The latest news and articles from Financial Poise.
Thursday, May 19, 2022
Keep Calm & Carry On
This was the phrase that the British government printed on nearly 2.5 million posters in 1939, in preparation for World War II. Interestingly, the poster was only rarely publicly displayed and was little known until a copy was rediscovered in a bookstore about 20 years ago.
The poster might be repurposed for Wall Street, given yesterday’s stock market bloodbath:
The Dow Jones Industrial Index fell 3.6%, closing at 31,490.07
The S&P 500 fell 4% (its worst day since June 2020), closing at 3,923.68
The Nasdaq Composite fell 4.7%, closing at 11,418.15
Our response: keep calm and carry on. If you follow best investing practices, then there isn't much you should need to do. Panicked selling doesn’t usually work out too well. And trying to time the market to make large stock purchases in the hope that you will buy at the bottom often doesn't work out well either. If you are properly allocated among asset classes, and properly diversified within those asset classes, then you should be okay. If you are not, or if you do not understand these terms, then you should read Investing Basics For Beginners.
Do you have any friends, virtual or IRL, who have bragged in the past about how much money they’ve made on Bitcoin? Financial Poise has always been against “investing” (notice the use of quotations) in Bitcoin. Read Buying Cryptocurrency: Fad, Fraud or Fortune-Maker? to understand why.
Bitcoin Braggarts are laying lower right now. A nearly one-third loss in value in a month tends to do that. And so does a nearly 50% loss in six months. Ever hear of a Bitcoin Braggart named Michael Saylor? Well, to call him a braggart may not be fair. Regardless, he runs a large public company named MicroStrategy.
MicroStrategy (Nasdaq: MSTR) is the largest independent publicly-traded business intelligence company. MicroStrategy is also a huge owner of Bitcoin. A Fortune Magazine article by Christian Hetzner published on May 11th, as a matter of fact, called MicroStrategy “little more than a levered play on rising Bitcoin adoption rates…”
Mr. Saylor would be better characterized as a Bitcoin cheerleader. You can see that on this website, which is linked to directly from MicroStrategy’s website. Under his stewardship, MicroStrategy has amassed a huge number of Bitcoins (about 130,000). As Mr. Hetzner reports, the company has borrowed heavily in order to do so.
As we note above, Bitcoin lost nearly ⅓ of its value in the past month and nearly ½ its value in the past six months. In comparison, MicroStrategy is down nearly 57% in the past month and nearly 73% in the past six.