The price of bitcoin surged more than 15 percent on Tuesday, but certified financial planner Peter Mallouk warns against buying the digital currency. "It's not a real investment," he says. "It's speculation."
“That’s the way to play blockchain technology—not by trying to buy cryptocurrencies that you hope will replace regular currencies in the future” – CNBC on investing in corporate, private blockchains of the future.
So... who’s gonna tell this guy? https://t.co/vwtZkuhhHV
I don’t think he understands investing in crypto is like any early stage investments. Yes, most crypto’s will collapse, but the ones that make it will make hundreds, even thousand X’s. That’s why we make many small bets. Our losses are stopped at zero. The upside is 🚀🌝💸💸💸 https://t.co/UiadO8LP7g
I would imagine 2 things by now;
1. Talk of Cryptocurrency collapse are a thing of the past. Not only is it her to stay but everyone knows this by now!
2. CNBC would be smarter in their selection of guests and articles. https://t.co/ZMMTZSZKfD
Imagine the millennials, who, instead of investing in the #bitcoin "scam" in 2012, racked up $100k USD+ in NON DISCHARGEABLE debt to get a liberal arts degree from a "legit" school where rich parents bribed their unqualified loser kids in past admissions💫
On this week's episode of @CNBCFastMoney : "DON'T BUY BITCOIN WHICH IS DOWN 73% FROM THE HIGHS IN 15 MONTHS."
Next week we will go back to our popular segment: "HOW TO BUY RIPPLE AFTER A 958% RUN IN THE PAST 24 DAYS." https://t.co/bswOQCLwLj
There are some decent pieces of advice in this but the comment that cryptocurrencies will collapse is absurd. Based on that comment you can tell that there is not a lot of thought put into what he says he is just quoting from the textbook he learned investing from.
This article reveals a typical core-sampling of ‘expert’ opinion regarding bitcoin.
Peter Mallouk writes that “There are so many types of virtual currencies — like litecoin, ethereum, ripple and, of course, bitcoin — that "there's no way that even a fraction of them can survive." But litecoin, ethereum, ripple, and bitcoin are a fraction of the many types of virtual currencies that have already died – indeed were stillborn for any practical purpose and have had no impact on those that have survived: litecoin, ethereum, ripple, and – of course – bitcoin.
Having said that he goes on to say "Is it possible that maybe one or two will work out in the future? Sure it is." But then adds “. . . in the meantime, "if you buy cryptocurrency, you get no income. It's not a real investment. It's speculation."
Mallouk knows that speculators make money, sometimes a lot of money. One of the reasons for that is that they (sometimes) earn no compensation before cashing out. In other words, the risk they took in not earning dividends and yields is compensated for if and when their initial buy-in pays off. But as a practical matter the distinction between “speculation” and “investment” is academic. Taking stock options instead of higher pay is a form of speculation. And many stocks pay no dividends or very small ones, and bonds often yield very little – depending, of course, on how risky – speculative – such bonds are. As for real estate which Mallouk also recommends, the rent you earn is proportionate to the cost of owning that real estate – unless you speculate and buy land that has low value now but may have high value later. In the interim, you may not earn any rent or rent so low it won’t pay for your investment for years.
Mallouk then makes the usual nod to “blockchain technology” but adds “that doesn't mean that bitcoin is going to work out or ripple is going to work out.” He then obliviously states “Palm and Blackberry were fantastic, but Apple came in and took them out. Lycos and Excite were here before Google,” clearly unaware that Bitcoin and Ripple and (Ethereum) may be the Apples and Googles of the financial world.
Jim Cramer unsurprisingly gets it wrong as well. Bitcoin is a “pure gamble” and "kind of like Monopoly money [showing he has no understanding of, or possibly any knowledge of, mining]. It's just pure gambling at this point. I mean, if you want to gamble, go to Vegas. Vegas is fabulous.”
To quote Edgar Allen Poe, “Observe, here, the laughable confusion of thought!" If bitcoin is pure gambling, you clearly don’t need to go to Vegas to gamble. But worse – and this from a financial adviser (of sorts), Cramer is saying that you should not take the money a trip to Vegas would cost and put it into Bitcoin instead. That’s pretty bad. You should put it into bitcoin instead.
As for Dimon’s comments, they have been largely superseded by Dimon himself.
Regarding all this I will paraphrase the old Chinese saying and state that It’s earlier than you think.