Warren Buffet talks about being greedy when others are fearful. I think it’s fair to say that there is a great deal of fear in the financial system right now with interest rates climbing as quickly as they are.
Eventually, this will lead to distress in all financial markets. The stock market is already down—especially tech stocks. The Real Estate market is frozen. There is very little trading. That’s why our investor group has not acquired anything since May.
The worst part about where we are now in this cycle is uncertainty. Rates going up to more historical levels is not, in and of itself, problematic. The problem relates to the unexpected speed of rate increases and the fact that we don’t really know when it will end.
Even with higher rates, we can go back to business as normal. Buyers and sellers just need to have some sort of interest rate benchmark with which to underwrite. But the Fed is moving the goalposts too quickly for anyone to use a specific interest rate to put into a spreadsheet.
One thing you might be wondering is why there is no significant distress in the market. The answer is largely that most buyers on floating rates purchased rate caps. But over time those will expire and if rents are not raised quickly enough, they could see negative cash flow pretty quickly. We could start seeing opportunities early next year. And when we do, I will be buying!
Over the last month, the cryptocurrency market also got hit hard. It went from beloved, even by teenagers, to red-headed stepchild status within days. In crypto, down markets mean DESTROYED. And… that’s where we are right now.
Could it go lower? Maybe? But I am a buyer of bitcoin at this price. Bitcoin isn’t going anywhere over the next several years and I believe will eventually be worth a lot more than it is today. It may be controversial to say, but investments in bitcoin or bitcoin mining today might be some of the more obvious plays to make for savvy investors.
But again, there is fear in the financial ecosystem. Investors, as much as they like the idea of buying low and selling high usually do the opposite in these situations. But remember, be greedy when others are fearful.
Cryptocurrency is down but not dead. People just stop talking about it when there is a bear market. But that’s exactly why we should talk about it on Wealth Formula Podcast.
My guest this week will tell us why blockchain and cryptocurrency are an inevitable part of the future…even for banks. And if that’s the case, should you be investing?
Make sure to tune in and find out.
Omid Malekan is the Explainer-in-Chief of blockchain technology. He’s the author of ReArchitecting Trust: The Curse of History and the Crypto Cure for Money, Markets, and Platforms as well as The Story of the Blockchain: A Beginner’s Guide to the Technology That Nobody Understands.
He is an adjunct professor at Columbia Business School where he lectures on blockchain and crypto.
An eight-year veteran of the crypto industry, his writing has appeared in the New York Times, Wall Street Journal, Financial Times, Spectator magazine, and his own blog on Medium.com. Malekan advises individuals and corporations on the intersection of the old and new.
Learn more at www.omidmalekan.com
Shownotes:
- How Omid got started working with banks on cryptocurrency policies
- What are the fundamental problems in the system that crypto potentially provides a solution for?
- How can blockchain and cryptocurrency restore trust in the system?
- Re-Architecting Trust: The Curse of History and the Crypto Cure for Money, Markets, and Platforms
