To beat wall street: Cryptocurrency and marijuana like the perfect bubbles
We offer you translation of the article Joe Vizentalja from Bloomberg, in which he talks about the investment opportunities that in some countries it is forbidden and others permitted. The article reflects the subjective position of the author, which may not coincide with ideas of editorial Coinspot.
Economist John Maynard Keynes wrote: “Professional investment business to the limit boring and require too much tension for anyone who deprived of the instinct of the player; those who have it is present, inevitably pay for it.”
The crisis has forced investors to understand the “to the limit boring.” Index. Rebalance. To diversify. Again rebalance. To reduce the cost. And don’t count on that sitting at home you can invest in some individual stocks and get rich. Those who have learned this lesson, reached after the crisis, the phenomenal success on the background of long and stable, even boring “bull” market.
But the instinct of the player, that is passion, can be suppressed only for a time: no wonder there’s a new, rather strange bubbles. Yes, I’m talking about the cryptocurrency and… marijuana. Crazy stock trading canadian cannabis company Tilray in September led to the fact that its market value briefly exceeded the same period American Airlines. It resembled last year’s frenzy around bitcoin.
Despite different backgrounds, bubbles cryptocurrency and marijuana are similar, like brothers. Look through a few minutes of page on Reddit about bitcoin, marijuana, or about trading, and you will see a lot in common. According to TD Ameritrade, “herb” stocks are trading mostly male Millennials. The same applies to cryptocurrency.
To understand market bubbles will help us the events of the late 90s. People call them the dot-com bubble, but in reality it was something more — a global “bubble of optimism”. In those days it seemed that all would be well. People thought that the coming peace in the middle East and China’s accession to the world trade organization will launch a global transition to freedom and democracy. Segway promised to revolutionize the movement of people in the city. Investors invest not only in the overvalued shares of techcompany — they are investing at all. Another hot market were manufacturers of fuel cells, and speculators bet on an imminent advent of eco – (and I was one of them).
But the symbol of the dot-com bubble steel not Pets.com forecast Henry Blodgett about Amazon’s stock, or the disastrous merger of AOL and Time Warner. No, the symbol of the bubble was “garbage stocks” of the company Uniprime Capital Acceptance that owned a car dealership in Las Vegas. One fine summer day in 1999 Uniprime issued a press release in which it claimed to have found a (I kid you not) a cure for AIDS. Of course, people were skeptical, but it was the 90s, when everything seemed possible… when someone in the company really invented a cure for AIDS? And the stock soared. Spoiler: no AIDS drugs were not available, and the President of the company was arrested for fraud.
Now compare this with cryptocurrencies. This market was born of optimism and dreams that each entrance will be on “Lamborghini”. On the contrary, he was given the impulse to distrust and pessimism, because bitcoin emerged at a time when the world was gripped by financial crisis. In the Genesis block of bitcoin Satoshi Nakamoto wrote: “The Times 03/Jan/2009 Chancellor on brink of second bailout for banks”. Ever since bitcoin went from Shirobokov and drug dealers on the darknet to bigwigs on wall street who, by the way, was at a party one of the last. The main cryptocurrency peaked in December last year during the launch of bitcoin puchero. Of course, this wave appeared a couple of thousand cryptocurrencies.
Cryptocurrency fever and the bubble in the housing market directly opposite each other. In “shorting” a symbol of the fact that the housing market is inevitably headed for disaster, made the scene in which the stripper talked about his speculation in the property market. By the way, rumor has it that strippers have adopted bitcoin are far in 2012. In a future film about bitcoin strippers will understand that cryptocurrency reached a peak and move to the collapse, when clients of wall street to speak about the launch of cryptocurrency hedge funds.
Bubble cryptocurrency blown away, but in the industry there are players who hope that digital currency will change the hairstyle, wear a costume and collect billions of dollars to wall street. That may well be. But there is an internal contradiction, because cryptocurrencies were created to help give all of that. Cryptography allows person A to send person To a message without providing information about it to the person S. Thanks to Satoshi the same thing you can now do with the money. Intermediation of banks, became too much, and no one can allow or forbid us to make any transaction. It is, in fact, subversive activities, and no futures, ETF or “institutional solutions” can not change this fact.
So, moving on to marijuana, which has always been associated with counterculture and decadence. We can do without an extensive digression into history, let’s just note that the activists for a long time worked on the legalization of marijuana, and then, like, someone accidentally touched the key switch. Yesterday traders “grass” was arrested on the street. Nowadays the dealers of cannabis are included in the listing on the Nasdaq, and the Board of Directors Tilray is not similar to the figures of the counterculture.
The grim mood in society after the crisis may have helped to speed up the legalisation of cannabis. Peter Atwater, President of Financial Insyghts who looks at the markets through the lens of larger social trends, says cryptocurrency and cannabis at the same time contain the elements of “fear and greed” (fear and greed), and both of these market are inherently oppositional (anti— establishment). Atwater refers to the study of the Institute sotsioniki, which was held in 2013 under the leadership of a very controversial theorist of investments Robert Prechter. The document says that, historically, support for marijuana legalization in the United States grew in periods of social tension. The percentage of people supporting legalization has increased dramatically after the onset of the financial crisis.
In the same way as in the case of cryptocurrency, wall street and popular media is late to the party. David Greenwald, a former music journalist, now works as a web developer and “cannabis— trader” in Oregon. He says he began to study the stock associated with the marijuana companies after wandering in Google led him to the subreddits r/weedstocks and r/thecannalysts. On these forums people are reviewing business models of different companies whose shares are traded on the stock exchange, and this is as deep as many of the reports wall street.
Reddit plays an important role in the history of cryptocurrency and cannabis. Some argue that one of the reasons why last year Bitcoin Cash separated from bitcoin, was the fact that the moderators of the popular subreddit r/bitcoin censored some remarks about the scaling of the main cryptocurrency. For people outside the community it seems a trifle, but one of the bitcoin sect took the initiative, which culminated in a completely new currency.
Aaron Lammer at the same time makes Coin Talk podcast on the cryptocurrency podcast on marijuana Stoner. I asked him about how these worlds intersect. He once said that his second podcast is just the talk of “grass” and not arguments about shares of companies. However, he admitted that watching “junk stocks” of marijuana. According to him, a dark forest:
I’ve never seen there shares that would correspond to the sold products, and really do not understand what the company. It’s all very reminiscent sidoine.
Sidoine — slang term for a cryptocurrency that no one will ever really use, but which sometimes engaged in outright speculation on some exchanges (in altain casino).
So we have two bubbles that have much in common, which, so to speak, developed shoulder-to-shoulder. Why have they appeared now? If someone gave a simple explanation for why bubbles appear, he would become very rich. But still there are some General rules. First, their origin need a fantastic story, which is, as crypto-currencies and the marijuana. The first undermines the world of Finance and large technology; the second has the potential to create a giant new market that is quickly legalities around the world. Second, the available investment assets are initially small. This leads to the fact that there is a huge discrepancy between the fantastic story and the fact that investors really can buy.
The mismatch between demand and supply was the cause rather paradoxical situations around the Internet stores in the late 90s. People wanted to buy something “dotcomology” that the shares of K— Tel International (which was engaged in a banal creation of compilations retropect) increased ten-fold just because the company announced plans to sell their CDs online. In 1999 there was a real tsunami of the IPO. The shares caught up and overtook the demand, and in the end the bubble burst. ICO boom in 2017 and many forks of bitcoin, may have helped to blow away cryptopuzzle because the offer once again surpassed the demand.
On the cannabis market now there are only a few companies in which to invest (especially if you live in the US). If the market will remain hot, there is no doubt that soon we will see a wave of IPOs from similar companies. We will also see new press releases, shouting: “Hey! We were cannabis company!” You can remember the Long Island Iced Tea, which is engaged in the manufacture of beverages, but in December last year mentioned to the blockchain, thereby causing the crazy growth rate of their shares. If the PR company waited just a few months, they would have announced some kind of drink with cannabidiol is at least connected with the main activity of the enterprise.
The point is that in these markets there is excitement. When I asked Greenwald why he invests in marijuana-related stocks, and sells them, his answer was clear and concise: “because of the volatility.” The day of the action can grow to 10— 20%. Of course, in as much as they can and fall. If you are a disciplined investor, volatility is your threat, because it plays with your emotions and pushes the poor decisions. But if you are a trader or just a gambler, the volatility is an asset. In our days the asset is quite rare, as of 2017 and 2018 were among the least volatile for the market.
Probably the most vivid supporter of cannabis as an investment opportunity (and also of its medicinal virtues) is Todd Harrison from CB1 Capital. Harrison first became interested in this market following the events of 11 September 2001. He worked at a hedge Fund in the vicinity of the world trade center, and after the attack he had PTSD. Popular methods of treatment have not helped, so he began to dig deeper and found out about the war on marijuana and the government’s attempts to ban medical research in this direction. It indicates a serious racial component in the war on drugs. The government, he said, “blood on the hands”.
In marijuana, he sees the market with the prospect of $2 trillion. up to $3 trillion. but said that the current legal uncertainty is a very slow investment opportunities. The situation with cannabis, according to him, the first 30 years of his work on wall street, when people can play the lead.
That is conversing with Harrison, I realized that the story of cannabis — more than monitoring the legalization and establishment of a new market. Cryptocurrency and marijuana have the same metastory about to hit back at the corrupt elite. Add to that the war on big business from marijuana, ineffective traditional medicine, Central banks that reduce the value of your savings, saving bankers during the crisis at the expense of taxpayers… And more censorship.
In addition, proponents of these markets will tell you that due to the current regulatory hole has a great opportunity to enter the game and beat wall street. Is the icing on the cake. At least psychologically cryptocurrency and cannabis — popular markets to trade in the post-crisis period.