Author: sfo5107

Fig1. XRP Chart

It has been a while since the last time I posted. During this short break a lot has happened in the financial world. A lot has happened in the macro and micro economy and it has had major impacts on my recommendations. What I will be focusing on is the recent news with the cryptocurrency XRP.

The reason that I take a look at XRP so much is because I am heavily biased towards it. Back in 2015 a fourteen year old me more or less bet his life on it. In my short investment career I have seen the currency go from nine cents per share to almost four dollars. In short, this experience has absolutely changed my life in terms of career path and overall experience.

If there is one key to cryptocurrency investing it is that the end of the year is always the best. For whatever reason cryptos always go up at the end of the year. Since my last post, XRP has seen double digit gains. Many of these companies release major news at the end of the year to show what exciting things they have coming up.

Fig2. Coinfield

XRP has recently released news for numerous exchanges. The general concept is that XRP will be the facilitator of all payments and transactions because the exchange will use the XRP ledger. This uses XRP to make payments and transactions, so every time someone buys or sells it will use XRP to do so. This is huge news, as the more XRP is used in transactions, the more it should increase in value.

The main news is the new exchange called coinfield which will trade stocks and cryptocurrencies. The news states that it will use XRP for over 30,000 stocks. To me, this is major news. Also in the news is Ripple, the parent company to XRP, has invested with coinbase in a new exchange. They have also opened an exchange in Japan which will use XRP for payments. The volume and reporting for this is still to be determined.

Either way, in the latter days of the past three years, XRP has always done well. The end of the year and the very beginning is always great. If you are looking for some high returns I would say get long on XRP. I myself have added to my investment in it, and I cannot wait for the wild ride that is ahead. I hope it is both exciting and profitable! Until next time.

 

Fig 3. XRP Ticker

Figure 1. Average Student Loan Debt Increasing

Welcome to another blog post. I have been posting about cryptocurrencies and my involvement with them. However, the world of cryptocurrencies is currently stagnant. What I want to do is talk about my prospective investment opportunities. A year ago, I wrote an essay on a dangerous financial instrument called student loan asset backed securities. They are also known as SLABS.

These instruments are just hitting the news now with how dangerous they are. Simply, SLABS are how banks and private lenders continue to lend out money. They package together thousands of loans into bonds. Investors can buy the bonds and earn payments while the bond is paid off.

Years ago, these bonds were very safe investments. A government institution insured them, so they were just as safe as treasury bonds. However, that program shutdown in 2017.

Figure 2. Student Loan Bond Contents

In the present day these bonds are very dangerous. When reading through the contents of the bonds, there are many low fico scores and non-cosigners. This means that there is a very high chance that they will default. Since student loans have no collateral, when the bonds fail the investors will be left with absolutely nothing.

Figure 3. Student Loan Trends

With tough economic times coming up, there is a high chance that many of these bonds will start to fail. I am deeply afraid for our economy. Private lenders are becoming more and more prevalent in the United States. Also, the average tuition payment is continuing to grow so more and more of these bad bonds will be made. Therefore, a lot of money is going to be lost. With many of these bonds failing, investors will no longer purchase the bonds. Banks and private lenders will have a shortage of loanable funds and most likely will charge premiums to borrow. That will worsen the issue because people will be unable to pay back at such high premiums.

The defaults will also have negative effects in the housing market. If students cannot pay their loans, then they definitely cannot buy a house. With many baby boomers and the larger generations downsizing, dying, and moving into communal housing, a lot of real estate is becoming available. If there is nobody to buy this open real estate, then home values and real estate will slow.

My recommendation is to get a credit default swap on the bonds. Therefore, financial institutions should get short on these bonds. A credit default swap is like insurance on a bond. If the bond fails, then the value is payed out. I also think getting short in housing is a good idea. Finally, getting short in the private lender’s stock is perhaps the best thing you can do. For me the private lenders stock has produced over 10% profits, so it has worked so far.

As previously stated in my last blog post, I have taken a major interest in cryptocurrencies. They have absolutely changed my life. I wanted to highlight my absolute favorite “crypto” and explain why it is the best.

Figure 1. XRP and Ripple Logo (Not currently trademarked)

In late 2015 I found my very favorite cryptocurrency: XRP. This is a pre-mined token, which means that there is a finite amount of them and they are all distributed. Inversely, cryptocurrencies like bitcoin need to be “mined”. Large percentages of coins like Bitcoin are still stored in complex equations that are uncovered when the equation is solved. XRP was pre-mined for transparency reasons.

XRP was created by its parent company Ripple. Ripple is a Google and Apple backed liquidity solutions company. Using XRP, they have created technology to bring the bank solvency time to just a few seconds. XRP is the asset that their system uses to transfer currency. It is a central asset that provides a market-based value for the system to transfer value across all currencies.

Back in 2015 I had little expertise in investing. All I had was a little bit of luck and logic. When I came across XRP and Ripple I read the documentation on the technology. I thought to myself how annoying it was to wait three days to receive my paychecks when I worked. It would be so much better to get access to them in just seconds. On my small scale I was certain that XRP would make an impact on me financially.

However, I began to think about the real-world application. I thought what it would be like for companies and firms to be able to transfer money almost instantly. I thought about what that could do for the federal reserve lending money to banks. Even to banks lending money in general. The realm of opportunity was endless, and I was among the first few to discover this new tech. In short, my investment decision was based in XRP’s inability to fail. I tried to shoot holes in it, but I could not find a target.

In late 2015 I scraped together all the money that I possibly could and I invested in XRP. For years I sat and watched the charts. There were some good runs and eventual falls. Every forum and chat room was filled with “haters” who were not behind the “hodl” culture. I never folded.

Late in 2017 XRP’s price shot to all time highs. In my time I saw XRP go from nine cents to almost four dollars per token. This is my most notorious investment. Without this decision I would not be where I am today. For that I give thanks to XRP and the Ripple team. Only time will tell where XRP is headed.

Figure 2: XRP Price Chart

Figure 1: Crisis Political Cartoon

The 2008 financial crisis was also one of the greatest investment opportunities of all time. The mortgage crisis was a gold mine for the people who saw it coming. This is one of my all-time favorite investment opportunities. Unfortunately, I was not old enough to invest and I was way to young to have seen the fall coming. However, many people do not know what truly happened.

Figure 2: Mortgage Backed Security Diagram

The major issue with the 2008 financial crisis was mortgage backed securities. Basically, when banks and institutions loan out mortgages, they create financial instruments called mortgage backed securities so that they can continue to loan out money. Thousands of these mortgages are packaged into bonds. The bonds can be purchased, and investor receive coupon payments based on the incurred interest.

As long as people pay their mortgages, the bonds will produce the payments and investors will make money. However, if people do not pay then the bond fails, and investors lose their money. The problem in 2008 was that the mortgages in these bonds were very risky.

Figure 3: Variable Rate Mortgage Diagram

If you were to look at the bond’s contents in 2008 you would see that many of the mortgages were variable rate mortgages. This means that the interest rates started out with a low rate called the teaser rate. The applicant could afford the low teaser rate, so they were approved for the loan. However, the rates could jump up 300% after a few years. Many applicants could not pay these high rates.

To make matters worse, the people who packaged the bonds artificially rated the bonds a high credit rating. This would falsely attract investors. Even though the bonds were filled with bad bonds, the credit rating would be in the A range which is a high rated investment.

In late 2007 many of the variable rate mortgages increased the 300%. Many home owners were unable to pay the interest on their loans. This led to millions of defaults, and hundreds of billions of dollars in lost investments. This destroyed the mortgage sector and the housing market all in a short span. This was enough to crash the entire market and force many top financial institutions into trouble.

Those that saw this crisis coming shorted or bet against the bonds. They placed insurance on the bond, so when the bond failed they were paid out in the full amount that the bond was insured for. Investors were able to make billions of dollars because the returns were up to twenty-five to one.

I fear that a similar situation may be coming. The banks were all bailed out and many of them lobbied congress to fight reform. Many laws did not change and not many people went to jail for these crimes. Only time will tell, but I am very scared.

Hello and welcome to my passion blog. I have a lot of posts from the last semester that are all centered around the world of cryptocurrency and a few other investments. I am going to continue that blog but with a wider range of investment opportunities. I want to include what I am currently doing as well as the returns or losses that I get. I want to take this post to introduce myself and to explain why a nineteen year would take any interest in this topic.

In short, I have been an entrepreneur since I was thirteen years old. I have had a lot of success and even failed along the way. In 2013 I started an eCommerce company with twenty dollars that my grandmother gave me for my birthday. Since then I have operated in a lot of different areas. However, before I begin, I would like to point out that my telling of this story is in no way an outlet to brag or boast. First and foremost, this experience has changed my life. I am beyond grateful for this good fortune and the experience is absolutely what I cherish the most.

As I said I have operated in a lot of areas. I started in ecommerce and to date I have become a best seller on Etsy, Amazon, and eBay. I have created multiple sites that have top selling products with over ten thousand sales in the past year. I have become very good at google advertising and have been consulted by a few companies to improve their ads. Some people I have met in eCommerce include Quincy Wilson of the Indianapolis Colts as well as James Hetfield who is the lead singer of Metallica. I also invested in cryptocurrency in early 2015. I was able to capitalize on one of the greatest investments in history which is my prized accomplishment in this field. To this date I have produced returns that rank me above many of the world’s top investors. In a single day in late 2017 an asset that I bet everything on changed my life. I continue to trade cryptocurrency as well as day trading stocks.

My most recent venture was a software that I developed to aid in eCommerce shipping. It was an interface that linked sellers with suppliers to decrease costs and increase efficiency. I am currently in the process of selling the rights to the software to a company that I cannot disclose. I want to point out that although I have had a lot of success, I have failed many times and in the early days I was in a worse financial situation than any thirteen-year-old should be.

Many may ask why a young kid would want to do these types of things. To be honest, I do not know why. I think it is because I hate stagnation. It was not because I was originally money crazed or anything. I just hate the idea of stunted growth. I wanted to advance myself and learn. For generations my family has done their best to grow. My grandparents bent metal, my parents were barely able to go to college, so what type of person would I be to not want more. I absolutely admire my family for their ability to provide a better life for their succeeding generation. Therefore, I think it to be my purpose to do the same. Undoubtedly, I will achieve this goal of growth and advancement, or I will die trying.

Although I love to talk about cryptocurrencies every post, they have become stagnant in the past week. I will keep you updated on what arises with them in the coming weeks. As you probably know, I am still very bullish on them and do not plan on changing that anytime soon. I would still advise to buy them now because I think we will be looking at huge gains in the coming three or four months. I would say to look at XRP and Bitcoin to make major breaks through.

Fig1: Vape Devices

However, there has been some crazy news in the financial world in the past days. E-Cigarettes and vaping have taken the world by storm. These devices were originally meant for people to not smoke cigarettes and to eventually quit smoking. However, there purpose has completely changed face. There is a borderline epidemic now with teens and vaping. I personally saw it in my high school; kids would vape everyday in the bathrooms and outside. The security guards had boxes full of jewels and drops that were confiscated from the students. Kids were buying these all the time and buying the cartridges that held the extract.

Fig2: 16% of Students Vaping

Naturally, this rise in demand helped the vape companies to make billions of dollars. The top company, Juul, went from being valued at a few million to billions in a very short time. Many firms were buying huge stakes in these companies to ride out this long-standing trend.

However, in recent news the Juuling has been shown to be very dangerous to teens. I want to pause for a second because I am surprised that the world could have been this ignorant. Smoking artificial fluids that are loaded with nicotine and we are surprised? I do not get it.

Anyways, vaping has now killed thirty-nine people even though it is stated that they are not harmful. They U.S. health officials have identified vitamin e acetate as the culprit that has led to a lot of lung injuries. This substance was found in the lungs of all those that had fallen victim to lung injuries. Also, THC, which is found in marijuana products, was found in their lungs as well.

Fig3: Vitamin E Acetate

Since there is a government institution recommending that people do not vape, I would say now would be a time to short vape stocks. It is only a matter of time before the entire bubble of vape stocks bursts.

Fig1: Article That States Rate Cut

Although this blog has mainly been about the triumphs and downfalls of cryptocurrencies, I do also look at macro-economic trends as well. The fed is expected to cut interest rates by another quarter percent this upcoming Wednesday. It is reported that this could lead to high market volatility. Volatility means that markets will be rather erratic, with many of the worlds stocks and assets falling in value.

When the fed lowers interest rates, especially for the third time, this means that the economic outlook is not the best. This means that troubling times are ahead, and they want to promote businesses to borrow money. This is a form of expansionary monetary policy. In theory, this should promote the growth of companies because they can raise debt or borrow money a lot cheaper. This will allow them to invest in infrastructure and improve themselves. However, the effects are not always so clean and clear.

Fig 2: Recessionary Borrowing

Many companies use these cuts as a sign to cut back. They decrease inventories and stagnate their growth to prepare for an impending recession. Since the market has been so strong for so long, many people think that this is the time for a downturn. This unfortunate fact means that many of the world’s equities will see losses.

Although stocks will see losses, there are many other assets that are worth taking a look at. If you are a wealthier individual, you can invest your money with a hedge fund. These funds are designed to earn money regardless of the current state of the market. They are the funds that are most suited to the tough climate that lies ahead. Also, now would be a good time to invest in bonds. Market volatility does not strike the treasury bond market. The same amounts are paid out over time as long as the U.S. government does not default.

Fig 3: Cryptocurrency(Bitcoin)

If you are looking for a bit more of a risk reward scenario you can look at cryptocurrencies. I cannot say it enough, cryptos always do well in a bad market, and they always do well at the end of the year. In this case, the perfect storm seems to be forming. Cryptos are still relatively low as compared to their all time highs. In my opinion, I think they have the potential to have gains that are multiple times their current price. This monetary gain will surely come in handy when the recession inevitably hits.

Fig1: Bitcoin Futures

As you may have guessed by now, I love cryptocurrency. The reason that I love it so much is that it has the ability to change the world. It has already started actually. I am doing my paradigm shift essay on the wonders of blockchain. The shift is on the current acceptance of cryptos and what they can do for the financial world.

However, today what I am going to be talking about is the recent news surrounding the “king crypto”: Bitcoin. My history with Bitcoin is a long one. I purchased Bitcoin minutes after I bought my first crypto XRP. That was back in 2015 before it hit its all-time highs. Since then I have increased my amount of XRP and held my Bitcoin constant. When it rose to all time highs I traded up and got more, so with the recent news I am very excited.

Fig2: Bitcoin Price

In the current day, Bitcoin has gone up over fifteen percent in the past twenty-four hours. This is pulling almost all of the cryptocurrency market up. What you may not know is that the cryptocurrency market is very closely tied to Bitcoin. When Bitcoin goes up, the whole market tends to trend upward. As I said in my past posts, cryptos usually tend to do good at the end of the year. Therefore, it is not a huge surprise that many of the cryptos are doing well.

Fig3: Bitcoin Futures Article

The news that made Bitcoin increase so much is all time highs on Bitcoin futures. A future is a financial instrument that is a contract. It is a contract to buy or sell a specific asset at a future date at a certain price. These have hit all time highs for Bitcoin and the price targets that the contracts have are high. Therefore, this tends to make investors bullish. Bullish means that they think it will go up.

I really think cryptos will continue to go up for the foreseeable future. I would say they are a very good investment from now until the end of the year. However, Bitcoin may go down in the short term since it has gone up by so much in a single day. It may retract and then hit new highs as many cryptos do. I am excited to see what the end of the year will bring, as there are many regulations and company partnerships pending. I wish good luck to all parties, and I hope the next post will justify this optimism.

Figure 1: Fed Cuts Interest Rates

The United States fed just cut interest rates by another quarter point. This is a big opportunity to make some smart investments.

Figure 2: Interest Rate Cut Expectation

First off, many people projected that the interest rates would get cut. Most analysts and news agencies published that they would be cut. This is a major opportunity.

With tariffs being imposed on China and interest rates being cut, I believe that the USA is looking to promote domestic production. With low interest rates U.S. companies will be able to borrow money for very low fees. Since interest rates are the premium you pay to borrow, paying loans back will be way less expensive. Think about it like a mortgage. If the interest rate is five percent the loan will be a lot more expensive than if it were one percent. Therefore, you can buy a bigger and better house with the lower interest rate.

This will allow businesses to invest in infrastructure. They will be able to spend the money that they need to in order to streamline inefficiencies and create new products. These sorts of improvements usually spike stock prices. They make people want to invest more because of the companies proactiveness. I would say buying equities in U.S. based manufacturing would be a good investment for the time being.

We will have to wait and see how the election turns out. Political turmoil is usually not the best for investments. If parties change or controversy occurs, it could mitigate the potential for equity gains.Figure 3: US Currency Chart

There is also another issue. When interest rates decrease so does foreign investment in U.S. debt. The demand for the U.S. dollar decreases in terms of other currencies. This is called currency depreciation. All currencies that are openly traded are indexed against each other. There is a conversion from US dollar to euros and many more. This ratio changes based on a market system where currencies are traded. In this case the ratio will most likely favor the other currency when indexed against the United States dollar.

My recommendation is to buy currencies that have higher interest rates that will make up the difference from U.S. based debt. They will be small appreciation gains, but they are a good opportunity.

It is predicted that the U.S. and the world will most likely come into tough economic times soon. The best thing to do is to manage economic risk and make money while you still can. You can see my other posts for long and short-term investment opportunities.

Figure 1 Bitcoin(Left) XRP(Right)
Hello and welcome to my personal blog. I would like to start out with the reason that I have found this passion of mine. From a very young age I have always felt that I am different in one key way. I am an entrepreneur. In short, I have operated a business since I was about twelve years old. My early excursions dealt in the realm of small-scale eCommerce and various little schemes that produced small profits. I worked long hard hours trying to figure out anyway to make a single dollar. I would literally spend ten minutes on a product just to make twenty-five cents. As my ambitions and ideas began to expand I started to sift through the internet for any way to make my business better. This is how I found my passion.

At the age of fourteen I found cryptocurrencies. They are “online tokens” that are not physically backed by anything. They are a collection of equations and algorithms that are stored and transferred over what is called a blockchain. They are more like a stock than anything and they trade on privately owned market systems. The “king crypto”, bitcoin, was the first to come along in 2009. At the time of its ICO (initial coin offering) it was valued at a fraction of a cent. Today it trades at almost 10,000 U.S. dollars. It is considered by many as one of the best investments of all time, assuming it was purchased before the big “boom” in late 2017.

As I said I was just fourteen when I came across this godsend of an opportunity. I looked at the markets with minimal expertise. I looked at the technology that was backing these assets along with their real-world application and I poured every ounce of money that I had made into them. I purchased equal amounts of Bitcoin and XRP.

What I saw in Bitcoin was pretty simple. Bitcoin was the first to come along, so like most emerging markets it would gain the first rise. I backed XRP because of its real-world application. XRP is a liquidity solution that hacks bank settlements from three days to three seconds. My reason for investing in XRP was based on the fact that this technology was crucial. I sat for hours and tried to think of how it could fail. Needless to say, I am still thinking.

Figure 2 Bitcoin Price Chart (28 Dec. 2017)
For three long years I waited around and checked the prices with minimal movement. Any forum or discussion that I read was in a stalemate with people who did and did not believe in Bitcoin and XRP’s future. However, in late 2017 my phone began to ring.

While in class I felt vibration after vibration and as I looked at the screen I saw twenty notifications from my price tracking app. In the following weeks the whole world came to know Bitcoin, XRP, and countless other cryptocurrencies. The markets went up by over 30% every day. I was a part of one of the most profitable investments of all time, needless to say this absolutely changed my life. This is where I found my passion of emerging markets.

XRP Real Time Price Ticker

Bitcoin Real Time Price Ticker