrency, is pivotal in establishing cryptocurrencies as a new investment class.

Bitcoin and other cryptocurrencies are much more volatile than common stocks. Cryptocurrencies, other than Bitcoin and Ethereum, are essentially a token on a company's project. If a company is successful in its projects, the cryptocurrency issued by the company will be successful.

A difference to common stocks is that cryptocurrencies are not an ownership on the company which implicitly presupposes that the particular company will not necessarily support in full the cryptocurrency it has issued. Microsoft, for example, had many hardware and software projects through the years which never produced success. If Microsoft had issued several cryptocurrencies in connection with particular projects which failed, those particular Microsoft's hypothetical cryptocurrencies' prices will have sunk to zero. And yet Microsoft's common stock is soaring to new highs giving Microsoft a 2.25 trillion USD market capitalization.

In short, cryptocurrencies investments bear high risks, but also high potential rewards. Vigilance is key.

The Future of Cloud Computing

Cloud computing is the new way to compute. People are slowly starting to trust off premise software.

Amazon, Microsoft and Alphabet, the google search engine creator, are the main beneficiaries from cloud computing.

People will realize that in the cloud many times more powerful computers than the ones they have at home can be used, which will only expand their productivity multiple times. Bitcoin can be successfully mined and highly complex machine learning calculations can be done on cloud based super computers.

Cloud computing will simply save people time, effort and money, so it is destined to succeed.

Apple and Artificial Intelligence

Apple has established itself as mainly a producer of hardware and many analysts think it is missing the rise of artificial intelligence/AI.

Actually, Apple uses artificial intelligence in its new chip which the company produces itself. What is more, its hardware is proving an excellent platform for artificial intelligence. 

Apple's office productivity suite and other applications made by the Cupertino, California based company also use artificial intelligence. What is more, Apple uses extensively AI in its App Store for software applications.

So Apple is in an unique position to benefit extensively from artificial intelligence.

In fact, artificial intelligence or AI could prove the next big technology product which could make Apple's market capitalization surpass 5 trillion USD. And this time it will be software or algorithms, not the highly efficient hardware for which Apple is famous.

Stocks to Benefit From Cloud Computing

Amazon, Microsoft and Alphabet, owner of the Google search engine, are the most likely mega capitalization public companies to benefit from cloud computing.

Smaller companies like Arista Networks can also rise on widespread adoption of cloud services.

Basically, almost every technology company uses in one way or another cloud computing. 

One can do also artificial intelligence/machine learning in the cloud. 

Cloud computing simply saves people time, effort and money, which will make this technology thrive into the future.

Bitcoin Price Forecast

Bitcoin's price could surpass 100 000 USD in the next 3-5 years.

Bitcoin is USD 2.0, a global currency, but in electronic from. Yes, regulators are increasingly threatening to regulate cryptocurrencies as evidenced by the news flow in the last couple of days. However, strict regulation will destroy Bitcoin. 

Since Bitcoin is beneficial for governments by increasing the velocity of money, participation in financial services and thus increasing government tax revenue, it is highly unlikely that government agencies will overregulate Bitcoin.

As more institutional asset mangers like hedge funds invest in Bitcoin, the public's trust in Bitcoin and cryptocurrencies will increase which on its turn will drive up Bitcoin's price on more investors putting money in Bitcoin.

Dropbox Valuation on Cloud Computing

Dropbox Inc., the file hosting company, which currently has a market capitalization of approximately 12.7 bln. USD is actually with an intrinsic value of 22 billion USD, in my opinion.

The current valuation metric of 5 times Price/Sales ratio is simply too low for Dropbox. Dropbox is growing at 13.52 % year on year for the last quarter, posting 16.58 % net profit margin for the second quarter of 2021. Such metrics simply presuppose a higher than the current market capitalization for Dropbox.

File hosting is basically a cloud computing service. And cloud computing along with artificial intelligence are driving the current fourth industrial revolution. AI, artificial intelligence, is actually a computing cloud service. Yes, file hosting services are being commoditized, getting cheaper and more accessible as many huge companies like Microsoft, Alphabet(owner of Google) are offering file hosting.

Dropbox, however, has a significant first mover advantage and a strong grip on the consumer hosting services or cloud computing infrastructure.

Amazon' Future Lies in Cloud Computing Services

 

Amazon is the leader in cloud computing services with its AWS offering.

Cloud services are the way Amazon can become profitable. So far, Amazon has chiefly relied on its online merchandising business to receive revenue. Only Amazon's online delivery business in the USA, however, is consistently profitable. The International online merchandising business of Amazon is losing money consistently and is cross-subsidized by Amazon's other business initiatives.

The cloud computing business can become a 1 trillion USD in revenues globally business in the next 10 years. And Amazon is achieving a circa 30 % margin on its AWS cloud computing offering.

Cloud computing is basically the future of computing. Many on premise at office and at home computing activities will move to the cloud. The cloud services are slowly building trust in companies and consumers. Not to mention that cloud services are very cost efficient.

Amazon, with its first mover advantage, has a huge edge in cloud services which the company is confidently monetizing.

How Big Can Palantir Become?

Palantir, the artificial intelligence data analysis company, is currently with a circa 50 billion USD market capitalization.

Basically, I think Palantir can become a 1 trillion USD market capitalization company. Palantir has arguably the only really scalable artificial intelligence data analysis products suite. Artificial intelligence or AI is driving the fourth industrial revolution and its promise huge.

Palantir simply has astounding edge in artificial intelligence/ machine learning which, if used wisely, will allow Palantir Technologies to reap the benefits of the huge mega trend of AI.

Tesla Short-Term Valuation 08 September 2021

Tesla is currently valued at 745.40 billion USD. Based on the news flow I think Tesla is overvalued in the short-term.

Actually, I think the long-term intrinsic value of Tesla is 120 billion USD, since Tesla simply does not earn money. The company is not profitable.

However, since the company is priced at 745.40 billion USD, I think in the next several months Tesla market capitalization could fall to 650 billion USD.

The markets and the world are concentrated on the coronavirus which actually decreases carbon emissions which lowers Tesla's future value, since the pressure to preserve the environment lessens.

So simply said, the news sentiment concerning Tesla is negative.

Facebook Valuation 07 September 2021

Facebook is currently valued at 1.06 trillion USD.

I would say Facebook Inc is still undervalued. Facebook market capitalization could reach 1.7 trillion USD and then I would say Facebook would be fully valued for the next 5 to 7 years. My estimation is influenced by the constantly and briskly growing  market for online advertising.

The online advertising market, however, will soon reach a saturation point. The whole market for advertising is 649.22 billion USD in annual revenue. Online advertising is constantly gaining at the expense of television and newspaper advertisements.

Advertising, however is a mature industry so it is growing with 5 % and is likely in the long run to grow with the pace of the global population growth.

A huge advantage of Facebook Inc is that the social network is extremely profitable unlike its competitors Snapchat and Pinterest, for example.

The stock market rewards handsomely profitable companies by assigning them high Price/Earnings and Price/Sales multiples. The stock market also likes growth. And Facebook has both high growth and very high profitability at the moment.

So I estimate Facebook's intrinsic value is 1.7 trillion USD.

Bitcoin's Value Proposition

Bitcoin is currently trading at around 52 000 USD. So the general market thinks there is value in Bitcoin, despite many technology research analysts at investment banks, or even hedge fund legends like John Paulson saying Bitcoin is worthless.

So how does actually Bitcoin create value? Bitcoin provides the infrastructure for the cryptocurrencies market which supports the issuance and trading of all other cryptocurrencies like Ethereum, Dogecoin, Lite coin etc. Yes, currently Bitcoin does not produce cash flows back to investors holding it, but never have Amazon or Google or Facebook paid out any dividends also

Cash, like United States Dollars, also does not produce dividends. It just provides the infrastructure of our modern society. Bitcoin is USD 2.0, but it is just in electronic form. A new global, electronic reserve currency.

 

So, I am firmly convinced, excluding a Black Swan event like governments outlawing Bitcoin or cryptocurrencies in general, which I would deem as only 0.05% probable, Bitcoin will only thrive into the future

Artificial Intelligence Investments

 

Artificial intelligence or algorithms via which different tasks are by performed by computers usually guiding other machines is the basis of the current fourth industrial revolution, which is arguably the most impactful event in humanity's history.

Several publicly listed companies are set to benefit extra proportionately from artificial intelligence(AI). NVIDIA and Palantir are the most obvious choices. NVIDIA produces the graphical processing units and chips that power AI, while Palantir designs scalable software that incorporates AI algorithms.

Amazon, Microsoft, Alphabet and IBM, through their cloud computing offering, are also set to profit from artificial intelligence or AI.

Virtually all software companies use algorithms and artificial intelligence or AI on a basic level. That is why technology companies' stocks are outperforming all other sectors of the global economy.

Can Apple Develop a New Breakthrough Technology Product?

Apple, under Steve Jobs, made a technology revolution by conceiving, developing, designing and manufacturing first the iPhone, then the iPad and building on its Mac personal computers line.

I would argue that under Timothy Cook's leadership Apple is actually moving forward and actually also tremendously succeeding because of the inertia, momentum created under Steven Jobs' leadership.

No breakthrough products has Apple brought to market under Cook's leadership as CEO. Apple has turned into a dividend paying, large corporation behemoth living on inertia for the benefit of its pension funds and endowment shareholders. Jony Ive was also been pushed aside. Apparently the shareholders of Apple do not want to bear the risk of developing new products.

At the moment, I doubt Apple has a deep enough bench of genius engineers and designers to create a new breakthrough technology product like a self-driving electric car or Apple TV set for example.

It takes a genius like Steve Jobs to create revolutionary technology products. And it took even Steve Jobs more than 30 years to come up with the iPhone. 

However, in the mean time Apple Inc is a cash cow which can bring, apart from dividends, also capital appreciation to its institutional shareholders.

Cryptocurrencies As a Financing Vehicle

Cryptocurrencies have proven quite successful as a financing vehicle for start ups.

Several years ago many start ups issued cryptocurrencies to finance their businesses or they did initial coin offering or initial exchange offering. Cryptocurrencies are filling in a niche for start up financing moving either before seed financing or between seed financing and venture capital.

Actually initial cryptocurrencies offerings are the latest revolution in finance. They in a way circumvent the lengthy and expensive process of an Initial Public Offering. Initial Public Offerings require stable revenues of the issuing firm, host of investment banks as intermediaries and lawyers to prepare the documentation.

Initial coin offerings do not require per se investment banks or lawyer. Only a white paper as document is needed. Yes, it is true that the amounts raised via an initial coin offering are much smaller and the investor base is much more short-term and less sophisticated than the pension funds and endowments participating in the Initial Public Offering of large and established companies.

Initial coin offerings have actually revolutionized finance and they are a real threat to the equity underwriting business of investment banks. Yes, lately initial coin offerings have subsided and investment banks maintain their hold on public equity issuance and are a large participant in the equity issuance of privately held companies.

But initial coin offerings and initial exchange offerings, I forecast, will again become vey popular as they are an excellent, light load way for promising start ups to finance their businesses without giving up equity stakes. Instead the cryptocurrencies or tokens start ups issue are bound to projects of the issuing company.

The constantly rising price of Bitcoin could be the main factor of the renewed proliferation of initial coin offerings.