🔒 Everyone’s Trying To Steal Your Wealth - Invest Accordingly

What’s on the Menu 🍴

Investing is a competition…

And everyone is either trying to take your dough or tell you what you can and cannot do with it.

So today is all about giving you a mental model for thinking about this battle arena of building wealth…

And exposing an example of the old guard who wants to control where you store value.

Let’s go!

• Everyone’s Trying To Steal Your Wealth - Invest Accordingly 🔒

• The AI Impostor 🕵️‍♂️

• Jamie Dimon Wants To Shut Down Crypto…Still. 🫣

• Are We Going into a Cypto Altcoin Season? 📺

Today’s newsletter is a 4 minute read.

Everyone’s Trying To Steal Your Wealth -
Invest Accordingly 🔒

Ever felt like everyone in the investment world is out to get your money?

Well, you’re probably right!

Welcome to adversarial thinking, where skepticism isn’t just a trait; it’s your knight in shining armor.

In this high-stakes game, the key to survival isn’t just knowing what to pick but also questioning what everyone else is picking.

Think of it like playing chess against a sly opponent; you're always questioning their moves, right?

That's adversarial thinking, and in investing, it’s about challenging the status quo, digging deeper than the shiny surface of popular investments, and sometimes, daring to walk against the crowd.

Remember the 2008 financial crisis?

A few eagle-eyed investors smelled something fishy when everyone else was busy partying in the real estate market.

They questioned, they analyzed, and they bet against the market. While others faced their downfall, these adversarial thinkers reaped the rewards.

Here’s some ways “adversarial thinking” can save your ass-ets:

1. Uncovering Ponzi Schemes: Adversarial thinking helps spot Ponzi schemes by questioning unrealistic high returns, aiding in avoiding such frauds.

2. Evaluating Overhyped IPOs: Critical analysis of hyped IPOs, focusing on actual financial health rather than market buzz, can prevent investing in overvalued stocks.

3. Resisting Market Bubbles: During market bubbles, like the dot-com era or NFT craze, a skeptical mindset helps investors to question collective enthusiasm and avoid over-inflated sectors.

4. Scrutinizing Business Models: Adversarial thinkers critically assess startups' business models for feasibility and sustainability, avoiding impractical investments.

5. Assessing High-Yield Investments: A skeptical approach to high-yield, high-risk investments encourages a careful risk-return analysis, protecting against potential significant losses.

Now, don’t confuse adversarial thinking with being a perennial naysayer.

It's more Sherlock Holmes and less Eeyore from Winnie the Pooh. It's about dissecting every investment narrative with a fine-tooth comb and asking, "What if everyone is wrong?"

It’s about looking for evidence that contradicts popular belief and being brave enough to trust your analysis.

Cultivating an adversarial mindset means embracing discomfort. It's about listening to the contrarian in your head when it whispers, “This hype seems overblown.”

Develop this skill by engaging with diverse opinions, playing devil's advocate, and always, always, wearing your cloak of skepticism.

Remember, in the investment world, groupthink is your enemy, and independent, critical analysis is your ally.

So, the next time you’re about to make an investment decision, channel your inner detective. Question, analyze, and be prepared to zig when the market zags.

After all, in a world where everyone might be trying to take your money, being the smart skeptic could be your best defense.

The AI Impostor 🕵️‍♂️ 

One of the biggest trends of the year has been artificial intelligence’s INSANE progress.

With such a boom comes staggering growth for some companies, while others try desperately to attach themselves to the gravy train before it runs away.

Love or hate Nvidia, there’s no denying that the company is benefiting massively from the boom. The evidence is clear in NVDA’s financial results:

Microsoft, OpenAI, Anthropic, Scale, Runway, Midjourney, and others have similarly joined the gold rush.

But unfortunately plenty of grifters are tagging along, including companies in the public markets.

One such company in our view is C3.ai (ticker: AI).

While this company has the most coveted ticker symbol in the market right now, the underlying business looks suspect…

🚩 Red flag #1: the company seems to change its name whenever a new hype cycle emerges

In 2009 the company was called C3 Energy. Then in 2016 they changed to C3 IoT, an attempt to ride the “internet of things” wave. In 2019 they switched to C3 ai.

🚩 Red flag #2: the company puts out a lot of press releases exaggerating partnerships with larger companies that never amount to much.

For example, the company once touted that it was “developing AI solutions with Microsoft” when in fact C3 merely pays Microsoft for server usage.

🚩 Red flag #3: C3’s largest customer, Baker Hughes, has been selling its stake in C3 aggressively this year. Its revenue commitments were also revised downward during the last contract negotiation.

🚩 Red flag #4: C3’s revenues & profits are not growing very much during a boom year for AI software.

C3 reported a mere 14% revenue growth in the last 6 months, and had negative cash flow to the tune of $60 million in the same timeframe.

The stock gapped down 10% this week after releasing its quarterly earnings report:

It sure doesn’t look like an “AI winner” to us!

While stocks like these can make brief pushes higher on promoter pumps, inevitably they are likely to destroy shareholder capital in the long run (c3 is down 70% since 2020).

Be careful out there!

Jamie Dimon Wants To
Shut Down Crypto…Still. 🫣

As Bitcoin (the largest Cryptocurrency) continues its trek higher, we continue to see some of the brightest names in finance feel uneasy about the technology.

We’ve all heard some of the greats like Charlie Munger, Jamie Dimon and even Warren Buffett calling Bitcoin “rat poison”, a “hyped up fraud”, a “pet rock” or a way to simply gamble.

The opinion lives on as we heard Jamie Dimon (CEO of JP Morgan) speak in the Annual Oversight of Wall Street Firms Congressional hearing this week.

He went on to tell Congress members that the only true use of Crypto like Bitcoin is for “criminals, drug traffickers, money laundering, and tax avoidance”.

He ended his bit with “If I were the government I’d close it down”.

Now, we all know Bitcoin can’t be “closed down”, so a lot of people are inferring he means closing down “Crypto exchanges”:

Bank CEO’s simply feel like Crypto exchanges need to be more regulated to have Crypto transactions go through all of the same “checks and balances” that traditional banks are forced to follow.

It sounds like Congress is trying to get the “Bank Secrecy Act” updated to include the new Crypto (blockchain) technology.

Senator Warren continued to note that last year an estimated 20 billion dollars in “illicit crypto transactions funded every kind of dangerous criminal.”

But, truly, this is a small percentage of total illicit activities thanks to cash:

“The estimated amount of money laundered globally in one year is 2 - 5% of global GDP, or $800 billion - $2 trillion in current US dollars. Due to the clandestine nature of money-laundering, it is however difficult to estimate the total amount of money that goes through the laundering cycle.” -Source UNODC

Coinbase, one of the top Crypto exchanges, is already trying to do the right thing here:

However, it does sound like Congress isn’t going to let up on more regulation, and most traditional bank CEO’s agree that there should be more.

One of the major reasons people like Crypto is because it’s permissionless, borderless and decentralized.

So, of course, users are pretty annoyed that “Know Your Customer” is necessary and the government wants to know everything about who is doing what on the blockchain.

While more regulation goes against the “ethos”, the general bull case still exists.

Bitcoin specifically is still a scare asset proving to be a better store of value than silver or gold and the faith in the technology is what keeps it alive. People also love that it’s a way to break out of dying currencies around the world.

Even more regulation simply can’t change the core of what makes Bitcoin, Bitcoin.

Are We Going into a Cypto Altcoin Season? 📺

A few months ago, we gave a heads up for exactly when altcoin season would start…

And in today’s episode, we’re diving into the charts to see if crypto is about to go into full-on altcoin bull market.

You’ll also learn:

• What happens if governments start FOMO buying bitcoin?

• Why are rates falling so fast - and will they keep going?

• How can we find value trades in today’s environment?

• And much, much more!

Delicious Bites 😋

• Which Companies Make Up the “Magnificent Seven” Stocks?

• Bitcoin is up 84% since Jim Cramer told people to sell bitcoin

• Do Kwon Faces Extradition to U.S. for Charges Tied to the TerraUSD and Luna Collapse

• Elon: Disney CEO Bob Iger should be 'fired immediately’

• ChatGPT often won’t defend its answers – even when it is right

Food For Thought 🧠

"Do not be embarrassed by your failures, learn from them and start again.”
- Richard Branson

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.