Will Bitcoin Become the New Buck?  

The price of one bitcoin is, as of this writing, $51,360.37. I say “as of this writing” because, by the time you read this, that number is likely to be higher. At least, that’s what we’ve seen with Bitcoin, as well as just about every other cryptocurrency, over the past six months.

To illustrate this point, consider that Bitcoin’s price has spiked nearly 315% since the middle of August. Oh, and over that same time period, the benchmark domestic equity index, the S&P 500, is up slightly more than 16%. That move in the S&P actually is very robust by index standards, but when it comes to Bitcoin and cryptocurrencies, a 16% move is a like a day’s pay.

So, is it any wonder why cryptocurrencies have become all the rage on both Wall Street and Main Street? 

Now, in the interest of full disclosure, readers of my Fast Money Alert and Bullseye Stock Trader advisory services have been profiting bigtime from the move higher in cryptocurrencies. In fact, on Tuesday we realized a gain of 101.07% on one common stock position and a 378.42% gain on a call option position — all in just one week! (No, that is not a misprint).

We also continue to have exposure to several positions that are profiting from the Bitcoin craze, including one stock that’s up nearly 170% in just a few weeks and another that was up 140% in just over one week. Notice here that I said stocks, and not a cryptocurrency or bitcoin itself.

You see, I am a stock picker at heart, and while I won’t hesitate to recommend hard assets, real estate or digital assets when the time is right, I always prefer actual companies run by smart people engaged in in the enterprise of providing a good or service for a profit. Because in my universe, “profit” isn’t a dirty word, it’s a sacred word. 

Another word I consider sacred is one that many Americans also hold in a consecrated fashion, and that word is “freedom.” And when it comes to Bitcoin and the promise of cryptocurrencies, freedom is, in part, at the heart of its appeal. Indeed, the popularity of cryptocurrencies is actually rooted in libertarian ideas about the need for a stateless, distributed, noninflationary currency that can be more private, and more secure, than traditional dollars. 

More importantly, cryptocurrencies are seen as a way to eliminate the middleman, i.e., to finally be rid of governments and their central bankers, and to liberate money from the hands of Big Brother and put it back into the hands of individuals. 

Of course, this is a big undertaking, and one not likely to be adopted anytime soon. Yet in a provocative opinion piece at the website Coindesk.com, Alex Treece, co-founder of fintech platform firm Zabo, argues that adoption of Bitcoin as a reserve asset by the U.S. government would be in our strategic best interest.

And in my opinion, that could be a good way to begin the process of making Bitcoin the new buck, i.e., replacing fiat currency with cryptocurrency. As Treece explains it, the reason the U.S. government should embrace Bitcoin as a reserve asset is simple economic self-interest:

“In the near term, there exists an irresistible arbitrage opportunity for a country silently to accumulate a bitcoin position and later announce its holdings… It finally happening would send an ultra-bullish signal and vaporize doubts among traditional investor holdouts, including other central banks. The resulting adoption acceleration would bestow huge windfalls for early adopter countries who managed to accumulate early in this transition.”

Self-interest is always a key ingredient when it comes to necessary change, and though I don’t expect the United States to abandon the dollar anytime soon, having an early position here in Bitcoin could put our country in a very strong position. Moreover, this will be especially important because of the fact that the U.S. dollar is currently the global reserve currency. 

Rival countries Russia and China have already been building out their dollar alternatives via the accumulation of massive gold reserves, especially over the past several years. And as Treece explains, “Their overall goals are clear: create alternatives to the current U.S. monetary hegemony. As bitcoin continues to gain adoption and becomes a global reserve asset, it will be thrust into this great competition between nations.”

Treece finishes his opinion piece with the following provocative observation: “If America’s rivals embrace bitcoin first and take advantage of the reserve asset arbitrage, not only will they secure a once-in-a-generation economic windfall, they will also be in position to damage U.S. foreign policy and strategic interests. Fortunately, the U.S. can avoid this outcome, if it acts boldly and embraces bitcoin first.”

This most interesting take on Bitcoin, the dollar and rival nations is something I am going to be watching over the next several years, and most likely beyond, because if the situation plays out problematically for the dollar, that will have serious implications for everyone. 

In the meantime, it only makes sense for investors like us to take advantage of this tremendous wealth-creating wave that is cryptocurrencies. And as I’ve told you already, you can do that without actually owning any cryptocurrencies directly.

Next Thursday, Feb. 25, at 2 p.m. Eastern time, I will be holding a live online cryptocurrency summit that we’ve titled, “My $20 Backdoor Bitcoin Play.” This summit is free, but you do need to register to attend. So, simply click the link here, and get ready to find out more fascinating facts about cryptocurrencies — and how you can make huge profits from this tsunami-like wealth creation wave.

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ETF Talk: Tracking Social Responsibility with DMXF

For many, 2021 is about fresh starts, limitless possibilities and good karma.

For investors looking to gain a few karma points in the stock market, iShares ESG Advanced MSCI EAFE ETF (NASDAQ:DMXF) may be an appealing exchange-traded fund (ETF). This fund was created to capture companies with favorable environmental, social and governance (ESG) ratings compared to similar companies in each respective sector.

Moreover, the fund works to avoid adding companies that are involved in less-than squeaky-clean business activities, such as those offering adult entertainment, alcohol, gambling, tobacco, genetically modified organisms (GMO) and for-profit prisons. Moreover, companies in the energy sector and those tied into the fossil fuel industry are pulled from the running as well.

In constructing its portfolio, DMX looks at companies in the broad MSCI EAFE Index, which includes 21 developed countries excluding the United States and Canada. These companies are rated based on their environmental, social and governance (ESG) risk (AAA being the best score and CCC being the worst), opportunities management and controversies scores, which range from zero to 10, with 10 being the most desirable ranking. The fund only selects companies with a ESG ranking of BBB or higher and a “controversies” score of three or above.

For a fairly new fund since its launch in June 2020, it has a pretty impressive financial overview. DMXF has $91.91 million in assets under management, net assets of $62.4 million and a modest expense ratio of 0.12%. It is fairly liquid, with an average daily monetary volume of $722,000 and a median average spread of 0.23%.

Since the fund was created after the COVID-19 outbreak, it was spared the harsh March dip that funds faced. As is evidenced by the chart below, DMXF had a modest start with an almost COVID-19-like dip at the end of October but then hit its stride and spiked greatly in the first two weeks of November. Its 52-week rise of $51.06 to $67.04 is proof of its upward momentum.

Courtesy of ETF.com

DMXF has 525 holdings, with 84.1% of the portfolio in large-cap stocks. As the fund excludes companies based in the United States and Canada, Japan makes up the majority of its country exposure at 33.2%, followed by France and Britain. Its top five holdings include ASML Holding NV (ASML), 2.65%; AIA Group Ltd (01299.JK), 1.70%; Toyota Motor Corp (7203), 1.67%; SAP SE (SAP.DE), 1.52% and Softbank Group Corp (9984), 1.39%. 

This is an ETF that practices what it preaches, and has an ESG score of AA, or an 8.14 out of 10, which shows its dedication to holding only funds with an ESG score of BBB or better, and controversies scores of three or above. Because of its high ranking, the fund may be more resilient in the face of environmental, social or governance disruptions, and this could prove favorable in the months and years ahead. 

So, for investors looking to gain a few karma points, an ETF with upstanding holdings and broad market exposure, iShares ESG Advanced MSCI EAFE ETF (NASDAQ:DMXF) may be a fund worth looking into.

As always, I am happy to answer any of your questions about ETFs, so do not hesitate to send me an email. You just may see your question answered in a future ETF Talk.

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Talking Politics, Ideas, and Gold with Good Friend Rich Checkan

What do you get when you bring two Renaissance Men together to discuss the current political, social and financial market craziness?

You get a really fun, lively and informative conversation between myself and former U.S. Army officer, West Point graduate and current expert on investing in precious metals, Rich Checkan of Asset Strategies International.

In this episode, Rich and I talk about the Capitol Hill insurrection, the state of societal discord, the importance of listening to others and the current and future prospects for investing in gold and other precious metals.

If you want to sit in on two friends discussing critical topics of the day, and how to approach those topics Renaissance Man style, then this is the podcast for you.

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In case you missed it…

A Confession of Character

Haters gonna hate.

That’s a little youthful slang for the notion that, no matter how successful, accomplished or good someone is, there are always going to be those “haters” out there that want to denigrate their achievement.

Sadly, I saw quite a lot of this “hater” sentiment in the days leading up to, and after the outcome of, Super Bowl LV. That hatred was directed toward one Thomas Edward Patrick Brady Jr., also known as the “G.O.A.T.” or the Greatest Of All Time, when it comes to NFL quarterbacks. As you likely already know, Brady is fresh off his seventh Super Bowl victory. That’s more than any other player in NFL history. Heck, that’s more Super Bowl wins than any other franchise in NFL history.

Yet, this column isn’t about football. In fact, I’m not really all that into football or sports in general, although I do like watching the best at what they do battle it out for on-field supremacy. Rather, today’s column is about philosophy, and more specifically, a destructive attitude that permeates society. It is best encapsulated by what philosopher/novelist Ayn Rand calls a “hatred of the good for being the good.”

The concept can be found in Rand’s essay, “The Age of Envy,” which is part of a collection of essays I highly recommend titled, “The Return of the Primitive: The Anti-Industrial Revolution.” The premise here is that people tend to hate those who achieve their values, and those who are able to deal with reality on a level that others simply cannot, or that have not. Yet, perhaps it’s best to let Rand herself elaborate on this issue, and here I quote:

“This hatred is not resentment against some prescribed view of the good with which one does not agree… Hatred of the good for being the good means hatred of that which one regards as good by one’s own (conscious or subconscious) judgment. It means hatred of a person for possessing a value or virtue one regards as desirable.”

Image courtesy of www.shutterstock.com

Now, I don’t know about you, but if you look at things honestly and objectively, wouldn’t we all like to be Tom Brady? I don’t mean that literally, of course, but wouldn’t we all want to possess the man’s attributes? Here are just some of the values he embodies, at least from all the accounts I’ve read about the man.

He’s a supremely hard worker, and he pushes himself to achieve the highest levels of his profession. He demands the best from those he works with. His presence and work ethic uplift and inspire his co-workers to be their best. He is handsome, fit, disciplined and supremely focused. He’s wealthy, and that wealth has been earned through the blood, sweat and tears of more than two decades in one of the toughest and most violent sports around. Finally, he is married to one of the most beautiful women on the planet, and one who is equally successful in her profession as Brady is in his.

Yet, for the haters, the aforementioned values and virtues Brady embodies is why they like to engage in sniping, criticism or in joyfully witnessing his defeats. I even read social media posts that openly pined for Brady to be injured during the game, because he doesn’t “deserve” another Super Bowl victory. Other posts I read were rejoicing in the notion that Brady would be “dethroned” by rival quarterback Patrick Mahomes of the Kansas City Chiefs.

Well, I got news for you, the same hatred of Brady’s success would then be transferred onto Mahomes, because for a certain element of society where envy, jealousy and a hatred of the good for being the good is a dominant characteristic, whomever embodies the values they wish they had will become the living example of what they’ve failed to achieve.

The writer and philosopher Ralph Waldo Emerson once said, “People do not seem to realize that their opinion of the world is also a confession of character.” For Tom Brady haters who don’t like him because he embodies attributes they wish they had, well, then what does that say about their character — or lack thereof?

My recommendation to the haters is as follows: Don’t hate, celebrate.

Doing so will liberate you from the ugliness of envy, and it will save you from descending into the abyss of the hatred of the good for being the good. And who knows, celebrating another’s virtues might just get you ready to focus on celebrating and cultivating your own virtues — and that might actually help you be the kind of person you really want to be.

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On Living Forward 

“Life can only be understood backwards, but it must be lived forward.”

–Søren Kierkegaard

The existentialist philosopher is telling us that it’s impossible to really understand your life in the present moment. That understanding only comes in retrospect, and even then, that understanding will likely only be temporary. The reason why is because life consists of forward motion that demands you constantly take new actions and make new choices. And those forward actions also will likely change your past understanding, as your new experiences become integrated into your thoughts. So, always remember that life must be lived forward — and know that the present moment is all any of us really have. 

Wisdom about money, investing and life can be found anywhere. If you have a good quote that you’d like me to share with your fellow readers, send it to me, along with any comments, questions and suggestions you have about my newsletters, seminars or anything else. Click here to ask Jim.