Its funny, I recommended Bitcoin to some relatives that dont have a lot of money and a common complaint that I received is that they own "too little". They were bothered by the fact that they owned 0.0xxx Usually when someone says that is irrational, that someone is rich and can own FULL units. We dont listen to these small investors the same way some rich people are totally oblivious about the issues of the poor and might say 'these people are just lazy'. These simplistic explanations are wrong in my view. That rich guy goes to cocktail parties and brag about his investments, he might say "I bought a shitload of AMZN last year and now I'm up a ton" he NEVER has to face a situation where he owns a tiny fraction or small amounts of something and needs to talk about it in public, as a result he is out of touch with reality. Its an embarrassment for people. Essentially they are giving up the privacy of their finances in a way that make them lose status so they are reluctant to do that and get angry at the investment for being so "expensive" That expensive investment is forcing them to give up their privacy when they dont want do, so what do they do? They get pissed and sell, or dont talk to others about it, or are not as enthusiastic when they talk to others. They are not proud owners, and ownership is something that people cheerish, just look at how many people want to be homeowners (No one was ever proud of be a 35% owner of a house) So, now I believe that yeah, stock splits do matter and the size of the float of an investment is very important
The key issue here is: If someone owns 500 shares of GME, you dont know if they could have bought more or not. Maybe they like it and just have a small position, maybe they are planning to more buy soon, maybe they had 3000 and took most of the profits. Heck, maybe they had 50,000 at one point and sold most But if someone owns 5 shares or 72 shares, you KNOW that this person dont have that much money to invest. You just caught a glimpse at their entire finances, in a casual conversation or internet posting. The price of the investment has violated that persons privacy "what if the person just says they own GME and that's it" Most people have an honest bone, in most cases they are not going to beat their chest, wear GME t-shits, post constantly on the internet about it because deep down they know that "if people knew I only own 33 shares, they would not listen to me, they would know I'm just a poor student investing". They feel like frauds so they rather not do it, in most cases. Especially in status oriented countries like the United States
I raised some cash today by selling a few postions, in order to balance out the risks that I have now due crypto exposure. I dont want to get caught and have a big drawdown in case all risk assets dump in a surprise sell-off By raising cash I balance out the "barbell" of risk+safety I sold: -All my gold stocks, GDX & GDXJ. Gold is being disrupted hard by Bitcoin and NFTs. If that continues, the stocks will get hit super hard. I have not sold any GLD though, because it works as a hedge against crypto -All my Brazilian stocks, EWZ EWZS. Brazil is facing a 2022 election between a socialist friendly towards socialist dictatorships and a nut friendly towards military dictatorships. Fiscal reform is not getting traction and I figure, if commodities make a big comeback, crypto will outperform commodities due being better inflation hedges. But if commodities dont come back, Brazil faces future fiscal problems that congress dont want to solve. There is not enough clarity to continue. -Some of my China exposure in FXI. FXI is basically tech+banks, so I already own a lot of that stuff in other etfs and I think I bought too much of China that unbalanced the risk to safety balance By raising some cash I can sleep at any night knowing that if there is a surprise sell-off in everything, I will have plenty of dry powder to pick up cheap stuff
The AML fine for IB has ruined their broker! At least for non-US accounts. I deposited $30,000 the other day from my Tradestation account and they proceed to ask from me everything but my DNA sample. They even asked audited financial statements, which I have no intention to provide as it costs a fortune. Meanwhile 90% of all my money was obtained as capital gains inside of IB, they have access to everything they could ask for. I might be able to survive this round but its getting close to the point where I will have to move everything into crypto land, not necessarily in risk stuff like BTC/ETH but in a mix of self-custody and custodial services (including smart contracts like Aave) using stablecoins If I split stablecoins between: Self-custody, AAVE, Compound, FTX, Kraken, Binance then I'm pretty diversifed to all kinds of risks, especially now that USDC will be 100% backed by US Treasuries. Gold exposure can be obtained through paxos gold. Stock exposure, through FTX derivatives (until they shut it down of course), etc It wont be perfect but its getting to the point where I'm considering. I might dabble with Tradestation and Centerpoint first, they have been awesome over the years, they dont treat you like a criminal and say you got 30 days to KYC your ass or they close your account but if that doesnt work, I'm going full crypto
I think IB is still king when it comes to TradFi brokerages but if you believe crypto has more upside and/or equities have minimal upside going forward eg. 20 year fwd returns etc, it does make sense to shift allocation. I've been leaning that way for awhile now, have been looking for alternatives.
If we're talking 20 year horizon, one of the longer term barrier I have with allocating higher % of my capital to crypto is that it wasn't initially apparent what I can do with my currency. I think seeing additional in-flows into the space for several more years is likely, but mature instruments that act as a store of value / medium of exchange eventually don't carry much risk premium. So if I am allocating more capital into that currency; I also want to control risk assets producing real yield with it. Still fairly early on the learning curve but I don't know of an easy way to do that aside from staking; which didn't seem too attractive yet on a % return vs. the lack of liquidity and high underlying volatility. Owning NFT's are attractive because it gives me something to do with the currency.
The thing is, its not even a return thing. I dont see how I wont lose my IB account in the long-run. At some point the regulatory requirements will outpace my willingness to comply with them. If they really demand audited financial statements, then I'm out. I'm not spending tens of thousands just to be able to buy stocks. If somehow they let this one pass, I'm never making a wire to inside IB ever again, their compliance department is just too paranoid. If they enable crypto, I'm never depositing crypto there, like ever
With BTC, you dont do anything with it. It just sits there like gold, but ETH there is a lot that can be done. So much so that I see NFT kids thinking in terms of ETH more and more. Its a store of value, medium of exchange and unit of account. Its really hard to explain it, just spend a few weeks talking and learning from NFT discords like crypto punks, BAYC, cryptokitties. And follow a bunch of NFT people on twitter, in a month, you will see
I think a potentially bigger concern is IB not letting you get your money out at all. If the KYC gets ridiculous you will have to get audited just to claim your capital. I can see this happening based on interactions I have had with IB previously.
NFA Interesting point of view. There are many DeFi projects in cryptosphere. Some have tokenomics (token economics) that are quite impressive when compared to TradFi Have you looked at Pancakeswap and how your statement would apply? If Pancakeswap was a publicly listed company in the US stock market, it would have the following metrics: $5.3B market cap over 91% yearly dividend yield disbursed every 3 seconds for stakers weekly stock buyback of ~$130M and destroyed (burnt) verifiable on the public ledger (blockchain) ~$5B worth of stock destroyed to date ~$1.3B in sales per day (exchange volume) but very tiny profit margin other revenue-generating businesses besides exchange $12B AUM https://pancakeswap.finance/