Sunday, July 17th, 2022
If investors needed another reminder that if something sounds too good to be true, it probable is, they got a big wake-up call this week.
Crypto lender CELSIUS, which 9 months ago, said that they had $25 Billion, with a “B” in assets, under management, this week filed for bankruptcy, leaving their investors and lenders with a big ulcer, and maybe $125 Million in cash, to repay the Billions of Dollars they owe.
They were able to grow to this gigantic size in crypto land, by offering super sized 10%-14% interest returns to those who would place their crypto funds with them.
As a “famous” investor once said: “It is not the return ON your money that counts, but the return OF your money that matters.”
Haven’t we all learned for the umpteenth time, that it is impossible to make outsized returns without doing somthing involving tremendous risks of loss?
The fact that it was in crypto currency world should have made it even more suspect, but the fact that blockchains and crypto are the mania of the year does cloud rational minds.
How much further this entire Bitcoin, Blockchain, network has to implode before we see more than a temporary bottom, is anyone’s guess.
Although I have missed the entire upside of the eight year Bitcoin miracle, I do believe the risks of futher downside in prices are real.
However, I don’t know if I would go along with Warren Buffets’s partner Charley Munger who said recently that he thought the whole Bitcoin universe was a mirage and would eventually return to where it started.
However, ignoring Munger and Buffett’s outlook is usually not a very positive investment strategy.
Also, although none of these observations are investment advice, one should note, Warren Buffett continues to add million of shares to his position in OXY ($58) and now has over a 18% holding in the Company. Although I am not a stock analyst, I believe, over 20% would permit him to include a percentage of OXY’s earnings into BRK.A earnings. You might want to check that out yourself with your own professional advisors.
Repeat after me, “If it sounds too good to be true, it probable is.”