tl;dr: Not investment advice here, just an observation from what I hear often.
There was an article in the November 13th WSJ called “Deposit Interest Rates Are Taking a Pandemic Nosedive”
It begins:
“Banks are paying a pittance on deposits, but customers don’t seem to care.
Some banks are slashing deposit rates. Others are keeping already-low rates at next to nothing, sometimes 0.01%. But customers keep stashing cash at banks anyway.”
I would challenge the idea that “customers don’t seem to care” based on (admittedly) anecdotal evidence.
I think they do care (or at least some of them do), they just don’t have a satisfactory answer for what to do with the cash they do have?
The stock market increasingly looks like a casino, where 5-10 stocks keep going up and the rest of them are just volatile.
In fact, the CEO of MicroStrategy, Michael Saylor tweeted that on Nov. 10th:
And other options are just very risky, though that hasn’t prevented people from piling into SPACs, see “Investors Flock to SPACs, Where Risks Lurk and Track Records Are Poor”
So people are left with the question which I hear a lot, “where should I put my cash?”
The Bitcoin Option
Like it or not, more and more people seem to be opening up to the possibility to Bitcoin as one possible answer.
And the good news is that it’s becoming easier to acquire:
And it’s becoming more accepted while it’s becoming easier to acquire. That’s a powerful combination.
I was speaking with a friend of mine who is a senior exec at a large, publicly traded tech company in the Bay Area.
He said,
“I’ve been putting more money into Bitcoin and I have to say, the more I study it, the more it just makes sense.”
This is the journey that people go on. They get some out of curiosity, THEN they explore it, and eventually they get it.
Where to put cash?
So that brings me to the original question.
To be clear, I’m NOT giving advice here, I’m just telling you what I am hearing from people. You should do your own research, make your own decisions.
However, from my microscopic view of the world, there are two avenues that make sense to people. Crypto and betting Volatility.
Volatility, such as VIX, because all of the money that has flooded (and will continue to flood) the system is only going to fuel the next boom (and then bust)…see Keynes vs. Hayek.
If you’re interested in this, blog reader Hans is a leading thinker on market volatility and how to play it.
Crypto and, in particular the store of value assets like Bitcoin, Zcash, Decred may be appealing to people who are looking to hedge against inflation, which is a growing concern.
Look, I don’t know more than anyone else on these topics. I just know this: there’s a TON of cash out there, more coming, and people don’t know what to do about it.
For now, they are “stashing” in banks.
How long this lasts and whether it lasts…well, I just have to believe that, at some point, people will say “this is crazy, I need to do something with it.”
What they will do…that will be interesting to see.
Disclaimer: this is not financial advice. You should consult with a professional and do your own research before making any type of investment.
