₿ Bitcoin Block Halving Imminent!

What’s on the Menu 🍴

All eyes are on bitcoin…

And stocks…

And the economy.

Ok, there’s a lot to look at this week.

Let’s jump into it!

• Netflix: Were Investors Too Bullish? 🎬

• Bitcoin Block Halving Imminent! ₿

• Is Looking At Your Portfolio Everyday A Bad Thing? 🧐

• Why The Markets Are Finally Crumbling 📺

Today’s newsletter is a 5 minute read.

Netflix: Were Investors Too Bullish? 🎬

Netflix was one of the first large tech companies to report Q1 earnings this season, and the initial reaction from investors was a sour one.

NFLX stock sold off 5% in after hours trading on Thursday, despite the company posting strong subscriber & revenue growth:

NFLX grew its subscriber base by 16%, revenue by 15%, and operating income by 53% versus Q1 of last year. Those are robust numbers!

The company also forecast 16% revenue growth and 42% earnings growth for next quarter.

However, NFLX management did say that growth would likely slow down somewhat in the back half of the year.

They also announced that the company would stop reporting quarterly subscriber metrics in 2025, which upset some investors.

But perhaps the biggest reason NFLX stock didn’t react more positively to the report was that investor expectations had gotten too unrealistic.

NFLX stock was already up 30% year-to-date and up over 80% in the past year.

The forward price-to-earnings multiple on NFLX had reached a two year high as well:

Investors expectations may have gotten too far ahead of what the company could actually deliver, despite healthy business trends.

This is a classic pattern that plays out time after time in individual stocks as well as in the overall market.

The lesson?

The price we pay for a stock matters just as much as the quality of the business.

A fast growing company can be a poor investment if it’s bought at too rich of a price.

Oftentimes the best time to buy stock in a strong company is when the market is uncertain about some short term issue.

That was certainly true when NFLX subscriber growth briefly stalled out in 2022 and the stock dropped by a whopping 75%!

The company pulled several growth levers with advertising and a crackdown on password sharing, which led to a re-acceleration in growth and stock price:

Stocks often bottom before the worst is behind them, and when things are going well they often price in future growth way ahead of time.

As investors it’s our job to figure out how to best leverage these cycles of fear & greed.

NFLX doesn’t look like a screaming buy to us just yet, but with further correction it could get compelling again.

The same is true of many stocks out there right now…

It’s early in Q1 earnings reporting season, but we’ve already seen several stocks sell off despite solid earnings reports (TSM and JPM for example).

We’ll be keeping a very close eye on stocks that sell off despite strong business fundamentals.

Those often end up being wonderfully profitable accumulation plays for long term investors!

Bitcoin Block Halving Imminent! ₿

The countdown is on!

In just a couple of days, bitcoin’s block rewards will get cut in half from 6.25 new bitcoins every ~10 minutes to just 3.125 bitcoin’s available for the world.

Why the Halving Matters

Bitcoin operates on a deflationary model, meaning the creation of new bitcoins is steadily slowing down through these halving events.

Initially set at 50 bitcoins per block when Bitcoin was launched in 2009, the reward halves approximately every four years.

This design mimics precious metals like gold, which are also limited in supply, thereby increasing their value over time as they become harder to mine.

The reason behind this is to create scarcity, potentially increasing Bitcoin’s value as the supply slows down.

If demand remains stable or increases, the price of Bitcoin is expected to rise, theoretically protecting it against inflation—much unlike fiat currencies, which can be printed endlessly by governments, leading to devaluation.

What's Happened Before?

Historically, each halving has had significant impacts on Bitcoin's price and the broader cryptocurrency market, though the extent and nature of these impacts are widely debated.

The prior 3 halvings from 2012, 2016, and 2020 were all about mid-way through their respective bull runs…

So, will this time be any different?

It's crucial to remember that the market is influenced by a myriad of factors, and past performance is not indicative of future results.

With that said, we think this model of bull markets through halvings will continue to work, because it’s a self-fulfilling prophecy… until it isn’t.

Is Looking At Your Portfolio
Everyday A Bad Thing? 🧐

I know a retiree who looks at his portfolio every…single…day.

He’s made it in life with loads of fixed income from pensions and his IRA money is simply going to be inherited by his heirs.

Yet, market open, he’s checking what the stock market is doing, and checking that account balance alongside it.

Most financial professionals will tell you this is not a good thing to do.

It’s “unhealthy” to constantly be obsessing over market moves that you can’t control.

This retiree simply has no reason to do it, but, he still does it.

So it begs the question of “is it okay to check your portfolio and the markets everyday?”

Let’s start with checking the markets.

If you’re an active trader or investor, this is an easy answer. Yes, it’s okay to look at the markets every day!

Not only are you in need of being in turn with the market for future opportunities, but, you also likely simply enjoy being involved in the markets.

There’s something about pulling up those red and green candlesticks for an active trader or investor that feels like “home”.

I don’t see anything wrong with this.

If you’re using market trends to manage individual positions, it can be even more important for you to be in turn with market moves on a regular basis.

What about checking your portfolio balance everyday? This one I don’t think is as necessary and can be damaging.

Checking your balance every single day could just be noise that messes with your mental state. Unless you’re working with an account balance that is dwindling close to zero, or you have margin trades on, you probably are better off checking balances less.

The retiree who doesn’t even need his IRA money checking the balance is likely more from boredom than anything.

But, being too focused on the daily dollar amount could lead you to making bad or unnecessary trades in your account.

So, I’d be careful and avoid checking your balance too regularly if you don’t NEED to.

You’ll likely have an idea of what your balance is doing generally by simply looking at what the general market is doing (or even checking chart price trends of individual stocks).

So, there’s no need to get too “in the weeds” and risk an unhealthy relationship with the numbers on the screen.

All around, it’s not unhealthy to constantly want to be engaged in market movements. But, obsessing over the dollars in your account could lead to over analyzing and over trading your positions.

Video of the Day:
Why The Markets Are Finally Crumbling 📺

Stocks and crypto markets have been selling off hard the last week…

And investors are wondering: Is this a good dip buy opportunity?

Join us in this week’s We Talk Money where we answer that question and more!

Click Here To Watch - We Talk Money Episode 143

You’ll also learn:

• Why rates aren’t falling (and how they’ll impact markets)

• What are the big events to watch out for this week?

• How to look at market sentiment

• And we answer your questions!

Food For Thought 🧠

"In shorting, it's not enough to be right;
you also have to be right at the right time.”
– James Chanos

DISCLAIMER: We are not investment advisors, and this content is for educational purposes only. We don’t offer financial, legal, or tax advice. Nothing we say is a recommendation to buy or sell any assets. Trading and investing are extremely risky, so please be careful and do your own research.