Crypto Versus Stocks You Cannot Compare
We always hear that holding a investment for a prolonged period of time is how one makes money. The compounding effect is prove to be effective and is one of the reasons besides investing in the right shares why Warren Buffet has made so much money.
I cam across an article today highlighting that Warren Buffet bought his first Coca Cola stock back in 1988. This is a lengthy period of time being 37 years so this example gives us an idea of what a blue chip like Coca Cola has on offer versus what we are doing in crypto.
Lets be honest here nothing compares to what Bitcoin has done and will do in the future versus stocks. I do not believe for Buffet has not got some crypto
because that would just be defying what he has done in the past and that is making money.
Lets look at the Coca Cola investment if $1000 was invested in 1988 it would have done a 36x which is not shabby but at the same time not setting the world on fire. This is basically doubling your initial investment each year in a low risk stock. This is a 3534.2% gain over that time and I guess he bought at the right time because over the last 10 years only averages out at a 11.6% return per annum. I am not sure if this example had been compounded or not as this does seem low.
If we go back to Bitcoin $1000 invested in 2010 would be worth $88 billion today ad eve f you invested far later in 2015 like the second Coca Cola example your investment would be worth $260K vs Coca Cola's $2163. Even if one invested $1000 in 2020 Bitcoin would have out performed Coca Cola returning a sizeable $9.9K.
When I first saw the Coca Cola returns and I immediately thought about what Ark Investments predicted for Bitcoin for 2030 being $2.4 million. At a $100K Bitcoin that would equate to doubling your investment every 3 months and nothing comes close to this and why the institutions are going to be investing big in crypto. Crypto versus stocks is a money printer ad the scry part is many alt coins are going to out perform Bitcoin over the coming years.
24 x in 5 years is regarded as a big return for any normal investor, but us being in crypto would think that is kind of normal and many of us are hoping to see our portfolios grow by at least 20 times in value later this year.
What this highlights is Bitcoin has been around for 15 years already and yet we are all still considered early. As an investment Bitcoin will still out perform all the other major stocks even at a $100K price tag. We have no idea what our portfolios are really worth and why it is important to keep on accumulating as much as possible because we are so far ahead of the curve.
I crypto they say we do not receive dividends like owning shares, but we do receive staking rewards which is like a dividend and is in my opinion far better as these are compounded daily/weekly and not annually. Crypto is going to explode once others find out what we already know and have been doing for years.
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Crypto and stocks are truly different investments. But for long term, I'd prefer stocks over crypto as it's more stable. I don't want to sleep at night feeling like my money could be gone overnight.
I do experience that feeling some nights, but I think betting on crypto makes much financial sense to me than with stocks, despite the uncertainty and lack of stability.
I think it's best to diversify your portfolio. I must admit that crypto returns (or losses) are greater than that of stocks. But one can never really tell what the future holds. So it's better to diversify.
I think the outsized returns with crypto will diminish over time, especially if/when it gets regulated. But until then, it's beter to bet big on crypto over stocks, the latter is less substantial and isn't really our own money.
This is the kind of high expectation we've been having for some years now and we are already seeing some of it come to fruition from the BTC Spot ETF that got approved in USA and the enthusiasm from institutional guys like Saylor and other corporate institutions.
When more of them catch on crypto is certainly going way beyond the moon 🥂