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Cryptos, Trading, and Treasuries: Your Most-Asked Questions

1 | By Shah Gilani

If there’s one thing that I love doing, it’s helping people make the money they deserve. Doesn’t matter if they’re friends, family, or complete strangers. If I can help them, then I’ve done my job.

It’s been a while since I’ve been able to address your questions, so I’m going to take some time to dig into the three most-asked questions I’ve been receiving.

Here’s what folks have been asking…

  1. Do you think block chain and cryptocurrency investors should still feel comfortable in the volatile market? Do you think crypto still will explode in the future? – Lance L.

While cryptocurrencies and the stock market have very little in common, market volatility seems to have a spillover effect in crypto-land.

I believe that’s because cryptos and stocks are both vehicles for speculation. Of course, stocks are equity interests in a business and have intrinsic value, while cryptocurrencies, for the most part, are more like Ponzi schemes. (Not all cryptos. And certainly not blockchain.)

When stocks look like they’re heading into a wall, the resulting increase in volatility is bound to cross contaminate cryptocurrencies.

On their own, cryptos are volatile by their nature. I’m not comfortable with cryptos in general. But that doesn’t mean I don’t think traders and theoretically “investors” in them can’t make a ton of money. Just keep in mind that if there’s nothing fundamentally underpinning a cryptocurrency, it’s likely to end up where it started: back in the thin air it came out of.

Cryptocurrencies that represent blockchain products or actual services are the real deal, but they, too, are subject to acceptance and widespread use – and, by extension, volatility. There’s a future for them, for sure. It just may take a while and a good flushing out of the worthless cryptos contaminating the whole space. Good luck with yours.

  1. How do I go about trading? What program do I use? – Anita S.

Very good question, Anita, and an important one.

First, you have to decide what “trading” is to you and why you want to trade. Then you have to ask yourself if you have the temperament and capital to trade. Trading isn’t investing. It’s getting into and out of positions, sometimes in the same instrument. Sometimes it’s getting into and out of different instruments, stocks, ETFs, options, or whatever you want to trade.

There are thousands of “programs” or ways to trade. Picking one is always a process of trying different methods and finding the one that works for you, which means only one thing: that you make money with it.

If you’re just getting started, I recommend you trade by looking for a couple of smart stocks you think will go up in price. Buy one or two of them, in small amounts, and that’s how you start trading. But that doesn’t mean to have to do anything with them.

If they keep going up, up, and up, then your trades become investments, and that’s great. If you use stops, or are happy with a good profit, you achieve and sell some shares, and, in a sense, you’re trading. But I wouldn’t try and become a “trader,” because that’s a full time job. Buying and selling stocks is trading, in one sense of the word, but that doesn’t make you a trader. You don’t want to be a trader. You want to make money.

That’s where a “program” helps you. You can design your own program by just making up rules for yourself: when you’ll buy a stock and why, why you’ll sell a position and why, how much you’d like to make and how much loss you can tolerate, etc. That’s your program.

Or you can follow a service and see if it suits your temperament and makes you money. Even when you follow someone else’s “program,” you should always have you own mental program running in the background, and you should always do what you feel is right. After all, it’s your money. You’ll come to realize you’ve got a program all your own. Keep improving that by understanding what is and isn’t working, and why you lose on some positions.

Trades are like busses, there’s always another one coming along. And in my Zenith Trading Circle research service, I send out alerts every week with new information and opportunities.

I’ve spent the last 35 years as a student of the markets and trading every opportunity I can. And I started by learning some of the information that I’ve covered just now.

Anyone can do this kind of trading, and everyone is encouraged to learn how to find profits and accelerate them. That’s why I took on Zenith Trading Circle, and if you have any desire to really learn about trading, you should consider joining.

You’ll have the knowledge to be a trader and an investor before you even realize that’s what you are. Go for it.

  1. What you wrote here seems contradictory to what you wrote in the “Bond Vigilantes” article on Feb 28. “… If the hard selling by vigilantes pushes the 10-Year yield above 3% – meaning 3.10% to 3.25% – the losses on existing bond portfolios will be staggering and will spur cross-asset selling. That means stocks will drop again if bond yields spike.” What do you think about this? – Ramon T.

When bond yields were ticking up, and the 10-Year Treasury was approaching 3%, the steady rise and prospect for further hikes in rates were about to quickly overwhelm a lot of bond investors who hadn’t hedged their positions against rising losses (as yields rise, prices fall).

Now that we’ve backed down, gone back up, backed down, again and again, bond investors have had time to hedge against falling prices they now know are ahead of them. Inflation will eventually pick up, and investors are focused on that. The Fed’s going to raise rates. Investors are focused on that.

Hopefully, a lot of the exposure bond investors had has been mitigated, so when rates rise there won’t be a huge selloff and panic dumping of bonds that could cross contaminate the stock market. But that’s all a matter of slow and steady. If we get unexpected huge spikes in rates and yields, and if prices tank, then we’ll see cross-selling of all kinds of assets. But, that’s doesn’t look too likely now that bond investors have had months to rebalance and reposition themselves.

The bond vigilantes are still out there, but they’ve been disarmed considerably by investors having time to hopefully be prepared for rising rates and returning inflation.

Sincerely,

Shah

One Response to Cryptos, Trading, and Treasuries: Your Most-Asked Questions

  1. RBaynes says:

    I really like your articles. You avail us with your logic, truthfulness. and wisdom. We need guidance and direction, of course, but also taking action. Thank you. RitaB

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