Politics and Crypto Update

Regarding U.S. politics, except for moderates/centrists, no one is happy, and both sides wish their respective parties could do more. The left wants gun control, to no avail. For the ‘right’, there won’t be any wall or other meaningful action to stem the inflow of immigrants. There is no sense of urgency among Political leaders to do anything regarding immigration. A lot of tweets and blog posts from early-mid 2017 have not aged well; a lot of overoptimistic predictions of what Trump would do. Fast-forward a year and 6 months, and little has changed, which is what I predicted in early 2017.

Americans have been conditioned into believing that if they repeat some bullshit in their minds enough times, it will come true. This is especially so for crypto currency. Some people are down 95+% on their investment having bought between late 2017 and early-mid 2018, and no amount of affirmations will change the cold, hard reality that their money is gone–for good. Unless you have one of the ‘better’ currencies such as Ripple, Bitcoin, Monero, or Stellar Lumeans, in which there is a small hope of a recovery (I bought Ripple and Stellar Lumens a few weeks ago while shorting one of the worst currencies, Ethereum, making a large profit in the process due to ethereum crashing and the others falling much less), an obscure coin that is down over 95% and has no viable developments on the horizon or investor interest, is likely never going to recover even if Bitcoin somehow recovers, which I don’t think it will.

The reason is there are better coins. Why would investors put their money in sub-par crap when there are superior alternatives. This goes back to my ‘simple systems’ model of how the world works, which is that capital always flows along a gradient of optimal allocation. So if one finds what the optimal investments are, that is where capital will tend to flow. In the case of crypto, it’s Stellar Lumens, Monero, Bitcoin, and Ripple. For stocks, it’s FANG (and also Microsoft and Visa, MasterCard, Boeing, and maybe a few others). For real estate, it’s Connecticut, Bay Area, Manhattan, Orange Country etc.

Then the question is, what makes something optimal. The HBD-investing thesis can help in that regard. Generally, high-IQ stuff tends to concentrate capital at a higher density than low-IQ stuff. So this means wealth will coalesce in the high-IQ ‘sinks’.Among competing high-IQ investments, the one with better fundamentals invariably wins out. So regrading crypto, Ethereum and Ripple both have high-IQ tech and smart people working on those projects, but Ripple is by every quantifiable metric a superior product. This requires doing research to find out which product/investment has better fundamentals.

Bigger is not always better. Although ethereum is still the third-largest coin despite losing 90% of its value since early 2018, I cannot convey with words just how bad it is and intend to remain short as it goes back to single digits soon.