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Why I’m Currently Avoiding Cryptos and Electric Vehicle Stocks

Why I’m Currently Avoiding Cryptos and Electric Vehicle Stocks

Posted On November 17, 2021 2:38 pm
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Admittedly, the past two weeks haven’t exactly been wonderful. I won’t rehash family drama, and to be clear, Options360 has held steady and remains up 53% for the year to date! 

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However, I’m starting to feel like I’m wandering around in a wonderland; feeling a bit lost amid the price movement and valuations I cannot comprehend. 

Of course, I’m referring to the pockets of euphoria, dare I say bubbles, in cryptocurrencies and electric vehicle (EV) stocks.  

Am I spitting sour grapes that I’m not involved in these sectors  (aside from a sliver of BTC and ETH I’m holding for my kids)?  Cute a side note: In 2016, I first started trying to learn about crypto and blockchain and bought my kids, ages 8 & 10 at the time, some BTC T-Shirts.  It only took 7 years for them to physically grow into the shirts and be inquisitive enough to actually ask questions.  To which I have no answers. I seeded accounts at Coinbase (COIN) and Robinhood ( HOOD) with some BTC, ETH, and DeCentraland (MARA), giving the kids passwords and links to articles.  Let them figure out what this wonderland is all about. 

By saying I’ve not been actively involved in crypto or EVs I’m not being a defeatist, simply a realist. Yes, there has been massive wealth creation.  But, we saw the same thing in the 1999 dot.com bubble and in the 2007 housing bubble.  In both cases, I shorted a variety of names, starting in 1997 and 2005, respectively, at what I felt were outrageous valuations.  In both cases, I used options to limit risk, and I was wrong for two years before valuations came back to earth.  To be clear, I made no money and was ecstatic to simply get out with my head attached when valuations re-entered the earth’s gravitational field. 

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Now, when I see similar action in EVs and crypto, I feel no compulsion to try to prove the market wrong by taking a contrarian position.  I do have a hint of jealousy. But, at this stage of my career, I know my first responsibility is to my family, Option360 Members, and my own mental and financial well-being.  As long as I continue grinding out market-beating returns trading boring names such as Walmart (WMT), Morgan Stanely (MS), and Advanced Micro Devices (AMD), I can stuff my Fear of Missing Out (FOMO) on the next big thing to the back of the closet.  

Maybe in 10 years, I’ll regret not putting on that party hat blowing into noisemakers. More likely, I’ll look at those items and this time as a silly party that ultimately comes to an ugly end. 

And during that period, hopefully, I’ll have continued to rack up consistent gains within the landscape I understand. 

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About author

Steve Smith

Steve Smith have been involved in all facets of the investment industry in a variety of roles ranging from speculator, educator, manager and advisor. This has taken him from the trading floors of Chicago to hedge funds on Wall Street to the world online. From 1987 to 1996, he served as a market maker at the Chicago Board of Options Exchange (CBOE) and Chicago Board of Trade (CBOT). From 1997 to 2007, he was a Senior Columnist and Managing Editor for TheStreet.com, handling their Option Alert and Short Report newsletters. The Option Alert was awarded the MIN “best business newsletter” in 2006. From 2009 to 2013, Smith was a Senior Columnist and Managing Editor for Minyanville’s OptionSmith newsletter, as well as a Risk Manager Consultant for New Vernon Capital LLC. Smith acted as an advisor to build models and option strategies to reduce portfolio exposure and enhance returns for the four main funds. Since 2015, he has worked for Adam Mesh Trading Group. There, he has managed Options360 and Earning 360, been co-leader of Option Academy, and contributed to The Option Specialist website.