top of page

Blast from the past; a Different Perspective

Another blast from the past –

A Different Perspective

Look back one year: on July 17 2017 —

the total crypto market cap was US$67,836,500.

One bitcoin was worth around US$2,500.

Then this year: on 17 July 2018 —

the total crypto marketcap was US$270,380,000.

One bitcoin was worth around US$9,000.

This is big: in *both* market capitalisation and in BTC price, that is over 300% growth in a year.

There are not too many company stocks which have done this at all, ever.

If you were not watching the markets every day, or if you’d only ever seen crypto values on those two dates, you would be very happy with your progress.

It is when you watch markets on a daily (or god forbid, hourly) basis, that you accumulate stress.

Investing into crypto or even stocks is a little like property investing. The only two times you really truly know the value of your property is the day you buy it and the day you sell it.

Of course, property values fluctuate on a day to day basis; they really do, it's just that most people don't notice. If you don’t have a real-time personal property price tracker, or if you don't read the weekly or monthly suburb or property profiles, you would not see the fluctuations.

If you could see your property price change every day, like the stock prices or crypto prices, your property life would be stressful as well.

We have suggested many times that "crypto is a marathon, not a sprint", and it makes more sense to watch the calendar, not the clock.

This is a great personal recommendation for staying cool and calm, and also a great investment recommendation: if you have a good asset, hang in there through the wobbles.

The proof is in the pictures

House prices 1890 to 2006

Back in 2006, the book “Who's Taking Your Money? (and how to get some of it back!)” predicted the upcoming 2008 GFC and made the claim that property prices would drop dramatically in Australia and the USA.

Back in those halcyon days, when everything was reaching new record highs and property had been climbing steadily for years, these forecasts seemed laughable.

Many laughed, many scoffed, and diehard property pundits said, “Stock market crashes will happen every ten years or so, but property prices never go down...”

The myth that “property prices never crash” was echoed by property investors, and especially, by real estate agents (check your bias).

The facts are, property prices do go down. They always have. Disregarding the warnings of WTYM would have made some people wake up to the realisation of the GFC and up to 30% drop in house values.

“Now for The Good News”

sunrise image

OK, so it's not 2006 anymore, and a decade later, one would hope that we are wiser. Property prices did indeed crash during the GFC (as did stock markets), but the happy news is...

The good assets always bounce back.

There are some stocks, such as older banks and diversified mining companies (think: 100-year old Westpac, or 100-year old BHP) who have bounced up and down through WW1, the Great Depression, WW2, Korean war, Vietnam war, recessions, hyperinflation and more... yet they still bounce back. Other “one-trick ponies” come and go very quickly, whereas, no matter how much you shake it, the cream always rises to the top.

Bitcoin, the grand-daddy of all cryptos, has been through a tumultuous 2018: it has been a roller-coaster ride (if you have been watching the daily news), but, taking a broader view, we still see a nice long-term gain from July 2017 to July 2018.

Other smaller or younger cryptocurrencies may have come and gone already (and if you're lucky, you broke even on those who failed to launch).