A Jaundiced View at your Investment Options as a Millenial/GenZ'er

I made this comment in another thread, but I've gotten numerous DM's and a comment asking me to make it its own free-standing post, so Merry Christmas, it's reproduced below.

Also, please feel free to be critical down below if you wish. Attack the premises, make your own conclusions, I don't mind. This my view, on balance given the data.

I am a late 30's, you could assert "older millenial" who is a professional. I've been in BTC in earnest since around 2015/2016. I made small buys initially, and escalated as I made more and more thereafter.

I will outright state that this is the only real asset that you younger folks have that can afford you the type of exponential pseudo de-risked relatively predictable gains that exists anymore. Why? Bear with me.

Let's go through your options relative to every generation before.

1.) Cash and Cash Equivalents - we're printing money at a rate that is literally unprecedented. Discussed ad infinitum here, but sufficing to say, we've printed something like 25-33 percent of all dollars in circulation in history in the last year. Grandma and Mom never faced QE/MMT. You do. Let's see how long we can last without inflation starting to kick in in earnest for everything below. I'll give it like um 3 seconds.

2.) Stocks/Equities - when your dad started earning and investing (and by "dad", I'll say boomer), the P/E ratio was at its second lowest in history, of about 7 (circa 1978-82). Go look it up. That means that for any given company, he basically only had to pay 6-7 times whatever it earned. What about you? Well, not only are you currently at a ratio of like 35 (which means that you're paying 5x more than dad for the same fundamentals), you're supposed to accept that that's totally awesome because 10 years prior, it was the highest ever at 122. That's right, you were being asked when some of you started your jobs to invest in the same stock but 20 times more expensive than dad, and now that it's "just 5 times more expensive", you should consider that a deal. Uh, sure.

3.) Bonds - well, if not stocks, then what about bonds? When mama started her trek into the world of fixed income, if she passed on the lowest PE ratio ever (since, you know, she didn't want to overpay or something), she could just go grab a bond and earn SIXTEEN PERCENT of a safe return. Don't believe me? Go look it up. In other words, she could literally just put 10K in the bank, and come next year, she's got 1600 more. People go bananas when you suggest that Bitcoin could go up 20 percent a year, but mama could get it basically FOR FREE. Oh, and if that wasn't enough (because hell, why would it be for the blessed generation), the fed slowly cut rates over time as you can see on that graph. Why does that matter? Because if she actually DID have some bonds, each year they cut rates, the existing bonds she had could be sold for a profit since, you know, they were from last year and are giving back 16 percent instead of like 15. And they did this all the way for 30 years so mama and her chicas could keep doing this over and over again. Well, how about you? See down at the weee corner of the graphic? Where it says "all time low"? Yeah, that's you. You put something in bonds, you get 0.5%, possibly ZERO if the Chairman of the Fed is to be believed. But maybe you get some and the fed cuts just like for mama, so the bonds you have can make some money, right? Oh wait, going BELOW ZERO means that anyone buying bonds is literally losing money buying them - that is, a rate of minus 0.5 percent means I buy a bond for 10000 dollars and each year they take away 50 dollars. Who tf would do that? Yeah, that's right, barely anyone except our strange Euro brethren - and it ain't havin the effect it had for mama - so no that isn't an option.

Edit: A commenter argued that while the nominal rate was 16 percent in 1981, the inflation adjusted rate was much less. Yes, that's true. But we don't do inflation adjust rates for literally any other asset, particularly BTC - in fact, we literally argue that inflation is a major reason why BTC goes up in USD. In addition, our notion of inflation being the CPI - and thus without the major contributions of healthcare, education, and housing which have literally been the things that have blown up in the last 30 years - is highly highly misleading. I strongly suspect that with a more modern view of inflation - that is, readjusted for healthcare, education, and housing increases - our inflation adjusted return on 0.5% bonds is even worse than I'm stating relative to mama.

4.) Real Estate - my favorite. Everyone's favorite. "They're not making any more of it" - err, except for that massive high rise that's blocking my view of the nice park that just got built and that one over there, and that one too. Regardless, I'll admit that certain markets might be less overvalued, buuuut, let's go to the graph again, shall we? Since this is a repeating pattern, go look at papa's opportunity on the waaaay left over there, and then go look at your opportunity on the waaay right. It's almost like yet again, you're paying 4x more than papa. To be fair, that's a better deal than equities or bonds, but if you think that's a legitimate deal, I've got a baseball card here that I've just jacked up the price 3x for no particular reason that you should buy. Seriously. It's a steal, young millenial - just pay me in BTC, natch.

Edit: An astute commenter mentioned that it's land that isn't being made anymore - yeah I know, but in practical terms, most people who argue its land that isn't made anymore will turn around and then offer you to buy that condo over there. And there's no doubt that housing prices have risen on average over the last 30 years. I strongly suspect land prices on average have as well, but I'm willing to look at counter data.

5.) Gold - aight, I'm not going to argue too hard against Gold. Well, except a little. Why? Well, let's go to the graphs again, because that's how we should roll. So yeah, Grandpa annihilates us on this metric (you're paying 5x his rate), but then again, dude went through WWII and was eating grass while dodging the Nazis in Caen or whatever it's called, so I'll cut him some slack. But mama? Wait, even SHE got a goddamn dip (see that 1980-1982 move). Admittedly she'd have had to "endure a bear market" but notice how just around the time YOU started making some cheese, you're already paying 1.1 to now 2x whatever it is they could have gotten. Again, this is better than everything else we've read, but it's still overvalued in relative terms, particularly if you have BTC as an option.

6.) Art/Fine Wine/Whiskey - Masterworks aside, if you've got enough to yolo into Picassos at Sotheby's, wtf are you doing here anyway? And if it's Wine or Whiskey, why aren't you sharing ffs? Drink that shit. I'll help.

7.) Bitcoin - clearly the best option. It's undervalued, misunderstood by everyone else, is basically a monetary base, and here's the massive kicker - the biggest guys literally CANNOT get in in earnest without spiking the price. "Accredited investors" can't just in aggregate airmail in a billion dollars without being fearful that the spot price will increase and they'll have to pay through the nose. Indeed, they literally can only get in once she gets to a market cap of trillions. However, the little guy? You? You don't move the price with your daily $1.50 "no, ffs, I didn't drink a latte or eat avocado toast, you stereotyping jackasses, I put it in the one place that I have that you can't control with your shitty financial tomfoolery" buys. She's literally designed to have small buys that, because she can compound exponentially, become big buys that cannot be diluted out because the Fed decided the Boomers needed one more bailout.

Oh, and one final demonstration of thievery - here's your wages versus your productivity (and to an astute commenter below, yes, I've intentionally linked an article that disagrees with me to provide balance and to make sure someone is actually looking at the graphs - here's a link that gets you to the original source). You're the generation that gets paid the least for producing the most. In (modern) history. So even with all of the above? You have less to put away.

I desperately try to get young people in my field to put something into Bitcoin every day, every week, every month, or hell, just freaking ONCE. Because it's the only option you guys have left.

But it's the option of a lifetime.

Submitted December 25, 2020 at 08:15PM by VisionGuard https://ift.tt/3mMSpTR