New England Capital Blog

The Roaring ‘20s refers to the 1920s when economic prosperity flourished in the United States and Europe.  Deferred spending from the effects of World War I and the Spanish Flu Pandemic, a construction boom, and the growth of consumer goods more than doubled our Nation’s wealth from 1920 to 1929.  

Through my 26 years of experience, it seems that every several years something “new and trendy” is introduced into the investing world.  Whether it was technology stocks and the dot-com bubble in the 1990s, Real estate (that can only go up) in the 2000’s up to the recent FANG stocks (Facebook, Apple, Amazon, Netflix, and Google).   Over the past 18 months, cryptocurrency has been the hot topic.  In this vlog, I will discuss:  How does crypto work – specifically Bitcoin.  What are the risks of investing in Bitcoin?  And finally, should we own cryptocurrency?

How does Bitcoin work?

Just over a year ago, on March 16, 2020, everyone at New England Capital packed up our equipment and said our goodbyes. I didn’t know when we’d be back together in the office – hopefully within a month, or certainly within two months. After all, some scientists said it would take 15 days to slow the spread of the Corona virus. Even our President said the virus would be gone by Easter. . .

What a difference a year makes!  Between February 2020 to March 2020 the S&P 500 (500 largest US companies) average dropped roughly 35% in that span.  As many of you know through your account balances, you have made up those losses and have quite a bit of gains since then – in fact the S&P 500 has risen 74% since that market bottom.

By far the most common question I get asked these days is “what is next?”.  Many times, it starts like this: “Chris, I know you don’t have a crystal ball, but…..”  Actually, I do have a crystal ball!  Chris Lee gave me one years ago. It’s on a shelf in my office.  Unfortunately, it doesn’t tell me what is going to happen next.  It does not flash red at the top of the market telling me to get out before a market correction.  Just as important, it does not have bells and whistles going off at the bottom of the market letting me know to be fully invested.  Maybe I should check the return policy since it may be defective!

Luckily for you, at New England Capital, we prefer proper planning over prognostication.  When I hear all the predictions coming from “experts” this time of year I’m reminded of economist, John Kenneth Galbraith’s quote: “The only function of economic forecasting is to make astrology look respectable”. For clues as to what might be ahead, let’s look at how we got to where we are today.