There is no doubt that at this moment the Russian invasion of Ukraine is a real thing. So far there have been 644 Ukrainian casualties, and I've seen reports of up to 5000 Russian killed. No one can predict when this conflict will be over, however everyone is hoping and praying for peace. I expect it to last weeks with more intense fighting and a possible 50,000 casualties. It is just my speculation, but after seeing the determination of the Ukrainian citizens and the madness of Mr. Putin, I've arrived at this guess.
There is a scheduled meeting between Ukrainian and Russian officials at the Belorussian border, however the Ukrainian president, Zelenskiy, has voiced his skepticism.
What's this mean for the markets? In simple terms, Oil will go up and major indices will fall. As of Sunday night in the US, we are looking pretty red.
In the Discord, we been talking about hedging portfolios with a long on oil. Oil is so high, Brent being $104, that I want to short it or buy $XLE puts. However, the key will be timing this transition over from long to short oil.
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I don't believe that Russia will invade Europe, but they are already threatening with their nuclear arsenal.
And now it seems like what is happening that Russia exactly didn't want to happen, which is NATO growing bigger and bigger - closer to the Russian border.
The only positive thing that I've seen so far is the 'alliance' between Russia and China has been put to the test. China clearly doesn't want to lose face and condemn Putin, however they aren't siding with him and asking Russia to engage in talks of peace.
However, propaganda in The People's Republic is still going strong anti-American and anti-West. I don't believe China is as crazy as Russia and they won't do a thing.
I'll be following the situation closely from China.
Even if we get out of this without any more major drawdown, the war is just one reason markets are down this year so far.
There are still interest rate hikes to worry about. The S&P is down about 2.67% since the start of the conflict on February 10th.
Overall, the Nasdaq is down 20% this year.
Everyone is wondering what is the thing to be investing in right now. Well, the simple answer would be bonds. However, I'm not happy with 2% so that isn't the answer I'm going with.
I've taken a much larger crypto position this year. Not only am I getting 12-14% interest on cash (stable coins), but there is much more upside and less risk than stocks for the ret of this year.
As a full time investor, we have to be flexible and try not to carry an ego.
Sometimes it hurts to cut positions that are down, but overall the most important thing to keep in mind is: What is going to go up more this year?
The Nasdaq, or QQQ, has about a 20% upside to regain its all time high status.
Bitcoin, BTC, has a potential 83% upside to regain all time high status.
If QQQ does a +20%, then TQQQ would do a +60%, still being less than BTC's potential upside. Now, I know what you are thinking, QQQ or TQQQ call options, and you would be right. Imagine riding a call option or LEAP on TQQQ up while the underlying pops +60%. The profit would be amazing!
The only problem with that is options have decay, and we don't know when we will reach all time highs. If it was a straight shot up, then calls would be the best. With the war and rate hikes this year, I fear that there is to much uncertainty and I think the decay will wreck portfolios that are in options.
So besides options, you have to ask yourself which commons are best this year to park money. I do think the leveraged ETFs are a good play as always, however they are down quite a lot. I'm not to concerned as 12 months later we should be up from here, as history suggests.
More to my point, crypto will grow bigger and stronger this year, as it is a deflationary asset. The world grows closer and closer full crypto adoption, and crypto could be seen as a safe haven asset class this year. Just imagine if banks shut down in Ukraine and/or Russia, BTC would be a safe and good bet. I expect BTC to reclaim all time high this year.
BTC Long Term Outlook
Every 4 years the BTC block reward halves. In May 2020 the block reward went from 12.5btc to 6.25btc. Overnight it became twice as hard to mine bitcoin, or you could say twice as rare. At the time BTC was trading around $8500.
Since then we are up 350%.
If bitcoin follows the same pattern, and same average slope of incline, the next halving in early 2024 should put bitcoin at around $300,000 per BTC.
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