What's Bitcoin Really Worth?

Written by Charles Mizrahi
Posted May 16, 2018 at 8:00PM

URGENT: Avoid Rat Poison, Turds, and Cryptocurrencies!

I was never a FOMO investor.

If you bought Bitcoin or any cryptocurrency...I’m sorry to say, but you’re a FOMO investor.

FOMO, Fear of Missing Out, is one of the worst ways to invest. Yet it is so tempting.

This past December Bitcoin traded close to $20,000.

Bitcoin is down by more than 55% from its December 15, 2017 high.
It is currently trading at $8,300

It was rising based on FOMO.

If you’d ask 99 out of 100 investors, what is Bitcoin, or any cryptocurrency worth...you’d get a blank stare. No one knew.

But the price kept rising, higher and higher each day.

The internet was chock full of success stories.

When you’re dumb neighbor tells you he just made $10,000 trading cryptos...it’s hard as hell not to be sucked in.

The rise of unsophisticated, that are investing based on FOMO, is fertile ground for fraudsters.

The Wall Street Journal analyzed 1,450 cryptocurrency offerings. They found that close to 20% of them were outright frauds!

If you have no idea what you are investing in, and you’re just doing it because of FOMO, be prepared to lose your money.

I was never tempted to invest in cryptocurrencies. I’ve seen this movie before, and it ends badly.

I was never tempted to buy and didn't recommend any cryptos to you.

And because the crowd had been heading in that direction, I knew to head the other way.

But there was also something more. Here are three of the reasons I've stayed away:

  1. Cryptocurrencies are not "currencies." Cryptos are not assets. They're not backed by anything. And they don't produce earnings or dividends. At Berkshire Hathaway's annual meeting, Warren Buffett said Bitcoin was probably "rat poison squared." Why would you want to put your money into that?

  2. Greater fool theory. Because cryptos don't generate any cash, the only value they have is what another person wants to pay for them. You can value farmland, apartments, and businesses based on what they return to investors. A cryptocurrency returns nothing. What's Bitcoin worth? NOTHING.

  3. Trading is the game. Very few people even understand what they're trading. The only thing they do know is that the price rises and falls. And that's the reason they're trading cryptocurrencies: price action. Charlie Munger, Warren Buffett's business partner, said about cryptocurrencies, "It's like somebody else is trading turds and you decide you can't be left out."

Don’t Do as the Suckers Do

If you've never traded cryptocurrencies, don't start. It's much smarter, safer, and more profitable to buy a piece of a business: stocks.

Buying stocks of great companies, such as Google (GOOGL), Apple (AAPL), and Amazon (AMZN), makes much more sense.

These companies are the 800-pound gorillas in their industries. They generate hundreds of billions of dollars in free cash flow each year and return it to shareholders in dividends and stock buybacks.

Stocks are real assets that can be valued based on the worth of their businesses. Instead of trading them, the best advice is to hold them.

And over time, you'll reap the rewards of greater returns and more money. And that's more than what can be said for cryptocurrency traders.

All my best,

Charles Mizrahi signature

Charles Mizrahi
Founder, Park Avenue Digest

Twitter: @Park_Ave_Digest

Charles cut his chops on the trading floor of the New York Futures Exchange before moving on to become a wildly successful money manager on Wall Street.

And with more than 35 years of recommending stocks under his belt, Charles has knocked the cover off the ball, compiling an amazing record of success and posting gain after gain for his loyal readers. He is the founder of Park Avenue Investment Club and the Insider Alert newsletters.

Charles is also the author of the highly acclaimed book, Getting Started in Value Investing.

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