🧘‍♂️Build Wealth. Here's How. #109

Earn your financial freedom.

Dear Meditators

In today’s FREE newsletter we show you how to build wealth in 2 ways:

1️⃣Through your behaviour ?

2️⃣Through your understanding of the hottest developments in the markets ?

So if you’re looking to earn your financial freedom, you don’t want to miss this one. 

Read, enjoy and share with your network. Let’s all grow richer together.

MARKET BRIEFING

• Crypto. Cautious optimism seems to be the theme of the day. Whilst we have not completely forgotten the sell-off, more Bitcoin ETF ambitions have certainly provided comfort. CBOE filed for SEC approval and CME said the average Bitcoin futures trading volume climbed 32% last month.

• Legacy. A few bubble warnings have served to neutralise the excitement in equity markets. For instance, China’s top banking regulator said bubbles in the U.S. and European markets may burst as their rallies are headed in the opposite direction to their economics and will face corrections sooner or later.

We are extremely grateful for our partner ? Phemex. This collaboration makes our free content production possible ? As well as receiving free bitcoin and discounts for signing up, Phemex have recently launched Crypto Asset Management ? Their savings accounts allow you to earn crypto passive income and as Warren Buffet famously said, ‘you want to find ways to make money while you sleep’.

Now, let’s move on to explore how our brains are wired and how we can best change our behaviour to build wealth ?

MARKET MEDITATION

The Psychology of Money 

During sell-offs, similar to the one we all experienced recently, many people are shaken out the market ?  In the Psychology of Money, Morgan Housel highlights an absolutely fundamental point. A game changer when it comes to building wealth. Market Meditators, your behaviour with money is oftentimes more important than how intelligent you are ? It can be the key variable for surviving market volatility.

“A genius who loses control of their emotions can be a financial disaster. The opposite is also true. Ordinary folks with no financial education can be wealthy if they have a handful of behavioural skills that have nothing to do with formal measures of intelligence.”

Let’s explore this through some examples.

1️⃣Accepting Volatility. Bitcoin’s bull run has been a rollercoaster. Many people were shaken out during the bear market and many, who were able to maintain their conviction, are reaping the benefits today. In a recent example, 100 bitcoins worth $8 and now $5 million ? have been moved for the first time in 11 years from an early BTC miner. It is essential to know that trading and investing comes at a price: we must all align ours behaviour such that we are comfortable with volatility and view it as the price you pay for a brighter future. 

2️⃣‘Never Enough’ Mentality. Capitalism is great at doing two things: creating wealth and creating envy. People are happy with making a million dollars in the markets. That is, until they realise their neighbour made 10 million. And turns out the neighbour isn’t happy because his boss made 100 million. The point is: there is always a bigger fish ? Those with a ‘Never Enough’ mindset are at risk of using too much leverage in their portfolios in order to move up the pyramid. We shouldn’t adjust our behaviour such that we are not ambitious but it is important to accept, at some point, that enough is enough ? Don’t risk what you have and need for what you don’t have and don’t need.

3️⃣No One’s Crazy. The lowest income households in the U.S. on average spend $412 a year on lottery tickets, four times the amount of those in the highest income groups. What’s more, 40% of Americans cannot come up with $400 in an emergency ? So, people are blowing their safety nets on something with a one-in-millions chance of hitting it big. It might seem crazy to you but we all have different perspectives and values. The sooner you realise this, the sooner you will see the error in copying other people’s trading or investing strategies ✅ These will be suboptimal to your own goals and objectives. 

4️⃣The Seduction of Pessimism. Our evolutionary mindset is not one that compliments investing and trading. Given 3 reasons why the economic outlook will be negative and 3 for why it will be positive, most people are inclined to agree with the negative. In fact, pessimism is usually regarded as more intelligent, with optimism considered naive. This stems from the fact that organisms that treat threats as more urgent than opportunities have a better chance of survival ? When forming a trading or investment strategy, understand that pessimism appeals more to your survival instincts than optimism does. And so, you might not naturally give the optimistic viewpoint as much credit as it is due.

Now that’s settled, let’s explore some of the hottest developments in the markets ?

? If you’re serious about adjusting your behaviour to Build Wealth, consider joining our community and gaining access to the full range of insights and analysis ?

TWEET OF THE DAY

CRYPTO NEWS & ANALYSIS

Fidelity Investments Bitcoin Bull?

Recently, Fidelity Investments published “Understanding Bitcoin,” a whitepaper that aims to help other institutions determine whether “Bitcoin belongs in asset allocation considerations.” If you’re asking, how could this report impact the price of Bitcoin?, this section is for you ?

Director of Global Macro Jurrien Timmer writes the “bitcoin growth curve may still be in its early, exponential phase” citing the stock to flow model and Metcalfe’s law as the reason for his conviction. If you’d like to learn more about Metcalfe’s law (which predicts that Ethereum could hit $20K by March 2022), check out the newsletter ?  article we wrote!

According to Timmer, Bitcoin will become scarcer than gold, but not without several market corrections that will likely “dismay” many along the way. It’s clear, then, that Timmer and Fidelity Investments are not in Bitcoin for short term price fluctuation but rather the “flippening” of Gold by Bitcoin over the long haul ?

For us traders and investors entrenched in the crypto community, this whitepaper may not seem out of the ordinary. It’s worth noting, however, that the whitepaper was published by a traditional financial services company. ?Could you have imagined even a year ago that Wall Street would not only buy Bitcoin but teach other institutions to do the same? This news is relevant because it’s one more confirmation that Bitcoin is going mainstream. It is this adoption and acceptance that can dramatically increase what people believe the “fair value” of an asset such as Bitcoin is. 

Check out our Bitcoin 101: Beginner’s Guide to Owning Cryptocurrency, a simple roadmap ANYONE can use to reach financial freedom and self sovereignty through bitcoin and blockchain.

Although, this shouldn’t be a substitute for a good credit score. Let’s take a look at that ?

PERSONAL FINANCE

5 Tips To Build Your Credit Score ? 

Your credit score is an essential part of your financial health. It dictates: interest rates you pay on loans, access to credit cards, availability of rental accommodation and more. However, it is not always obvious what you can do to improve it ?

With these 5 tips you will be able to improve your score and moreover, your access to financial products: ✅ 

1. Pay any debts in full and on time ? Your score is heavily influenced by your history of debt repayment. Set up a direct debit to pay your bill in full at the end of every month.

2. Build your credit history. If you don’t already have one, get a credit card, spend a small amount of money on it each month and show you are capable of repaying debt.

3. Monitor your credit utilization rate. This is the percentage of credit you are using in relation to the total amount of credit available to you. Always make sure your credit utilization is below 30%.

4. Never open multiple credit accounts in a short time frame❌ This makes you look desperate and is a sign you will not be able to pay back your debts.

5. Never withdraw cash using a credit card ? Many credit cards charge additional interest on cash withdrawals so always make sure to avoid this.

And back to the markets we go ?

LEGACY MARKET NEWS & ANALYSIS 

Goldman Sachs, A Bearish Indicator? 

In the last few days, one of the hottest legacy market stories has been Goldman Sachs restarting their cryptocurrency trading desk. The global banking giant “will begin dealing bitcoin futures and non-deliverable forwards for clients from next week, a person familiar with the matter said” ? Some traders and investors have rejoiced upon hearing the news ? Regarding institutional interest as further validation of the crypto markets (with validation comes more demand and price appreciation). Others, such as popular veteran trader and CEO Peter Brandt, have perceived this to be a bearish indicator.

? This argument is as follows: Goldman Sachs first set up a trading desk at the 2017 market top. The timing makes it seems as though it was one of the indicators of the consequent bear market cycle and ultimate 2018 bottom. And so, some people are arguing that Goldman Sachs restarting their trading desk marks the new ‘market top’. There are 2 key limitations to this argument, highlighted by cointelegraph:

1️⃣Timing ⏰ Whilst Goldman Sachs launched their desk at the start of the market top, the speculation had been ongoing for a couple of months beforehand. For instance, The Wall Street Journal already covered Goldman Sachs’ intention on Oct. 2 2017, so it is likely a lot of the impact had already been priced in. And so, the timing on the graph is a bit misleading.

2️⃣Market Structure ? Even if we disregard the exact date, there is a fundamental drawback of using historical evidence for claims about current markets. Current markets usually are not the same as they were historically. Fundamentally, the validation and institutional adoption of cryptocurrencies is on a scale unheard of in 2017. It is therefore not a like-for-like comparison. 

? To sum up, Goldman Sachs restarting their cryptocurrency trading desk should not trigger FUD. However, it remains as important as ever to have safety measures in place. We have an entire ? Risk Management Guide ? to help you achieve this.

That’s enough reading for the moment. Sit back, relax and tune into our podcast ? if you consider yourself a multi-tasker, you can even have a go at our puzzle while you listen ?

PODCAST

Investing Strategies from a $200m Crypto Fund with Jason Choi

CLICK HERE TO LISTEN ?

Jason Choi is General Partner at The Spartan Group, a $200m crypto asset management and advisory firm. He is also the founder and host of The Blockcrunch Podcast

PUZZLE

Can you find the missing number?

(P.S Scroll down for the answer?)

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ANSWER

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Disclaimer: The content in this newsletter is for informational purposes only. Nothing in this email is intended to serve as financial advice. We are not financial advisors. Every investment and trading move involves risk. Do your own research when making a decision.