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April 26, 2021 | It’s a Ponzi world

Danielle Park

Portfolio Manager and President of Venable Park Investment Counsel (www.venablepark.com) Ms Park is a financial analyst, attorney, finance author and regular guest on North American media. She is also the author of the best-selling myth-busting book "Juggling Dynamite: An insider's wisdom on money management, markets and wealth that lasts," and a popular daily financial blog: www.jugglingdynamite.com

Bitcoin and other digital coins plunged last week, wiping over $200 billion off the value of the cryptocurrency market. Some cite the need to pay income taxes in April as a prompt to raise needed cash.  A similar factor was noted in April of 2000 after the previous year’s 100% leap in NASDAQ shares into the tech bubble top.

Others cite President Biden’s plan to raise long-term capital gains tax for the wealthiest Americans to 43.4% as a catalyst for selling.  If that’s the case, other asset classes sh0uld follow suit.

Whatever the initial trigger, all financial bubbles pop eventually; slowly at first, with an almost imperceptible decline in euphoria one day after the next, and then, suddenly, all at once.

Notice in the segment below that the host suggests Taleb must be wrong about bitcoin being a Ponzi because the prices have continued to rise.  Similar arguments were made about the Madoff Ponzi and every other financial scam in history.  Surely, we know by now:  the fact that prices keep rising is no proof that something is legitimate or investment-worthy.

“There’s no connection between inflation and bitcoin,” Nassim Nicholas Taleb, author of “Black Swan,” told CNBC’s “Squawk Box” team. “The best strategy for investors is to own things that produce yields in the future. In other words, you can fall back on real dollars coming out of the company.”  Here is a direct video link.

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April 26th, 2021

Posted In: Juggling Dynamite

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