I’m Back!

by JDH on July 31, 2021

As you may have noticed, Buy High Sell Higher experienced some technical difficulties over the last few weeks.  Apparently a bunch of malware got onto to the site, and when I did a routine upgrade of the software it broke, and the only solution was to delete everything, and re-install the site contents from a previous backup.  We did, and here we are.

Fortunately, nothing much happened during my month-long absence.

The Dow is trading at the same price today as it was on July 9, slightly up on the month, but virtually unchanged.

Gold is higher.  The low for the month was on July 1 at around $1,765, and it closed the month at $1,817, so that’s a nice bounce.

Most interesting is Bitcoin.  It started the month at $36,079, touched $29,232 on July 20, and as I write this on Saturday morning, July 31 Bitcoin is trading at $41,815.  That’s a 43% bounce from the bottom in 11 days.  Interesting.

What does this all mean?

First, if I disappear for a month, it doesn’t really matter.

Second, we are in the summer doldrums, so it doesn’t really matter.

Third, Bitcoin is still a thing.  When it “crashed” below $30,000 (after peaking at just under $65,000 in April) the pundits declared it dead.  Those who bought it at the bottom have a nice gain on the books.

I expect continued volatility, but I also expect it to be a lot higher in a year than it is today.  Remember: the average rate of return for Bitcoin over the last decade is around 200% per year.  A decade is not a fluke.  Also remember that on July 31, 2020, one year ago, Bitcoin was trading at $11,000, so the streak of 200% + gains continues.

Let me be clear: I am not saying you should sell everything and put it in Bitcoin.  That would be crazy, just as it would be crazy to put all of your wealth in any one asset.  But to have no exposure to the best-performing asset class of the last decade is also crazy.  A small allocation (5%?  10%?) seems prudent.

The purists will tell you to buy your own coins and store them yourself, and that is the prudent strategy, but you can also buy exchange-traded funds that trade on the Toronto Stock Exchange and can be held in your RRSP and TFSA (like QBTC, BTCC.C, EBIT, or QETH if you want some Ethereum) so there are easy ways to get exposure.

Do your own due diligence, but don’t ingore.

That’s the update.  Let’s hope the site is still up next week.

Fun to Watch

by JDH on June 26, 2021

Is there a more interesting show on the markets today than Gamestop?  Here’s the chart for Friday June 25, 2021:

Cool, eh?  It spiked slightly higher at the open, then dropped all day, bottoming out at $198.50 around 3:30 pm, and then accelerated into the close, closing at $209.55.  That’s a gain of 5.5% in the last half hour of trading.

What happened?

It would appear that Gamestop is being added to the Russell 1000 index, as part of the annual re-balancing that happens on the last Friday of June every year (after the close).

In May, stocks are re-rated, and if a stock has a certain market value, and meets other criteria, it gets added to the Russell 1000 (and other stocks fall out, to keep it at 1,000 stocks).

So, if you are an ETF that tracks the Russell 1000, or a pension fund or hedge fund or whatever, to stay even with the index you have to buy the underlying stocks.  So, leading into the close, it would appear that a bunch of investors bought the stock.  Presumably, the buying will continue on Monday morning.

My question: since this news was widely known, why wouldn’t you buy it earlier in the day?

I assume the answer is “we need to track the index” so buying earlier isn’t tracking the index.

Crazy.

Congrats to all who bought leading up to the spike (on the assumption that it doesn’t crash on Monday).

In other news, it appears to me that Bitcoin is approaching a bottom.  Perhaps we’ll have a blow off crash, down on a spike to perhaps as low as $20,000, but I expect it to me much higher before the end of the year.

Or not.  What do I know?

Enjoy summer, it only lasts for so long.

See you next week.

 

The Dog Days of Summer – Part 1

June 19, 2021

I realize that it is not technically summer, yet, so this will be the first of no doubt many posts where I describe the nothingness that is the market these days. Nothing is happening. Even Gamestop has grown boring, with not much action this week. Sad. Bitcoin is in a consolidation phase. Gold is in […]

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Gamestop Craziness

June 12, 2021

With crypto and gold stuck in a range, and with the DOW not having made a new high since the beginning of May, today’s discussion topic: is the action in Gamestop (GME) the sign of a top? If the government stops printing money the markets will crash (stock market, housing market, lumber market, cryptos, etc.), […]

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Is the Economy Worse Than it Appears?

June 5, 2021

Interesting question.  The optimists will tell you that the world is getting vaccinated, the economy is re-opening, the worst is over, and all is good.  On that basis, the stock market is a screaming “buy”.  The pessimists will explain that, as of today, 6.1% of residents of Ontario are fully vaccinated, schools will remain closed […]

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The Markets are Separated from Reality

May 29, 2021

I have nothing much to say this week.    Bitcoin is 41% lower than it was 19 days ago, but the North American stock markets are at or near record highs.  Why?  Is it because the economy has re-opened and everyone is back to work? No. In Toronto, Canada’s largest city, the streets are empty, […]

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The Bitcoin Crash

May 22, 2021

That was epic. On April 14 Bitcoin hit a new all-time high at just under $65,000 USD.  On April 25 it touched $47,000, for a drop of 28% in just under 12 days. Cool. Then on May 10 Bitcoin traded at just under $60,000, before collapsing 50% to just over $30,000 less than 10 days […]

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Mid Month Update

May 15, 2021

It is May 15, 2021, so here’s what’s happening: The world has not ended.  The stock market is holding in there. Gold After a double bottom in March and April at around $1,675, gold has bounced back to $1,838, but the one-year chart continues to show a clear downtrend, and with the RSI approaching 70 […]

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Hang in, or Bail?

May 8, 2021

A lot of green on the stock screens this week.  That’s good.  Everything is up.  Gold.  Stocks.  Crypto. But we all know “sell in May and go away”, so is it time to take profits, move to cash, and wait for a correction? Probably, but the correction could happen tomorrow or six months from now.  […]

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A Bounce Back Week for the Cryptos

May 1, 2021

I assume some of you are growing bored with my continued commentary on the cryptocurrency world, as compared to comments on stocks, or gold, or some other asset class, but here’s the thing: crypto is fast becoming the most important asset class. Really? Yes.  Not the largest, of course, but it currently has a market […]

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