Real Investors Always Look for Better Stores of Value

Whether we’re discussing “alternative investments” or “better stores of value,” serious investors look for assets that will protect and grow wealth despite — or even because of — weakness in that major corner of financial markets, publicly traded equities.

Professionals, as a matter of career longevity, are always seeking alternatives. And the pressure to find them increases substantially when central bank money-printing and government spending go off the charts. (Sound familiar?)

For many years, Treasury bonds were the typical “go to” investment. When investors got nervous about risk, they sold stocks. But they didn’t hide their money under their mattresses. They put it in Treasuries. That’s called “flight to safety” buying.

But look at Treasuries now. They’ve been sinking for months amid concerns about future inflation and ballooning debts and deficits. In fact, there have been plenty of days lately where bonds have fallen right alongside stocks.

Gold, silver and mining shares have also historically worked as “go to” alternatives. And why not? Precious metals have long attracted both greedy and fearful buyers in times of turmoil — not just for the past few decades but for several centuries.

I still like all three of those assets as “Safe Money” plays, of course. But it’s clear that institutional funds and corporate managers as well are looking to broaden their horizons.

Cryptocurrencies are a prime beneficiary.

We’re seeing technology and fintech companies like MicroStrategy Inc. (Nasdaq: MSTR), PayPal Holdings, Inc. (Nasdaq: PYPL) and Square, Inc. (NYSE: SQ) convert their balance-sheet cash to Bitcoin or work to facilitate crypto-based transactions.

We’re seeing billionaire hedge-fund managers and Wall Street legends warm to the world’s No. 1 cryptocurrency, including Paul Tudor Jones and Stanley Druckenmiller. Ray Dalio of Bridgewater Associates joined the chorus of Bitcoin proponents in January, saying it’s “one hell of an invention” and noting that it’s “rapidly gaining popularity as both a type of money and a store hold of wealth.” His firm manages roughly $150 billion in assets.

And, of course, we’re seeing plenty of interest at the retail level as well.

All of this goes to show why crypto increasingly can serve as a solid hedge against stock market risk, a store of value in an age of rampant money-printing and a long-term investment at a time of increasing uncertainty about the future.

This is a fascinating time for an asset class that’s still in its formative stages. It’s not for everyone. But, if you’re intrigued and would like to learn more, we have ample resources available to help you start that process.

To start, why not check out the latest issue of our Weiss Crypto Alert to see what our crypto experts are talking about now.

Until next time,

Mike Larson