TBH: Motley Fool’s Stock Advisor Vs. Bitcoin who wins? (Update #5, Q1 Year 2)

Published in

InsiderFinance Wire

5 min readDec 18, 2022

Source: www.fool.com & https://en.wikipedia.org/wiki/Cryptocurrency?wprov=softie

Background

To get caught up with this experiment please click here to review the performance of year one. This is the first quarter report for year two of this experiment. At this time last year Bitcoin was winning with an overall return of 4.16% versus 3.55% return for Stock Advisor. Things started off okay, but now everything is down. Crimson Red! But the point of this experiment is to inform people that you don’t need to pay some company to protect your wealth. Just buy Bitcoin and relax. Now let's see how Bitcoin performed against Stock Advisor in Q1 of year 2.

Performance To Date:

Bitcoin $512.64 (-43.94% Return)

PAIN………………… MAX PAIN!

This bear market is absolutely brutal. During this quarter, Bitcoin hit local bottom of about $15.5k. and a local top of about $20k. Our friends at the Fed continued to raise rates, and now the CPI is dis-inflating. The December hike or 50 basis points (or 0.5%) brought a little bit of a pump but in the subsequent days after the market continued to sell off. One major event that happened during this quarter was the collapse of the crypto exchange FTX. It appears FTX was using customer funds to trade. A leaked financial statement called into question their solvency. Binance, a rival crypto exchange, smelled blood in the water and dumped all of the FTT they had on their balance sheet. This and the corresponding bank run exposed how naked FTX was. FTX is currently in bankruptcy, and the CEO is facing charges for fraud. This impacted the price of Bitcoin negatively. To Bitcoin’s credit, it has been somewhat resilient, but volatility is far from over. Miners are being squeezed, and the macroeconomic environment is filled with uncertainty with the chances of a recession rising with each passing day.

Stock Advisor: $637.76. (-27.79% Return)

One year and one quarter into this experiment, and Stock Advisor is winning. The return might a little better if you count the Zynga buyout and the Dividends that were re-invested, but for simplicity, we will only focus on stock appreciation. In the event the winner is too close to call, we will factor in items such as the start up cost for Stock Advisor and the gains from Dividends and the buyout. I replaced Zynga stock with the company that bought them out Take-Two Interactive. Since Robinhood isn’t giving the stock a cost basis, I set the basis to show a return of near zero.

As said for Bitcoin, this bear market is crushing the stock market. If 2023 does have a down turn the return can get much worse. Fintwit and financial YouTubers think the Fed will lower or stop rate hikes sometime in 2023. Since CPI is a year over year measurement and the interest rate hitting 5% many believe the Fed will achieve its goal of having a positive real interest rate, this stopping the rate hikes. If the economy is in a bad shape, then many expect the Fed to start cutting rates as well.

Conclusion

A quarter into year #2, and these returns are just bad. The war in Ukraine rages on. The United States Government is still deadlocked with the Republicans capturing the house and the democrats having a slim majority in the Senate. Uncertainty runs afoot in the markets. Layoffs are coming. Inverted yield curves for US treasures. The interest payments on the US Debt is closing in on $1 TRILLION. We are in a mess. The decade of the 2020s will be ugly before it gets better. With all of this going on, one must remember to focus on what is real. Food, water, shelter. Secure these items if at all possible. Next save in something that can not be taken from you with a turn of a switch or the stroke of a pen. This is where Bitcoin and Gold have their place. But as it pertains to this experiment, Bitcoin is losing to Stock Advisor. Will this continue? Stay tuned!

Now let's check to see how the passive investors did:

S&P:

9/13/2021 — > 4,468.73

12/16/2022 — > 3,884.40

Return of : -13.07%

DOW JONES:

9/13/2021 — > 34,869.63

12/16/2022 — >32,920.46

Return of: -5.58%

NASDAQ:

9/13/2021 — > 15,105.58

12/16/2022 — > 10,705.41

Return of: -29.12%

I am shocked that the Dow Jones is only down 5% during all this madness. When I was doing the calculation, I had to double check I didn’t make a mistake. Overall the passive investors are doing okay, but every investment tracked in this experiment is losing purchasing power in this market. It is just crazy to me how a small group of individuals have such a large impact on our lives. Raise rates cause people to go bust. Lower rates and people get rich. Crazy system that we live in today, but hopefully, Bitcoin is a solution to this problem.

Thank you for reading this article. Use your lightning wallet to scan the code below and earn your sats! This month I am giving away 2,500 sats to celebrate Christmas! Also I switched the site I am using to donate these sats. I am using light sats will allow me to reclaim the sats after a time period of not being claimed.