Dear Outsider,
I've got to admit...
I'm a bit surprised.
I thought for sure the market was going to crash last week.
Like, actually crash.
Friday wasn't great, but it could have been worse.
When the markets opened last week, I had already placed my bets.
I bought Bitcoin and Ethereum on the news that Silicon Valley Bank had collapsed.
And then when Signature Bank went kaput, I bought more.
Overall, I made roughly 40% on my crypto bets.
Not too shabby.
The key word here is "bets."
Never in a million years did I think I was making an investment.
I know there are many people who disagree on this point because they see crypto as a long-term strategy, but I just don't see it that way.
It's just a means to an end...
Pure speculation trying to capitalize on the fear of crowds.
Because sure enough, there was a frenzy in the market last week.
Banks collapsed...
Investment cash was no longer safe...
2008 was replaying in investors' heads...
Jay Pow said "financial conditions" are complicated.
Biden said it would all be OK and that it's not 2008.
Yeah... time to buy Bitcoin.
Investors realized they'd been taking on too much risk in equities and needed to hedge their bets with alternative asset classes.
It lit a fire under things like gold and crypto.
(I use "asset" loosely here to describe Bitcoin.)
For the first time in a long time, Bitcoin came roaring back from the depths.
All you had to do was look at the SVB collapse, look at the price of Bitcoin (trading around $1,800 when the bank fell), and make an educated guess.
Speculators thought, Hey, maybe everyone else is going to jump on this bandwagon.
Sure enough, Bitcoin and its brethren shot up overnight.
Now Bitcoin's up over 50% year to date.
Crypto "experts" came out of the woodwork this week.
They took to social media to try to pump and dump it just like always.
It's the same old story.
Now, this user is well-regarded in the space for calling tops and bottoms, so when he posts something like this, people listen.
Right now, investors are hesitant because crypto is so volatile and a lot of people got burned over the last two years when it lost considerable value.
But if you want to get in on the potential run, or if you're still new to buying crypto, it's really very easy.You'll Never Be On The Inside!
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Don't bother with Coinbase, because it takes a cut of every single transaction. Not to mention the company has a long and complicated sign-up process. It's also notorious for locking users out their accounts
On the other hand, Robinhood offers a quick and easy platform for buying and selling crypto, so I'd recommend starting there if you're new.
You can swing-trade it to try to make a buck, or buy and hold it in Robinhood's crypto wallet.
As long as crypto's a hedge, we might as well use it.
Macros
As we move into the spring, let's keep in mind these important macro events.
First, the Fed.
The Fed's job is to essentially raise rates until something breaks.
Now that something broke, it should encourage the Fed to rethink the rate hikes.
Right now the market's pricing in a 10 basis point hike at the end of March.
This should bode well for the markets, but I still don't like it.
In any other scenario, this would be great for the markets.
But now the whole thing seems odd - like the numbers aren't adding up.
I can't quite put my finger on it, but I'm going to do some digging.
The second thing to keep in mind is a rotation out of risky equities.
Kevin O'Leary said in a recent Forbes interview that he's never putting his money into a bank stock ever again.
This coming from the guy who peddled the FTX scam...
But I do agree with him.
In the interview, he said what I've been saying for years.
Want to get rich?
Buy high-quality dividend-paying stocks and don't look back.
O'Leary said, "When I started to do some research I found out one interesting fact that changed my investment philosophy forever. Over the last 40 years, 71% of the market returns came from dividends, not capital appreciation. So rule one for me is I'll never own stuff that doesn't pay a dividend. Ever."
Too right!
Anything else is gambling on capital appreciation, not investing.
Third, gold and precious metals are still a safe haven.
It wasn't just crypto that shot up last week; gold did nicely as well, reaching above $1,900.
I share a wall with our resident gold expert Luke Burgess, and I picked his brain at the office this week about the best strategy for owning gold right now.
Here's what he told me:
Banks fail ?+' bonds collapse ?+' U.S. dollar devalues ?+' gold prices rise.
Of course, all of this happens so fast that it seems like it's all happening at once. But this progression is the driving force behind the gold rally over the past few days.
Looking ahead, there's reason to continue to be bullish on gold, even without another bank failure.
The fallout in the bond market may prompt the Federal Reserve to finally stop raising interest rates when they meet for the FOMC assembly this week.
If the Fed decides on no change, it's likely that the bond market and U.S. dollar will see declines again this week, which would be very positive for gold.
Finally, he says that overall, things are looking very good for gold and precious metals right now.
Stay frosty,
Alexander Boulden Editor, Outsider Club
After Alexander's passion for economics and investing drew him to one of the largest financial publishers in the world, where he rubbed elbows with former Chicago Board Options Exchange floor traders, Wall Street hedge fund managers, and International Monetary Fund analysts, he decided to take up the pen and guide others through this new age of investing. Check out his editor's page here.
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