A gigantic step of mankind!

What is the magic of Bitcoin? Here is the best one I have seen:  

The magic of Bitcoin is not digital currency. The magic of Bitcoin is not the blockchain. The magic of Bitcoin is decentralization. Removing power from the center and spreading it as far as possible. It's the same magic that makes the Internet what it is today. That gives it power and makes it uncensorable and impossible to shut down. The same thing that means you cannot unpublish something on the Internet, means that you cannot stop something that's on Bitcoin.

Now the Magic Bitcoin has made a gigantic step: it has been officially recognized and promoted as the fiat currency in a sovereign country: 

While many people are still worried about its fate and legality here in the US, Bitcoin has also been quietly included in the FDIC-insured checking account business. 

It's not getting much press, but the folks behind family-owned Vast Bank just did something big. They unveiled a program that allows customers to purchase crypto directly in their FDIC-insured checking accounts. It means the market is opening to an entirely new crowd... the huge crowd of folks who are interested in crypto but aren't so sure about the technological hoops.

Straight from the CEO of Vast Bank, Brad Scrivner...

There's lots of different customers out there that may want to control everything and have their own wallet, their own passcodes, and then there are those who are crypto curious and may prefer to work with a bank or an intermediary, just because they don't quite understand.

You may have noticed a flash crash of Bitcoin and all the altercoins in the past few days, which brought down 20-30% down of their values within hours. It may feel scary but I'm happy to see it as a great buying opportunity for adding more of what I'd like to own. Only when you truly understand what Bitcoin really is, then you won't worry much about its day to day volatility. If anything, it offers more opportunities to buy them cheaply!😜🤗 

What is Bitcoin worth?

My friend forwarded me another great piece about the value of Bitcoin, a very intelligent explanation why Bitcoin is worth a lot from an unique perspective that I haven't seen anyone else has talked about!!

Hope you also find it very informative🤗 

The Billionaire Who Wants the World's Money
By Eric Wade

When a smart person – a person with whom you often agree – says something patently, absurdly, provably wrong... that's your big red blinking light of opportunity. Especially when that smart person is ridiculously wealthy.

But you have to figure out what the opportunity is, and you need to do it fast and with enough conviction that you'll actually act on it.

Because smart billionaires don't often give us obvious flashing red lights like we're getting right now.

Let me explain...

John Paulson is an American hedge fund billionaire. During the 2007 to 2008 U.S. housing bubble and subprime-mortgage collapse, Paulson used the very complicated credit default swaps ("CDS") to make an absolute killing. (A CDS is a contract that acts like insurance for bonds. If a company can't pay its debts, a CDS ensures that the owner of the debt gets paid.)

In other words, Paulson leveraged the possibility of risk of default away from his own portfolio and onto other parties just as the entire world's economy was going into a period of unprecedented defaults.

It was a brilliant move that made Paulson an estimated $4 billion personally.

But there's something else you should know about Paulson. In 2008, he wrote in the Wall Street Journal that the U.S. Treasury's Troubled Asset Relief Program ("TARP") would be better served by buying troubled financial institutions' preferred stock rather than following the Treasury Secretary's plan of buying those same institutions' worst, most toxic assets.

Washington, D.C., as you can expect, rejected the great advice and instead "bailed out" failed institutions with buckets of cash going to failing banks.

Smart and Rich and Wrong

I say all of this to introduce Paulson as someone who clearly has turned his smarts into billions of dollars... so he's worth paying attention to when he talks about investments.

But what happens when he says something that's dead wrong?

First, you make sure it's not you who's wrong. Then you figure out why he said it and what it means.

Recently, Paulson told Bloomberg Wealth that he doesn't believe cryptocurrencies have any value. His exact words were, "Cryptocurrencies, regardless of where they're trading today, will eventually prove to be worthless."

That's a bold statement, considering the global value of cryptocurrencies right now is more than $2.2 trillion.

And it's easy to prove that he's wrong. There are thousands of cryptocurrencies that provide a broad spectrum of services and utility as well as speculative value... But we need look no further than the most basic, simplest cryptocurrency for our proof.

Let's look at whether bitcoin (BTC) has any value. Bitcoin, you may or may not know, is a computer program written and released in response to the 2007 to 2008 meltdown that virtually anyone can run. I've run it on a standard Windows 10 home computer, an old laptop, and a $100 Raspberry Pi minicomputer.

What the bitcoin program does is simply keep track of where the bitcoin "coins" are, and when a coinholder wants to move coins, the program makes sure the coins being moved really belong to the coinholder who is moving them.

That's it. Bitcoin keeps track of bitcoin.

To make sure the bitcoin program isn't hacked, the program pays out rewards to anyone – anywhere – who voluntarily uses their computer to secure the network and process those "moving coins" transactions. Those rewards are paid out in more bitcoin to whoever is lucky enough to solve a puzzle that locks down all the data every 10 minutes.

It works so well that anyone, anywhere in the world, at literally any time of day, can track how many coins there are and where they moved to and from... down to the value of $0.0005. (If you're curious, there are exactly 18,803,690 bitcoin in existence as I write this.)

It's a simple, elegant program that has been running on thousands of computers virtually uninterrupted since its invention in 2009.

A 900-Year Head Start Should Count for Something

Compare that to tracking equities, which have been trading since the 12th century according to WorldAtlas.com and – get this – nobody really knows how many shares of stocks there are.

I'm not kidding. We've had centuries to perfect stock trading, and yes, high-frequency traders can execute a trade in milliseconds... but nobody can count how many shares there really are.

I know most of you reading this may be stock investors, so I fully expect I'll have to prove this and you probably want to hear more than just "unscrupulous brokers loaned out 140% of GameStop shares because of funny accounting tricks."

Yes, that's a problem. But it's even bigger than that and a much, much older problem than the recent meme stocks trading on Robinhood. In fact, in the aftermath of the 2007 to 2008 global economic collapse, the U.S. Securities and Exchange Commission ("SEC") adopted Rule 613 (Consolidated Asset Trail) to try to get a handle on – literally – who held what assets.

At the time, the SEC said Rule 613 would "create a comprehensive consolidated audit trail that would allow regulators to efficiently and accurately track all activity throughout the U.S. markets in National Market System securities."

Now, when it was written a mere decade ago, there wasn't a way to accurately track all of the securities in the United States. Rule 613 goes on to require market participants to submit a plan for how they would create and maintain a consolidated audit trail ("CAT").

In plain English, Rule 613 was the very beginning of attempting to audit who owns what of publicly traded securities.

Sadly, but perhaps not unexpectedly, in 2017 the SEC announced that the phase of actually using the CAT was being delayed by at least a year. It probably surprises no one that in April of 2020, the SEC again agreed to more delays due to COVID-19.

Knowing this, it's easy to see why brokers fearlessly lend out 140% of a company's stock right under the nose of the SEC. Until CAT is a reality, I guess you could say "the mice will play."

This isn't meant to scare equities investors... Rather, I'm attempting to highlight the difference between bitcoin – the simple, volunteer-run computer program that can track literally every single coin ever issued down to the value of five ten-thousandths of a penny – juxtaposed against Rule-613-spawned "Consolidated Asset Trail" vaporware.

Bitcoin, then, just one of thousands of cryptocurrencies, has solved the "who owns what" problem that has eluded the SEC and its nearly $2 billion annual budget and its 4,658 full-time employees for a decade... after having a 900-year head start dealing with equities.

Paulson Wants Something for Nothing

Therefore, Paulson's statement is provably wrong: Bitcoin (the program) is clearly worth something, not nothing. Adding to that, bitcoin can be used as a currency or medium of exchange by anyone around the world. You can transfer bitcoin without a bank 24/7, and on average pay a fee of only $2.72... in bitcoin, of course. Plus, you can deposit bitcoin and borrow against it almost instantly with no questions asked.

Moreover, every year another wave of investors turned off by the traditional finance world sees the value in the bitcoin program that – when you own some of its self-issued coins – allows you to be 100% sure of what you own.

That may not appeal to Paulson. Maybe he's perfectly fine investing his $4 billion estimated net worth in questionable securities sloppily tracked by bureaucrats who can't even build a database in a decade with a $2 billion annual budget.

But I don't believe that. And I also don't believe Paulson just doesn't understand cryptocurrencies or doesn't see the value.

I believe, instead, that Paulson says cryptocurrencies are worthless because he wants to buy them... cheap.

Just like in 2007 to 2008 when Paulson convinced the smartest traders in the world to take the other side of his massive, complicated credit-default-swap trade (which has been called The Greatest Trade Ever by the Wall Street Journal's Gregory Zuckerman)... Do you think he told the counterparties what he was doing?

No, Paulson's smart enough to know you don't telegraph your moves.

What does it all mean? Paulson is smart. He'll buy, use, or perhaps create and sell cryptocurrencies eventually. If he's simply looking to buy at lower prices... you should, too.

My advice: Don't sell him yours, no matter what the price is.

Buy side vs Sell side

We often hear people mentioning "buy side or sell side" when talking about investing or trading. Do you know what it means? I guess most probably have no clue, let alone how Wall Street tries to take advantage by frontrunning us to make money from us. Here is a good brief explanation about this concept, which may interest you!

The Sell Side

 The "sell" side is made up of brokerages and banks. And it creates profits from Wall Street's many fees… whether you see them or not.

For example, popular brokerage app Robinhood offers "commission-free" trading… with a hidden fee. That's because the company sells your order flow to the highest bidder – who uses it against you.

High-frequency traders pay big money to see your buy orders come in so they can legally jump in front of them. They will buy the stock ahead of you and sell it back to you at a higher price.

And brokerage firms like Robinhood want you to make lots of trades so they can collect more money. That's why they propel the myth that profits come easy with fast trades. Remember E-Trade? So easy a baby could do it?

The reality is, it's not really in Wall Street's interest to help regular folks make smart, long-term investments. The more we buy and sell, the more they can profit.

Hands are in the pot from the very inception of a trade all the way through – with broker's fees, exchange fees, floor fees, clearing fees, and other transaction fees.

And the sell side's goal is to maximize all those fees.

The Buy Side

The "buy" side, on the other hand, must make money for its clients. This includes hedge fund money managers, institutional firms, and market makers.

I've personally seen these kinds of "Big Money" players quietly gobble up millions of dollars of stock. Then they go on TV, announce their huge stake, and watch the share price rise as eager buyers pile in.

Or remember Bill Ackman? During the pandemic, he was on TV sobbing about the end of our economy… only to be quietly buying the same hotel stocks he claimed were on the brink of destruction at a discount while investors panic sold.

By manipulating people into buying or selling, Wall Street can profit from us… rather than the other way around.

These are just small glimpses into the shady underbelly of the financial world, but they show how Wall Street's tactics can influence us…

How to keep your cryptos safe

Panama Crypto, a contributor on Medium, wrote a "10 Commandments of Cryptocurrency Security" that could prove useful online even outside of crypto...

1. Do NOT use SMS 2FA on your accounts

2. Setup 2FA or U2F on your accounts

3. Get a hardware wallet, and USE IT!

4. Don't be flashy

5. Be anonymous

6. Don't dox yourself

7. Different email for different types of accounts

8. Bookmark websites (protect from phishing)
9. Use VPN on untrusted WiFi

10. Antivirus and Firewall yourself

Stay safe.

This Indicator Works Best at Extremes… and the trend is not so favorable!

In the past two days (Wed/Thu), the market was trying to make new highs and it did so big time during the day but failed to keep the gain by closing as it nearly gave up all the gain at the end of the day. Today was another losing day although it was trying to recover the initial loss during the day as well but failed at the end.  This sort of price action is quite bearish by itself and bearish negative divergence is seen for all the timeframes!  VIX calls now are 10+ times more expensive than puts for the next two weeks and 20+ times so for the later this month. What does it mean? Well the VIX traders are telling us they expect a significantly higher volatility in the next few weeks, which is usually associated with bearish price actions for stocks. In other words, be prepared for a potential plunge of the market that may happen any moment now. The market is really in kind of insanity with blinded bullishness without any fear. This is the exact moment that one should be very fearful. I'm adding more and more bearish trades now.

As I said before, I'm getting a lot of market information everyday, feeded by various sources of mine. As you may have already noticed, I've been trying to share some interesting and important up to date market information here that may help interested friends for their investing and/or trading decisions. Here is one I got today about one unique indicator most likely not familiar to most folks out there. I think it may be telegraphing something to those who are willing to listen to😎 

*************************************************************

Tracking the size of the options market gives great insight into the level of enthusiasm for a trend and whether it's at risk.

But first a note of caution… there is no single indicator that predicts all market moves.

But at extreme levels, options indicators are predictive.

So, let's take a look at American International Group (AIG), the top performer in the top performing sector during this recent "melt-up" phase as Jeff Clark called it earlier this week…

First, I'm going to go over a couple of terms…

The first one is open interest, which represents the total number of option contracts that are open. For every call or put option bought, an option contract is sold until those contracts are closed. Net open interest, which I'm using, is the difference between all the calls and all the puts.

Now, in the chart below, AIG's net open interest (black line) is overlaid on the price action of AIG (green line) leading into the pandemic and up to the end of this August…

When this indicator is positive, it tells you how many more calls are out there vs. puts – a signal that the options market is bullish. And when it's negative, it means there are more put contracts out there.

I marked four areas on the chart – A,B,C, and D – to show where this indicator diverges from the trend and when it supports it…

But then the indicator found a bottom and diverged the other way in the section marked B.The A indicator marked the exact peak of AIG right before the reality of the pandemic sunk into financial markets. You can see how the indicator started to drop sharply, yet AIG continued to rise. The rest is history… as AIG, along with everything else – collapsed.

Although there are nuances with this indicator, it did signal major weakness for this stock all the way into October – a stretch where pretty much everything else was rising in the market.

But the entire trend that started in October 2020 – marked C – all the way to August 2021 was supported by a corresponding trend in rising net open interest.

But right now, we're at D, which marks a big divergence for the top performing stock in the top performing sector. This kind of divergence is called the "alligator jaws" pattern, where two opposing forces are creating a lot of pent-up energy.

And like previous instances at extreme points in the market, it signals that the trend may not be your friend at this point.

So, with the S&P 500 above 4500, I recommend treading lightly and being very nimble.

Investors need to be picky here and play the risk management game more than just buying what looks good.

Also, keep an eye on financials. A breakdown in market leadership as we enter a seasonally weak period would likely mean we're not bouncing from the 50-day MA for an eighth time.

Eric Shamilov

Enjoy a perfect storm

The east coast has been hit hard by a strong hurricane and New York City was striked by a historical rain pour that has been the worst in over 170 years! My sincere sympathy for those who have suffered from the disaster!

Of course, I don't mean to talk about the natural storm here. Just saw a note from my friend talking about a perfect storm formed in a sector that nearly no one was interested in the recent past. Here is the excerpt:

The Baltic Dry Index (BDI) hit another new 12-year high yesterday and is up almost 1,000% since March 2020…It's not surprising, considering it's the most followed international measure of the price of shipping goods around the world.

And it looks like there's no sign that it'll slow down…

This is mostly due to the pandemic wreaking havoc at shipping companies and ports all over the world. Ports have had to shut down and ships have been particularly vulnerable to the rapid spread of the coronavirus. That's reduced both the capacity of ports and the number of ships available to run. At the same time, the global pandemic has created outsized demand for everything from furniture to appliances, homes, and vehicles.

There is less supply and more demand at exactly the same time, which has created the perfect storm…

I'm happy to say I really enjoy this storm which is indeed perfect for me😜💪

Who so? Well, if you read the following blog I shared with my Family about a year ago, you should be able to understand that I and my Family members have already deeply dived into this storm for quite some time. As such, we have been rewarded dearly so far, not only over 3 times return from the perfect stock we bought but also an amazingly strong dividend yield that has reached 12% even after the stock price has gone up so much!  With the storm is still ongoing with no end in sight, I don't think its business will shrink any time soon. Of course, I must say this is not a risk-free stock at all, especially at such a high level already. Buying from here may not be a good idea. But buying it at weakness may be prudent.

GOGL- Buy the most hated stock

Right now, there is hardly anything more hated than the shipping industry, which is highly cyclical. It is pure supply and demand play. Currently, there are pockets of the shipping industry where you can buy ships at an 80% discount to their market values. You can buy modern ships trading near their scrap values.

It's the most hated, ignored, depressed industry in the stock market. This is where you can truly find some beautiful bargains, drastically different from chasing highs in other hot stocks where you have to pay huge premiums! 

There are three main categories of shippers: energy, containers, and dry bulk. I have already got the oil tankers (the energy sector) like NAT (a quick double) and FRO. Today, I'd like to introduce a stock for the dry bulk segment, which is  mainly concerned with hauling iron ore from Brazil to China. It's getting absolutely hammered…

 From the FreightWaves magazine:

After plunging 21% on Monday to $3,842/day, which was awful enough, Capesize drybulk shipping rates have just crashed down another 25% on Tuesday, to $2,893/day.

Can you imagine being able to rent a giant bulker for $3,000 a day?  

If inflation returns, ships will do extremely well. A recovering economy should also provide a positive stimulus to the shipping industry. Golden Ocean Group Limited (GOGL) is one of the dry bulk stocks I like. Its 6% dividend is a nice plus! GOGL is trading around $3.19 today. 

A “Lehman moment” is looming for the world’s second-largest economy…

From 5 Min. Forecast

So screams a headline at Zero Hedge about the impending default of China's second-largest property developer Evergrande Group. Or as Ben Hunt of Epsilon Theory puts it: the "story no one is talking about."

In the past couple weeks, it's become apparent Evergrande is flat broke after the company couldn't pay its vendors and contractors. As a result, construction projects have ground to a halt. Not good optics, to say the least.

"The highly indebted company on Tuesday also warned for the first time that it may default on its borrowings if it can't resolve its liquidity problems," says an article at The Wall Street Journal.

"Evergrande… said it has been selling assets and apartment units to raise cash. The group also said that 'with the coordination and support of the government,' it is actively negotiating with suppliers and construction companies to try to get them to resume work on its properties."