Dear Legacy Wealth Alliance Family,
This is Pattie and I hope you are settling in to 2021 quite nicely.
In just looking at the calendar, can you believe the end of February is upon us? The older I become, I feel like time is speeding by as compared to my childhood when it felt like it just dragged on and on.
Even though time is moving fast for me and probably you as well, I have found time to focus on what is very important to me and have made changes in my life to get to where I want to be… being more faithful, more grateful and remembering to count my many blessings and yes, they are many. Maybe sometimes I do not see them, but this year I am taking time to change my focus and count my blessing and not dwell on things I do not have or things I want. My change in focus has helped me focus on what is truly important in my life.
I have a question for you, have you ever been scammed? You do not need to answer that, but I will be honest here and tell you that I have been. About 30 years ago, I replied to an e-mail from what I thought was bank asking for my pin no. After I gave my pin no., I thought better of it and called the bank right away and they froze my account, and I had to file a claim, so I was not held liable for any debits that occurred.
Then there are the social media scams… Yes, I have been approached by social media scammers. Thankfully, I recognized these as scams. I also reported these scammers to the FTC. These scammers reach out via chat on social media platforms and attempt to lure you in. You might ask why I engaged them, when I knew it was a scam… the answer is, I knew if they were wasting their time on me, that was one less person for them to attempt to scam. It starts out as friendly conversation then within weeks they tell you some sad story to get you to feel sorry for them and then it comes… please send me bitcoin to help me out of my dilemma.
Lincoln Financial Securities recently developed a paper on Cryptocurrency and we thought it would be beneficial to share with you, as we have had clients call to ask.
Cryptocurrency from an investment stewardship perspective
Overview
In 2017, a relatively new “investment” called cryptocurrency garnered a tremendous amount of media attention, most notably Bitcoin. While Bitcoin lost media interest at the end of 2017, it is now back in the spotlight since climbing in value. The intention of this review is not to issue a forecast of cryptocurrency, but rather briefly examine what it is and what it is not.
Let’s talk about Bitcoin
Bitcoins are a cryptocurrency. A cryptocurrency is a decentralized digital currency intended to facilitate monetary transactions without an intermediary. Bitcoins, unlike real coins, do not exist in physical form. Instead, they are intangible digital “coins,” also known as a store of value. This type of cryptocurrency may be desirable to those who wish to complete monetary transactions anonymously.
Who started Bitcoin and who backs it?
The origin of Bitcoin occurred when a research paper was posted to a website in 2009. It was attributed to a person or persons under the name of Satoshi Nakamoto. While there has been much speculation, Satoshi Nakamoto has never come forward or been accurately identified.
Unlike the U.S. dollar and other governmental currencies, Bitcoin is not backed or currently regulated by any governmental agencies or businesses. It does not produce earnings or dividends. Its value is set by what people are willing to pay for it.
Just how volatile is Bitcoin?
Bitcoin is incredibly volatile. This volatility translated into huge swings in price. As you can see from any online market source, it was just over $910 in the beginning of 2017; by year end, it crossed $19,400 only to drop under $3,300 by December 2018. It then took two more years to hit the old 2018 high of $19,490, and by February of 2021, it is now just over $50,000.
What are others saying about these cryptocurrencies?
There is a loud chorus of voices with opinions, including both critics and fans. When confronted with such diverse views, we tend to look to those with long histories of success in managing assets and strong academic backgrounds.
Nobel Laureate and professor Robert Shiller said, “Bitcoin exhibited many of the aspects of a speculative bubble.” Famed investor Warren Buffett said, “Bitcoin has no unique value at all, it doesn’t produce anything. It’s a delusion basically.”
These statements were made pre -2021 when Bitcoin prices were lower than they are today. While both Shiller and Buffet may ultimately be proven correct, these quotes illustrate the difficulty in forecasting pricing of an item driven purely by what interested people are willing to pay for it.
What is our view?
As mathematically based stewards of wealth, we take the business of investing money very seriously and hold ourselves to rigorous standards. Investing should be done prudently, with a constant eye on valuation, risk and potential return.
For an investment to qualify for inclusion in a portfolio we manage, it must have a discernable range of value. It also needs to have a long enough history to examine the degree of risk that is embedded. If these requirements are not met, it should be considered speculation- not an investment.
Because cryptocurrencies have extremely short and shadowy histories, non-traditional currencies have exhibited extreme volatility. As a result, we would not currently allocate them in portfolios. We are not saying these cryptocurrencies can’t appreciate further, as they are not tethered to valuation like stocks are to earnings or bonds are to income. Almost anything could happen. But our primary focus remains on protecting and growing our clients’ capital. As always, please reach out with any questions to discuss your personal investment goals and our view on long-term investing.
CRN-3457583-021821
I hope you found this information informative. As always, please call us if you have any questions.
Wishing you a great day!
Pattie Gradl
LFS-3466213-022421
This information does not have regard to the specific investment objectives, financial situation and the particular needs of any specific person who may view this information. Statements, opinions, and forecasts made represent a particular observation and assessment of the market environment at a specific point in time and are not intended to be a forecast of future events or a guarantee of future results. Investors should seek financial advice regarding the appropriateness of investing in any securities or investment strategies discussed or recommended. Statements regarding future prospects may not be realized and may differ materially from actual events or results. Past performance is not indicative of future performance.
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8950 S. 52nd Street, Ste. 204
Tempe, Arizona 85284
480.212.7000 (Office)
480.212.7002 (Fax)
Pattie@legacywealthalliance.com
Please do not send any trading or transaction instructions through this email as they will not be executed. If you need to place a trade, please contact our office directly or the Trading Desk at 800-237-3813. Todd Martin is an Advisory Representative offering investments and advisory services through Lincoln Financial Securities Corporation, Member SIPC. Insurance is offered through Legacy Wealth Alliance, located at 8950 South 52nd Street, Ste. 204, Tempe, AZ 85284. Lincoln Financial Securities Corporation and Legacy Wealth Alliance are not affiliated. If you do not wish to receive emails from me, please call me at 480-212-7000, email me at Pattie@legacywealthalliance.com or write to me at 8950 S. 52nd Street, Ste. 204, Tempe, AZ 85284. LFS-2714072-090319
See Lincoln Financial Securities (LFS’) Form CRS Customer Relationship Summary, available here, for succinct information about the relationships and services LFS offers to retail investors, related fees and costs, specified conflicts of interest, standards of conduct, and disciplinary history, among other things. LFS’ Forms ADV, Part 2A, which describe LFS’ investment advisory services, Regulation Best Interest Disclosure Document, which describes LFS’ broker-dealer services, and other client disclosure documents can be found here.
