Based on the extreme debasement that's been occurring and that's expected to continue, I would suggest adopting a new unit of measure. Although the world will continue to settle in dollars or other major fiat currencies, that doesn't mean you should measure your growth in... 1/
buying power with fiat units. For people that find Bitcoin to be undesirable, the most common alternative is gold. For example, look at the performance of the S&P 500 if you measure it in gold instead of the US dollar. Down 25% since peaking near the end of 2018. 2/
If measuring the S&P500 with dollars over that same period of time (since late 2018), an investor is up nominally 19% in dollar terms, but relative to gold their buying power (for retained earnings) has diminished by 50%. So, this begs an interesting question, what could be 3/
better than gold and why? As we know, the NASDAQ has been on a killer run (nominally) over this same period of time (since late 2018). In fact, here's the chart in nominal fiat terms: Up, 56%. But, wonder what that looks like when we measure in gold instead of fiat dollars? 4/
Well, here it is. When using gold as the unit of measure, even the NASDAQ is down -2.5% over that same period of time. Remarkable when you think about it, because a rock, which does nothing but sorta fixes it's outstanding units, is outperforming companies ... 5/
that are doing some of the most remarkable technological advancements the world has ever seen. How is this possible? Because the fiat currency supply is inflating THAT fast. It's growing at such a pace that the free cash flows these companies are making, can't keep pace with 6/
the debasement the global governments are supplying. So, this brings me to my final point. Earlier I wrote that gold "sorta" acts like a fixed supply money system. The reason it fails (relative to Bitcoin) is because there's no difficulty adjustment for miners. In short, 7/
if the price of gold continues to run higher (in nominal fiat terms) - which I expect - it creates a major incentive structure for miners to increase the production of gold being dropped into the market. Unlike gold, Bitcoin has a difficulty adjustment that regulates 8/
this flow rate. So as the price of Bitcoin runs higher, the two week difficulty adjustment inhibits digital miners from being able to capture more coins being sold into the market. Not only that, but every four years, the amount of coins being mined...9/
gets cut in half. This is equivalent to gold miners finding half as much gold ever four years (no matter what - and it can't be changed). So, in my very humble opinion, this is the chart to watch. Since May 11, 2020, Bitcoin had it's last halving event 10/
where the miners' reward flow was cut in half. Historically, these events are followed by an abrupt run-up in price for the year and a half following such an event. Below is the chart comparing Bitcoin, the S&P500, the NASDAQ, & gold since May 11, 2020 (the BTC halving date). 11/
As you can see, Bitcoin has slightly outperformed the NASDAQ (by 5%), significantly outperformed the S&P (13%), and aggressively outperformed gold (20%). Interestingly, gold has underperformed both equity indexes on this shorter time horizon but I expect it to catch back up 12/
and outperform as we get into 2021. In conclusion, investors need to be hyper-focused on their buying power and not their nominal fiat returns. The measuring stick you are viewing the financial world with can drastically impact your ability to navigate 13/
such an odd and nonstandard environment that doesn't happen but once in a lifetime. I'll continue to track these four indexes/assets from 11 May 2020 to show the results. If you want to learn more about Bitcoin, here's a one pager. 14/ END

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More from @PrestonPysh

11 Jun
Some thoughts on the dollar's reserve status.

A quote from the book, Big Debt Crises, by Ray Dalio:

"Can reserve-currency countries that don't have significant foreign-currency debt have inflationary depressions? While they are much less likely to have inflationary...1/
contractions that are as severe, they CAN have inflationary DEPRESSIONS, though they emerge more slowly and later in the deleveraging process, after a sustained and repeated overuse of stimulation to reverse deflationary deleveraging. Any country, including one with a ... 2/
reserve currency, can experience some movement out of its currency, which changes the severity of the trade-off between inflation and growth described earlier. If a reserve-currency country permits much higher inflation in order to keep growth stronger by printing lots of ...3/
Read 11 tweets
3 Jun
I can't take the misuse of this terminology any more.


Here's my point of view.

Central banks are aggressively "inflating" the fiat monetary base. Since 2008, the US federal reserve has expanded their balance sheet from .8T to 7.1T. Post 1
That means they have "inflated" that fiat monetary base supply of currency by 21.9% ANNUALLY over that 11 year period of time. Well, then why haven't we seen CPI "inflation"? Easy, because they are buy financial assets with that freshly printed money. Bonds are purchased .. /2
off the open market and freshly printed cash is supplied into the "free and open economy". The problem - the money goes straight into the hands of the people holding assets & only a trickle comes down into the lower income sections of the economy where a majority.. Post 3
Read 17 tweets
28 May
Update on Miner Capitulation. So this has been one of the most abnormal price moves I've seen considering the difficulty pressure the miners have been experiencing since the halving. IMHO, this is very bullish for the incoming price action once this epoch is complete. Post 1
In the past 24 hours, it appears the miners have been able to keep pace with the 10 minute block reward flow. This is the first time we've seen that happen in the current Epoch. If that continues to persist (that we remain 180 blocks behind until the next adjustment), Post 2
then I think the potential for a final price drop opportunity is diminished. Could it still happen - of course. But as far as waiting around for it, probably not the best idea. A simple DCA approach for free cash flow waiting on the sidelines is likely the best approach. Post 3
Read 10 tweets
27 Apr
Investing during manipulated market conditions (a thread).

Let's face the facts, you are not participating in free and open markets, so what's an investor to do? Here are a couple important aspects I think people should consider based on the current environment ... Post 1/
First, I think it's important for people to realize global governments are providing large amounts of stimulus - MASSIVE amounts of stimulus. As you can see in this chart, the trend of stimulus has been going strong for more than a decade and it's not letting up ... Post 2/
In fact, it might even be accelerating. So what does this mean for stocks? Well, to date, it has meant the consolidation of earnings power into the hands of the few. Check out this awesome chart from @LynAldenContact. Not only that, but it appears the consolidation ...Post 3/
Read 26 tweets
6 Apr
Markets are not functioning as you've seen in prior decades. Globally, fiscal spending and monetary policies are warping free and open markets into Franken-Economies. This means, as things move forward, the performance of stock and bond markets are going to be highly dependent 1/
on government policies (globally). Governments are fighting price deflation (which is caused by over-used inflationary monetary policies with no currency peg). Once real interest rates (globally) reach 0% and there's no fiscal responsibility for fiat nations, 2/
policymakers effectively have two tools remaining to fight the price deflation (in fiat terms). First, they can use QE (been doin' that), or, they can use Universal Basic Income UBI (just getting that one started). There are many...3/
Read 15 tweets

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