The stock market used to be an exciting place – crowds of people yelling “Buy!” and “Sell!” back and forth at each other, scribbling trade details on little bits of paper that got tabulated at the end of every day to determine exactly who owned what…
Yeah it was pure chaos – but it also made sense. It was easy to understand because It was people – people acting on their conviction that the price for oil was going up or the price of IBM was going down.
An environment like that – it’s easy to imagine how a panic sell-off or a moonshot rally gets going. Guy next to you starts selling at any price he can get, and you think, well, he must know something, I’m on board – multiply that by a few thousand and there you go, sell-off…
Or a woman on the other side of the trading floor starts buying some obscure stock and you figure you should jump on for that ride.
We could relate because the research that you did to understand a particular stock, or commodity or investment trend mattered every bit as much as what you knew about the people you were trading against. There was a psychology to it. A person could get an edge…
Today, it can feel like this:
Kinda helpless.
Because you’re often watching price movements that make no sense because they’re directed by machines running “buy” and “sell” algorithms that serve Wall Street’s interests only.
Sometimes it feels like stock valuations don’t matter anymore, strong management teams could be replaced by monkeys, and the machines wouldn’t care at all. It’s like the whole investment and trading landscape is now just about machines pushing a stock’s price a couple dollars up or down, scalping a little profit every day.
How do you get an edge in an environment like that?
Well, I would argue that is often easier to get an edge against the trading machines. Because they don’t do research. They can’t analyze a macro scenario and drill down to find the stocks that will benefit. They don’t think long term, or even medium term. The trading machines are all about the quick buck and the Magnificent 7 or Fabulous 5 or whatever the clever term for the hot stocks is popular today.
How to Beat a Machine
I’ll give you an example. It’s become fairly common knowledge that Artificial Intelligence (AI) consumes a boatload of electricity. The International Energy Agency (IEA) says that right now, the data centers that power AI consume as much electricity as Brazil. In two years, they will consume as much as Japan!
It’s absurd. Japan consumes the 6th most electricity of any country earth.
Plus, both Google (NASDAQ: GOOG) and Amazon (NASDAQ: AMZN) have announced massive multi-billion dollar expansions of their data centers in Northern Virginia. Dominion Power (NYSE: D) is the power company for Virginia and parts of North Carolina.
This is Dominion Power’s stock over the last two years:
It pays a 5% dividend, and the machines could give a crap.
I could go on with examples of clear disconnects in the market that will likely be very profitable. And I will in future Outsider Club articles, because this is what we’re about.
But what I started writing about today concerns a few headlines I saw this morning…headlines designed to manipulate and create doubt in investors.
Forbes was out saying: ‘Perfect Storm’—Bitcoin Price Now Braced For A Shock…
Bloomberg chimed in with: Bitcoin Faces Worst Month Since FTX Crash With ETF Demand Cooling…
Always with a keen eye for the obvious, Barron’s wrote: Bitcoin price struggles…
And these headlines come against the backdrop of JP Morgan CEO Jamie Dimon saying Bitcoin is a “fraud” and a “ponzi scheme,” Uncle Warren calling Bitcoin “rat poison” and the Vanguard CEO saying Bitcoin has no “economic value.”
If all that’s true, why did the world’s biggest asset managers like Fidelity, Invesco and Blackrock launch Bitcoin ETFs last year? Why did a couple Bitcoin ETFs just launch in Hong Kong? Why are Bitcoin ETFs coming to Australia soon?
Could it be that Bitcoin actually does have “economic value” and that big investment banks know this?
Here’s the thing. Wall Street uses machines to push stock prices around at their whim. But they also use headlines and the financial media to push you, the individual investor, around.
When you see such a concerted effort to put a negative spin on Bitcoin, when all the headlines are pointing the same direction, something’s up. There is opportunity.
We’ve talked about the Bitcoin “halving” a few times recently here at Outsider Club. You can read about more about the Bitcoin halving that just happened, on April 19 here and here.
The salient information that Wall St would prefer you ignore is this: Bitcoin rallies after these halving events. It usually takes a couple months for the rally to really get going, but when it does, it’s powerful.
The last two times the Bitcoin halving occurred were in 2016 and 2020. Each time Bitcoin 400%-500% higher within 12 months.
Godspeed.
Briton Ryle
Chief Investment Strategist
Outsider Club
X/Twitter: https://twitter.com/BritonRyle
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Time to Buy Bitcoin
https://www.outsiderclub.com/time-to-buy-bitcoin/
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