Cryptocurrency: Amazing Technology. Dangerous Investment. | Greg Vanderford | Skillshare

Cryptocurrency: Amazing Technology. Dangerous Investment.

Greg Vanderford, Knowledge is Power!

Cryptocurrency: Amazing Technology. Dangerous Investment.

Greg Vanderford, Knowledge is Power!

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16 Lessons (1h 43m)
    • 1. Cryptocurrency Promo

    • 2. Lesson 1 Cryptocurrency Intro

    • 3. Lesson 2 How to Use Cryptocurrencies

    • 4. Lesson 3 Cryptocurrencies as an Investment

    • 5. Lesson 4 Cryptocurrencies and Intrinsic Value

    • 6. Lesson 5 Cryptocurrencies vs Stocks

    • 7. Lesson 6 Cryptocurrencies vs Gold

    • 8. Lesson 7 Cryptocurrencies vs Gold

    • 9. Lesson 8 Bitcoin vs Ethereum

    • 10. Lesson 9 Other Cryptocurrencies

    • 11. Lesson 10 This Time It's Different

    • 12. Lesson 11 The Great Tulip Bubble

    • 13. Lesson 12 The Psychology of Cryptocurrency Investing

    • 14. Lesson 13 Relative vs Absolute ROI

    • 15. Lesson 14 The Best Wealth Building System in History

    • 16. Lesson 15 Cryptocurrency conclusion

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About This Class

Cryptocurrencies exploded onto the scene with the invention of the Blockchain technology and Bitcoin back in 2009. 

Since then, Bitcoin has exploded in value from a few cents per coin, to a peak of over $11,000 in just a few short years. 

This amazing rise in value mirrors other asset bubbles of the past such as the Great Tulip Bubble of the 17th century and the very recent Dot Com bubble of the 1990s.

As tempting as it is to get on the bandwagon of this meteoric rise, history has taught us concrete lessons that tell us what to expect. 

Learning these lessons can save us the heartache  of watching are hard earned capital evaporate before our eyes.


You will also learn:

1. How to analyze investments of all asset classes to identify intrinsic value

2. How to compare the different cryptocurrencies and analyze them as investments

3. How to build wealth over time in the safest and fastest way possible

4. How the psychology of investing can make you rich or poor and how to use it to your advantage

5. The dangers of FOMO in investing

6. How to save money on taxes when making investing decisions

7. How to avoid getting in trouble with the law when investing in Cryptocurrencies

8. How to think clearly about investing and building wealth

9. How to use human emotion to your advantage when it comes to investing

10. Much more

Do yourself a favor and educate yourself about how cryptocurrencies work so that you don't make the same mistake as countless others, and lose your money!

Meet Your Teacher

Teacher Profile Image

Greg Vanderford

Knowledge is Power!


My courses are designed based on my many years as a teacher and student of education and business. I hold a master's degree in curriculum and instruction and have been designing curricula for over a decade.

The business, language, and chess courses that I have built are a reflection of this experience and dedication to education. My goal is to reach as many people as possible with my courses, which is why I have chosen the internet as my ideal mode of delivery.

The following is a little more about my expertise and background. I was born and raised in Sandpoint, Idaho. I attended the University of Idaho where I earned a bachelor's degree in Business Administration in 2004. After a few years in the work force as an account manager I moved to Vietnam where I lived for over 5 ... See full profile

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1. Cryptocurrency Promo: how many big banner for I am a business teacher and entrepreneur. I have a lot of courses, and I've taught over 12,000 students about investing both in real estate and stock market as well as many other financial instruments. And this course I wanted to you guys about cryptocurrencies and give you a basic understanding of what they are and how they work. But that could be used for but more importantly, to analyze them as an asset worth investing it. I'm gonna compare Cryptocurrencies to stock market to real estate two gold and two than themselves, because there's lots of other Cryptocurrencies out there besides just Bitcoin and they all have different attributes. And so we're going to look at whether or not you should invest in Cryptocurrencies and if so, how you should go about doing it. Most importantly, how do you measure the value of the Cryptocurrency? As investors, we want to look at the intrinsic value of some assets so we know whether or not we should buy it at what prices and whether or not we should sell it and at what price is. And so the main they're gonna do in this course is we're going to look at the inherent value. Or, as we say in the business, the intrinsic value of Cryptocurrencies as well as other assets stocks such as the stock market. We're gonna look at how you value a business and how you value all different types of assets and decide whether or not you should make an investment in that asset. So I hope you guys join the course and you get a lot out of it. Thank you. 2. Lesson 1 Cryptocurrency Intro: So cryptocurrencies are the hot thing right now and a lot of people are really curious about them. They're seeing that the price keeps going up for Bitcoin and light coin and theory. Um, a lot of people seem making a lot of money. And so the first thing you think is should I jump on the bandwagon should be investing in Bitcoin. I don't really understand them, and I'm not really sure whether or not it's too risky oven investment or not. Or maybe I'm missing out. Maybe I should just making investment of missing out, and we're also getting rich as a lot of confusion around it. So in the scores, we're going to look at how the technology works, what it's used for, of how useful it is for different things and then also look at it as an investment. Obviously the title of the course. Cryptocurrency. Amazing technology, dangerous investment. You know that we're gonna be a critical of it as an investment, and I'm going Teoh, go into all the reasons why it's a very dangerous investment and you probably want Teoh stay away from it unless you just feel like gambling and you want to throw some money at it , just in the off chance that it continues to go up forever. But as we learned the course, there are many attributes of investments that Cryptocurrency simply don't have. You don't have any of the attributes of investing, like being able to produce profits and incomes and things of that nature. So we're gonna analyze that we're gonna go into some depth in the course in terms of how dangerous is an investment, how it acts and behaves as a currency as an instrument of exchange or as an investment. And that's we're going to go over in the course. But first, we're going to give a little introduction for those of you lot only familiar with the history of the currencies of how they work and things like that. I'm needy guys. Some some of the basics there. So you have some, uh, general knowledge of what Cryptocurrencies are. So obviously Bitcoin is the most famous and well known of the currency. It was invented in 2009 so Cryptocurrencies are only a few years old, and it was by a person who everyone is quite certain it was some sort of pseudonym Satoshi Nakamoto. So obviously sounds Japanese, but it could be anyone literally. Nobody knows the real identity of Satoshi Nakamoto. And so the basic core of all Cryptocurrencies is technology called Blockchain, and we're gonna go throughout the course over exactly how the Blockchain works. There's lots of different nuances about exactly how it works, but in most simple terms, it's a public ledger that records transactions. The transactions are chunked into these blocks. When these programmers called miners, they they encrypt the information and they put it into these blocks and we'll go over and more of it later. But basically the very first block I was ever made by Satoshi Nakamoto is called the Genesis Block. It created the block chain. There was the first block in this change at the time. Back in 2010 after the appearance, he was only a couple months old. Each Bitcoin was only worth about two cents, and so it was very, very low value. But then in 2017 it crossed $11,000 for one coin at one point. So it's been an astronomical rise in value. A lot of people who got into it early have made millions of dollars and it's leading a lot of people feel like they're missing out. They want to get on the bandwagon and start buying. Bitcoin's, however, has learned the course that would be extremely dangerous to do, especially if you're going to put any large amount of your hard earned money into it. It's basically it's reckless, reckless behavior and very, very dangerous as I will make the case throughout this course, my background is in business and investing is in finance and I'm a business teacher. I have, ah, a master's degree and teach certificate and that this degree loss of credentials in business, I know about business and so we're going to use that expertise in that knowledge. As I analyzed, Cryptocurrencies asked investments in this course now as mediums of exchange as the underground underlying Blockchain technology. Cryptocurrencies are very interesting. They're huge innovation and there is a lot of amazing stuff that they can do. We're gonna talk a lot about that, but they were going to talk about investments. We're gonna compare Dick coin and other cryptocurrencies to more traditional investments like stocks and real estates and things like that and understand really? What? What is it that you're investing in when you invest in Bitcoin? And what is it that you're investing in when you invest in a business and buy stocks? And so we're gonna analyze, Compare those things. So hopefully you guys have a much better understand being of cryptocurrencies from this course, we'll have a much better understanding of investing and how you can make your money work for you and build well over time. Okay, So back Teoh, this introduction here about the history What happened after Bitcoin was invented was that there was a little bit of a problem of pickling, which is that the mining process of creating new blocks in the chain is quite slow and so basically light point was invented. In order, Teoh decrease the block generating time. It makes it faster to mine and it creates more units. And so that was an advantage that has led Teoh the currency to be more efficient in certain ways. And b, you've more useful in certain ways. Otherwise, it's just a medium exchanges like big boy. But more units can be created more quickly with light point and the way they do this was something called segregated witness technology. It allows them to do it faster, so that's just a basic brief overview of light point. So it's still just same thing is Bitcoins and crypto currency. It allows you to buy and sell things on the Internet or even in the real world. Places will accept actual, uh, coins, as we learn more about later. But so the first, uh, you currencies and the biggest ones are big point and light coin. And, of course, next one, which is called a theory. Um, now, theory was kind of confusing for a lot of people because it seems not just a currency. A theory was like a whole platform and its currency within that platform that's called either so ether is the currency is just one aspect of the Ethereum platform, and the Ethereum platform is a decentralized, open source software platform. But it's one that is. He is used, uses the Blockchain, so use the Blockchain technology, which makes it totally encrypted. It makes it uses totally anonymous, and it makes you so you can create decentralize apse, which means that you can make absent don't need any central authority, don't any central company or database book government. The technology is decentralised on the Internet, and it's actually store located out there on individual computers about the world. So it makes it very, very anonymous and very safe, basically can't be hacked, and you can create all different kinds of software. And perhaps using this, that's that's basically the basics of it. Essentially, so it allows for We call it decentralized applications. So Bitcoin is designed only to create a currency. It's on Lee immediately of exchange. And so that's why Ethereum has been called Blockchain two point. Oh, or even this Internet two point. Oh, these. These cryptocurrencies are now creating this whole network of block chains and is actually dozens of them. Bitcoins just the most famous and the theory of like where some of the older ones that are now being used the most and most well known, but so that basically creating sort of this new Internet they're calling Internet two point . Oh, because it's a decentralized Internet using a totally different technology called the block chain technology, which is almost impossible a hack and is totally anonymous. This is, of course, why a lot of governments are against them. Some central banks are against it because it competes with them, and it also allows criminals and for other lots of, uh, elicit activity. And so it's a double edged sword. It's an amazing technology that could do really cool stuff, but it also has some issues with that. Me make it so that governments are against it. And as we're gonna talk about late on the course, that also was one of the big risks you invest money into buying Bitcoins or like coins were ether or one of the other ones is that the government's come down on it and wanted regulated crackdown on it on the value could plummet immediately, and there's just no way of knowing if it when that could happen. So that's just a really short overview of what Cryptocurrencies are. And throughout the course, we're gonna talk about different aspects of them as we compare them to other asset classes , other investments. And so the next lesson we're gonna look more detail about how the cryptocurrencies work 3. Lesson 2 How to Use Cryptocurrencies: So I briefly mention in the first lesson that coins are my they call it. Lining is similar to how you would mind for gold or some other real world asset. You are lining by having programmers using their computing power of their machines and their knowledge of programming to create this block this block of transactions. So the minor and writes the transactions into this ledger. This general ledger, which is where the source code of the Blockchain is. And that's why it's called a block chain. Because each block his mind, it produces encryption so that the information is safe and anonymous can be hacked. And then the miners are They're rewarded by getting a, uh, Bitcoin or a unit of the Cryptocurrency. So the reason that people want a mining is to get the money and then that incentivizes the system to keep working. But having people continue to add to the block chains. So what miners do They convert this information in a block into something called a hash, and the half is basically a computational puzzle. So you use your computer to solve this puzzle. It's very difficult to do, and so he takes skill and it makes it so. It's not easy to do. Just like mining for gold and other precious gems is not easy. There is a lot of effort involved in mining for Bitcoins and other cryptocurrencies, and but when you successfully solved this computational puzzle called a ash, you were rewarded. In the crypto currency, the hash is encrypted. It confirms the data in the Blockchain, so it makes it safe and trustworthy. When you create or completeness hash, what it's doing is it's it's connecting the previous block to the new block with the data, and it's confirming that it's it's legitimate and Israel, and that's what makes it safe. So the system is able to spot fake information in the Blockchain. It's it's able to spot anything that is not really or true. So big points that can't be stolen or altered in any way. The only way they could be stolen or altered it is it is with, as has happened in the past, one of the wallets, the places where the information of where your Bitcoins are if they're stored in a wallet. There was one wallet that was ah, company, headquartered in Japan, that got hacked, and then lots and lots of it was lost. People lost millions of dollars, but it wasn't the Blockchain that was hacked. It was the wall itself. So that's where if there's any issue with security, it would be in the walls. But they've since they've made a lot of improvements there. But the Blockchain yourself is basically unhappy herbal, and it's totally encrypted until they notice what governments can do anything to see who owns the Bitcoins of where they're stored or anything like that, which is why it's really popular, is what people like it. So mine is they compete with each other to do the productivity. So this activity, it's also called sealing off blocks. When you finish a block, it's added to the ledger and its competition, so some miners might fail it doing it because it's very difficult, and that's another thing that's good about it creates a scarcity. We have a currency like any currency US dollar, for example. It's scarce, and it's only printed certain amount by the central bank, and the U. S. Government decides how much they're gonna print, so they're just sort of scarcity. It's hard to earn money right with work to earn money, etcetera. So when it comes to Cryptocurrencies, there's scarcity that's involved. And that's where the mining process comes into play. Also, Vic coins in particular. There's only ever gonna be 21 million Bitcoins ever. So the mining gets more and work difficult and slower as time goes on, and eventually there will be no more Bitcoins in circulation. Or that could be mine. More than 21 lance look racist, limited amount, which is built in scarcity. So if that's a good thing about it, and that's one of the reasons why you would think that the values and continue rising, however, as we gonna learn throughout the course it is. It is fallacious to believe that, and extremely dangerous to put your money into these things. So anyway, miners are rewarded 25 Bitcoins every time they successfully still up one block, so you do it faster than the other competitors before they seal off the blocks. It was very difficult, and now if that Bitcoin is worth 10 or $11,000 as it is at the time, this course then you would get a lot of money by mine. Bitcoins so it's very, very difficult, and it takes a lot of work and computing power. But the more that it rises, the more valuable it will be to mine. And the more incentive programs will have Teoh mind Bitcoin's The Bitcoin Protocol. It makes it very difficult to finish a hashtag that says very different. This should say very difficult to finish the half. It takes a lot of computing power. I have a really, really good beer or set of computers, and you have to really know what you're doing. So I was very time consuming as well then, as we said before, that's why other CRYPTOCURRENCIES have been created like light coin. It's a little bit faster, and then each Cryptocurrency has something that's unique about it that makes it different from previous, uh, the currency's. They're all basically their own platform, and so big points is the most popular cause It was the first, and it's got the first mover advantage, and most people have invested in it, so it's ah, it's the most well known and the most valuable right now. But to use Cryptocurrencies, you need a wallet, as I mentioned, and that's where in the past, at least the security has been an issue. It seems that that has mostly been resolved, but you need to store your Bitcoins somewhere. And so what you do if you basically store a digital key that you say an access in your wallet. So all you're really saving in the wallet is information. That's a key that says, OK, these air, your Bitcoins and this was located. So it's all on the Internet. It's all just data, which is really interesting. Is nothing physical at all about on, And there are many types of bullets that you can store them on and so you could store them on your desktop. So that one example that's called krypton ater. You can look that up if you start purely online. The most popular ones called coin base. It's just the store. All your information on the Internet. I'm so a desktop one means that you have a platform or program on your computer in the information stored on your computer or on the Internet. But you have an actual software on your computer, whereas going Mrs Entirely there. So on your mobile phone was something called Blockchain, similar to the desktop when it just means that you have an actual application on your phone that stores the information. It's still it's also on the Internet, but you use software on your phone, and then you can actually have ah, piece of paper that has a Q R code so you can store the data just as a number, and you definitely wouldn't want to lose that. But a lot of places around the world actually accept Bitcoin and other cryptocurrencies. If you just bring in your Q R coat and they punch it in, they will let you buy things or trade cryptocurrencies with that Q R code and then, finally, hardware you can. Actually I have an access key on like a USB device. You definitely wouldn't want to lose that if you have a lot of Bitcoins. But you can just put your data onto a USB device and plug it in, and that would like to change them as well. By far the most popular Justo have something online like coin base. It's the simplest for most people, and it's pretty safe. The downside right now is that governments are starting to ask for data from Coinbase and other wallets in order to make sure that people who are trading in Bitcoin and other CRYPTOCURRENCIES are paying the taxes as it's something that one of the big benefits of going cryptocurrencies we thought, OK, there anonymous that can't be taxed. But I mean governments can force any entity to divulge information now. So far, some of these wallets have been holding out, but it looks as if coin base is going to be forced to comply with that. So now the government will have names and amounts of all the people, all the Bitcoins that they own, and there will be starting forced to pay taxes on this. So if you have this huge windfall from all of your investing in crypto currency, you're not gonna have to pay taxes on it most likely hasn't quite happened yet. That's definitely something that's a huge rips. Okay, Cryptocurrencies are simply a technology that allows you to pay for things. OK, there, just a currency, right? So it's interesting that their value, you know, the value of one individual going one unit of the currency in terms of Bitcoin is worth 10 or $11,000. You think about that. It's kind of weird. It's kind of like gold. Only gold is a physical thing that also, you know, is valuable because people believe in the value of it. Like a Cryptocurrency, however, gold has riel. Utility gold can be used for technology using transistors and computers. It's even used in dentistry, although not as much anymore. It's used for other types of tools, and, of course, it's used for jewelry. Jewelry is something that has utility because people find it to be beautiful and decorative . So cryptocurrencies are a lot like gold when they lack a lot of the attributes that makes gold another gemstones valuable. It's also partially like a painting or other work of art, because people find it valuable simple because the market for that other thing of people says it's valuable if everyone believes it's valuable that it is. But that also means that they're very, very wide range of fluctuation in prices so they could go up with no limit. You could also crashed down to know live it, and we're gonna analyze that more later in the class. So but this currency is a gift from currencies issued by the governments because they have little or no transaction fees that so the mining process comes in. Um, the ownership it's on Lee. You can spend it. Nobody else can spend your Cryptocurrency so you can lose it. No one else suspended several. You know who has the key? This is all the reasons why people really like it. You're totally anonymous. So the identity protection with your with your money basically, um and banks are not necessary. It also you don't need a central bank. You don't need government. It's totally decentralized is one of the main reasons why it's so popular, is decentralized out there on the Internet and can't be hacked, can't be stolen, and nobody knows who's using it. So it's very, very useful in that sense. And it's also risk free for sellers because payments can be reversed. What you pay for something with a Bitcoin or another Cryptocurrency. Whoever is that you made a payment to you can be given back, can't be reversed no matter what, and it can't be trapped. So people that sell things and accept Bitcoin and other cryptocurrencies as payment. They never have to worry about having to give refunds or anything like that because the transactions are permanent. So those are some of the things that make of these currencies attractive and really useful . And in some ways they're a big improvement on central bank produced money like the U. S. Dollar and others. So, but again, we're talking about them as a currency as a usefulness as a currency. Even so, a lot of places don't accept Cryptocurrency, right? You can't use it to buy everything on the Internet. You can't use it at stores. Only the ones that say Okay, we accept big point or whatever. So even though it's usually useful a t least as it right now, it's not accepted a lot of places and people are worrying that since the value of it fluctuates, so much of the utility of using it actually is much lower because of that. So even though they're called a currency and the technology is designed to be a unit of exchange, they're being used as an investment. But they don't have investment attributes as we're going to learn. So I accepted everywhere. Prices are very volatile on also, there's lots of different currencies, so they compete with each other so happened the value of all of them go up if they're all competing and the all different attributes. So Bitcoin two years ago it because it was the 1st 1 is the most well known. But now there's dozens and dozens of them, with new ones being produced every single day. And so eventually there's gonna have to be a downward pressure on. The price is right. If you've got 1000 cryptocurrencies happen, one of them be so valuable is an unlimited amount of them. And basically, in terms of economics, there gonna be a commodity. Cryptocurrencies will be commoditized because they will be essentially interchangeable if their primary use is a new unit of exchange as a currency is than economics. Traditional economics will say that the price will go down, and some people would say, Well, this is This is different. It's a new technology. Well, that's what we thought during the dot com bubble next nineties. The Internet's new thing. Everything is different, but nothing can change the basic laws of economics. Nothing changes that economics is about value. It's about utility, and the rules and or the laws of economics cannot be changed. So even though it's a new technology, if you look at what it does, what it does is it allows you to trade things on the Internet. And so it's really obvious that runs huge bubble right now. And for many, many reasons as well. Done throughout the course almost is a certainty that is going to collapse as every single bubble throughout history has done and what we're gonna learn. The course is ready to find what a bubble days. We'll look at some some past asset bubbles, and we're gonna identify exactly why it's very clear, very, very obvious that we're in a very dangerous asset bubble right now and nobody knows when it's gonna pop. It couldn't continue to go up, and you continue to let it ride with your money, and it will. It will either end in tears or if you're very, very lucky and you side to side it just a perfect moment. Maybe you can make a lot of money investing in these things that some already have done, but you'll be no different than going to a casino and just playing against the house. I would actually say that it be more risky to invest in Cryptocurrencies at this point. Finally, there's a threat of government shutting them down or regularly that that could happen at any moment at any time. And if the U. S government, for example, says we're gonna correct other cryptocurrencies, we don't accept them and we're gonna be against them, the price will plummet and people will lose all of their money. They will have very little value if governments decide to start regulating that. So that's how you can use cripple grand success, some of the attributes of them and they are interesting. The Blockchain technology is very interesting, as in terms of, uh, it's cryptography in terms of what it can do. However, I predict that Cryptocurrencies will be used a lot in the future. But we used by banks something used by tech companies will be a lot of things you can do with them. But in terms of being a very, very valuable currency and having this asset value always go up, it really just doesn't make any sense at all. And the next lectures we're going to start to analyze Cryptocurrencies as an investment class 4. Lesson 3 Cryptocurrencies as an Investment: so basically, investments are made in assets to increase the value of money invested right. We put cash into something that we we hope will go up in value. But in a normal asset, we don't just hope we can actually analyze how much something is intrinsically work. And asset is something that has a value either because the market believes it does as a case with Bitcoin or because it produces money. So, in other words, our business a business produces cash, cash could be spent as purchasing power. It's accepted by everyone by the government, set about all the banks and set about all the businesses. So the U. S dollar is not only a currency is a unit of exchange of that is accepted by everybody, but it businesses something that produces over time. It's good business, mawr and Mawr of that valuable thing, and therefore we can actually measure the intrinsic value of the business. This is what Warren Buffett has become the one of the richest men in the world. By doing, he understands how to analyze the business. It's business model and the value of what it produces, and the and the cash that's going to produce in the future over time, weaken value that. But things like gold or art or baseball cards and cryptocurrencies their example of something that only has value because people like to believe it has value and as long as I believe holds, it may continue to go up. But if that believes shifts and all assets like this in bubbles have done, it will crash. It's an inevitable thing that will happen just like the law of gravity, because the asset is not based on anything that has intrinsic value. Businesses meaning, you know, stocks. Just doctors represent representation of a business. They are an example of something that produces cash and has intrinsic value. So we want to be investing in things like businesses or real estate or something that has a tangible, intrinsic body, because that's an investment. Otherwise, it's just speculation. Or, in other words, we call it gambling. So cryptocurrencies like gold in a way, their hedge there something that you know. If the market crashes, the economy crashes, they might go up, but they're not yet accepted a regular about a central bank. So actually cryptocurrencies like gold. But as an investment gold still way better because gold is still something that is backed by government, something that has a very long history. And it actually has Utility is valuable, in part because it actually could be used for jewelry and four technology. You know that things like I already mentioned, even though that cryptocurrencies they have utility in, that they can be used to buy things on the Internet but not accepted everywhere. There's dozens of them, so they compete with each other and they can't be used for anything else. So thinking that each unit of them has some huge value, it doesn't make any sense. Basically, right now, there's a lot of euphoria that says, Well, this is new technology, truly amazing and essentially nothing, You know that we do could be seen by the government. Azan Asset. As an investment, it is not useful is not good as no inherent value. So the reason that the Kurds have gone up in price so far is simply because you know so called. Investors believe they will keep going up in price and have some utility, but it's totally a several. It means not riel as word love. It has said. He called it a mirage, and his partner, Charlie Munger, called it a rat poison. And he said that that was an understatement. So two of the greatest investors histories are very strongly against it, which is which is interesting, of course, to hear their perspective. And so, of course, if the investing community stops believing in in this thing, that they will, you know no longer go up in price, the price will fall and it will fall precipitously because markets are emotional. And once the herd mentality kicks in and everyone starts to go against it, it will crash, perhaps all the way to zero. Um so stocks of high quality cash losing companies they don't need a believing public to have intrinsic value businesses producing money like Apple if it sells millions and millions and millions of iPhones and then it sells billions and billions of dollars worth of services on the APP store. And if it sells more billions of dollars with computers and billions dollars with, you know, this is something tangible, it's based on actual profits that are produced by that business, and it's predictable when you look at the history of a business like Apple. Just a zone example. It's a famous, well known brand, very well known history, and you can project into the future how much cash is going to produce. You can see how much cash it has on the books. You can see how much debt it has. You can see how fast it's growing or not growing its profits and says those profits are paid out in dollars dollars that are accepted by everyone in the world. It has an intrinsic value. You can multiply its earnings by a factor of 5 10 20 You know its earnings per share. You can analyze the business, and you can see OK, this company is worth about, you know, $500 billion. In Apple's case, the market cap it this time is around $900 billion approaching a trillion dollars. You may, you may argue, Well, the thing is overpriced. Or you may say, I think it's worth more than that. I mean, that's what it's all about when you invest in stocks. But when you invest in Cryptocurrency, there's no frame of reference. Is nothing for you to say. I think it's worth this much happened you would argue that one Bitcoin should be worth $100,000 or $500 or five sets. There's no value there. And so when it comes to investing, that's critical. You have to have something has actual value. That's why we invest in the stock. If you hold stocks over a long period of time, you're almost guaranteed to make money Over no 20 year period in history. Have says, a stock market, at least the indexes like the S and P 500 the Dow, the NASDAQ, have they ever lost money? And that includes the Great Depression. So over time, investing in stocks is actually very safe over time, investing something new like a Cryptocurrency there's no was literally no way of knowing what's gonna happen to it, No way of measuring it. So that makes it very, very dangerous and risky. And, um, you know, maybe not even I wouldn't even call it gambling. It is total speculation. It would just be like taking a random number on the roulette wheel at this point. You know, stocks fluctuate based on actual learning, so they go up, they go down. But the companies earning money and earning, earning more money over time and then reinvesting of those profits as well new businesses or reinvesting it back in their business to increase sales of improved quality than the value goes up. And then your stocks go up. And that's why you can build wealth and stocks, and the same thing goes from real estate as well. Look at real estate later as well. Your investment goes up because value has increased. Value has increased because it has been created by the energies, the enterprise, as we say of what business people and entrepreneurs are doing out there in the marketplace . But cryptocurrencies fluctuate based only on buying and selling. So I want you guys, you know, they don't business background that are considering investing. Think about that stuff, think about that. And you realize that cryptocurrencies have have no intrinsic value, whereas other tried and true asset to do, and you're almost guaranteed to get wealthy over time. If you invest intelligently in those and the next lesson, we're gonna go into a little more detail about how about how Cryptocurrency, um has no true intrinsic value as measured by an office 5. Lesson 4 Cryptocurrencies and Intrinsic Value: so interested. Dr. This is the most important concept to understand when you're thinking about investing in any asset class and so has already, said Cryptocurrencies, they have no intrinsic value of Warren Buffett is called Bitcoin a mirage. Charlie Munger has wrapped poison with more and more crypto currencies being created every day. There's increasing competition among the currencies. This deludes value as going to lead to all of the Emmy develop, is going to lead to what we call a commodity and commodities they They compete by going down in price and is always downward pressure on commodities. It's still so new. It's so early on in the game in terms of the market, what's gonna happen? This hasn't happened yet. It was the price going down, although it has fluctuated a great deal. The price did plunge 30 or 40% within just a few days earlier, this'll year a few months ago and so that the price is fluctuating wildly. It is very stressful to see your money that you've invested in something go up and down that 30 or 40 percent. I mean, if you're investing large amounts of money that is going Teoh, give you heartburn, to say the least, So recurrence didn't mention there. They're like gold. A lot of people comparing him to gold, but they're worse. Gold is a physical thing that could be mine. Real world. It has actually utility based on technology used in dentistry, jewelry and in many other ways as well. It's an old asset class that is regulated by central banks, and all of these things give gold intrinsic value. Now Warren Buffett and others, including myself, we we wouldn't want to invest in gold because it still doesn't produce anything like cash. You know, a business produces cash, whereas gold, just considered to be valuable by people, has some utility. But actually, if you look at the long term appreciation of goal, it's very love. It's only a few percentage points, so pickled is mostly used as a hedge or when markets crashed. Or you have a really bad recession or a depression, usually gold as well, because capital flies towards it for safety. But as as an investment goes, gold is still not ideal, according Teoh economic principles and according to the greatest investors in history. But compared to gold, um, Cryptocurrency is way worse. Gold is gold because they're really good investment compared Toa cryptocurrencies there under the threat of being governor of the government, quashing them at any moment. I mean, by the time of this course is published, Cryptocurrencies might already have crashed due Teoh some government announcing they're coming out against them and they're going to regulate them. Even if they say we will accept Cryptocurrencies as a thing that exists that they want to regulate them, it will reduce the attractiveness a lot, especially. People have to pay taxes on him and they're gonna hold new rules. You can use them or, if they stopped, become anonymous, saying that all the wallets have to publish all the names of the people that hold Bitcoins , which it seems like they're already doing with coin based. It will reduce the value because a lot of the reason people hold them is because of the anonymity and things like that. So cryptocurrencies are actually experiencing bubble that is really similar to the great tulip bubble of the 16 hundreds in Holland, which we're gonna talk about. Some of you may be familiar with that it's become pretty famous now, and of course, the great dot com bubble for the 1990 is almost the exact same thing that is happening, of course, when you in the middle of a bubble, a lot of people may realize that the bubble, because of the euphoria of the asset going up so much and continue to go up so much over time. It seems like it's never gonna stop in the 19 nineties if you started investing in the early nineties or mid nineties and then year after year, everything has kept going up. It's going to seem like it's never gonna go down until it does. And so when the huge bubble popped in at the end of the nineties, you know, that bull run lasted several years. Eso It seemed like it was lasting for a long time, but when it crashed, people lost 90% of their money and they still had it invested. And one thing that you might think of is to say, Well, I'm gonna make much money and I'm seldom get out. But the nature of gambling, the nature of psychology, makes it almost impossible to know when the best time to sell something is if it keeps going up in your cell, and then it keeps going up again. Afterwards, you're gonna regret you sold, maybe jump back in the market. So it's really, really hard to do. People think they can time the market, but research has shown that it's almost impossible. And, of course, all bubbles eventually pop. Nobody knows when that crash will happen, and bubbles usually pop after reaching mass hysteria. Which is when you haven't investor starts to buy for fear of missing out. Right after this huge run up people, more people get in on the action, which maybe some of you better take in this class are thinking about doing. That's the most dangerous time, actually, of start acquiring the assets, start making an investment when it seems like it doing the best, it's actually the most dangerous is why Warren Buffett always says, be greedy when other other people are fearful and fearful when others are greedy, when prices are low and one scared like after the crash in 2000 it does, and I that was the best time to buy stops. That's a Warren Buffett, Charlie Munger and other. They spent all their money by many stocks of the good because they were priced cheaply. But what else is afraid of the other was keep going down, and then the converse of that is that you have a bubble in assets are really expensive. Everyone's really optimistic. It seems like they're gonna keep going up forever. But that's actually the most dangerous on the by because you're paying high prices for those assets. Remember this idea of intrinsic value? It business has an actual value based on what it produces, his assets and its cash flows, its profits and so you can actually engage how much a stock is worth. And later in the course, we'll look at exactly how to measure the value of a business or the value of a stock. But of course, the Cryptocurrencies, you simply can't do that. So in this next lesson, that's what we're gonna turn. We're going to compare Cryptocurrencies to stocks 6. Lesson 5 Cryptocurrencies vs Stocks: So, as I've already mentioned, stocks are based on the results of really cos with riel earnings, otherwise known as profits. CRYPTOCURRENCIES are based on the belief of their buyers that they have value and that they will go up in value. Stocks are also regulated and supported by federal governments and central. So there's this underlying values underlying support by society and by the very fabric of our society and the governments and the banking system that supports the stock market and support the businesses that do business in the economy and that provides a lot of stability and provide upward pressure on values. Because companies are incentivised to make more money, that money is reinvested. Hopefully attractive rates of return and companies get richer and richer and they grow over time. And if you own stock in those companies, your stocks will grow over time and you will build well. But cryptocurrencies, they have none of those attributes. They're not regular any entity, which may make them very useful in terms of being able to trade things online anonymously, which is one of the reasons why they're very popular. But that popularity should not necessarily translate into some huge value per unit 10 or $11,000 per unit it is making a difference of one unit of Bitcoin is worth $1 or $11 million is something that can be traded. It can be used to buy and sell things in terms of an asset value has no intrinsic rial worth like stocks do and stocks. They go up and down as a reflection of their performance of stocks. Do go down if companies are having for business results or there's a really pessimistic market due to a bad economy. But you can. You can measure those things. You say This company is worth less now because it's not doing very well. And so you learn how to analyze markets. You won't have analyzed businesses, and it's a skill that can be learned, whereas investing in something their Cryptocurrency. There's no skill that being learned there. There's the skill of the people that mind the blocks, and it is still the programmers that create decentralize APS very useful APS. We'll just have to see what comes out on the Ethereum platform. Some of other platforms what those acts can do, but it turns again of investment there's no way to analyze the investment. There's no skill as a financial analyst or business analysts where you can say OK, this Bitcoin should be worth this much money right, Whereas stop for the exact opposite and they will go back up in the economy improves, they will go back up when the business conditions improved. Cryptocurrencies again if luxury entirely based on the buying and selling of you know, investors in the market. And so you really can't define them as an asset class of all, or at least not any asset class that you would ever want to investing just nights. It's wholly different. Think, and over the long term, stocks have historically always gone up. As I said over every 20 year period, including the Great Depression, stocks have gone up because people need to buy things. We need to buy clothing, need to buy food, we need to have energy, we need to have housing right, And it is companies that produce housing and energy and food and clothes, and over time, due to inflation and due to increases in efficiency and uh, new ideas, entrepreneurs have value goes up and so profits go up prices go up and therefore stocks go up. There's an upward pressure that's inherent in stock market. About about 10% is the long term rate of return of stock. You buy, like 100 years. About 9.5 can process depending on the index that you measure the time for that you measure over some 30 year periods, like in the seventies to 2000. The average stuff market indexes actually averaged about 13% which is a really, really good return on your money is compounding at 13% over many years and get very rich off of that as virtually a guarantee. I mean, you're gonna have a lot of fluctuations in the stock market. You will have a long period of time. Where might be pretty flat? Uh, you know, for 10 years. But if you invest in good companies or an index over a long time, stocks are going to go up because of producing values and guarantee, basically. But with a Cryptocurrency, you are literally gambling. There's just no way of knowing anything. Now, if you think it be fun to throw a few $100 or a few $1000 in the complete currency markets and hope that you hit a home run. You know, just know that what you're doing is gambling is speculating, and you're trying to reach up with something that use have no idea what's going to happen with them. So the non and again, I'm not an investment class thing. It's the same as going to a casino. As long as you understand that, Well, then you have your eyes open. If you decide to buy them, okay. And now we're going to come pick up the currencies to another asset class. That's also, of course, very popular in this real estate. 7. Lesson 6 Cryptocurrencies vs Gold: so you probably see you're probably seeing when this is going right. Um, real estate like business like stocks, it has intrinsic value. A property can be rented out to live in. That means if you own a property, you can earn money off of the rent. It could be rented out to businesses, you know, commercial property. We rent it out for other businesses to do business in. You can also simply be invested in. It could be improved and it sold for a profit. If you buy a rundown apartment building or house and you invest money in it and you improve it, you make it nice and sell it for a very large profit. That's a house flipping is all about. You can also do that with large commercial businesses. You can buy a a run down skyscraper. If you have a huge group of investors or your wealthy yourself, you could fix that up and flip it and has really value for the people that buy it, and you've increased the value of something very useful. Everyone needs housing. Everyone needs a place. You all companies need a place to work. They can also be held and use for tax benefits a long term appreciation based on its increase in value. So you get tax benefits when you have mortgages. You can deduct the interest payments and other things like that as a lot of uses for real estate more than I could mention in this brief court. So real estate have actually utility of actual value is some ways. It has more intrinsic value than stocks. It just in the sense that it's something that everyone needs. Everyone needs housing, and it will always be used. Stock market, you giving a lot more money investing in certain companies, and they grow a lot. But a company's fortunes can also turn, and they can also go bad. Then you could lose money if you invest in some individual company that ends up doing poorly compared to its past, where as a real estate, the whole entire market goes up and down and nothing will ever change the fact that human beings need a place to live, so it has a lot of intrinsic value. It has a utility because it could be lived in, and it could also, you know, be designed and landscaped as a form of art works of people that are really into landscaping are really into interior design and things like that. That's another way that you could both add value to properties and also just enjoy the use of properties, even if you just have a piece of land. Can you that land? If it's near a body of water to go fishing to go camping to go hunting, you can use the land itself for things, of course, as humans have been doing for hundreds of thousands of years. But Cryptocurrency obviously does not have any of these attributes and has no real utility at all, except for the fact that it could be used to trading in a way I could figure into you. Just like writing a check, you can write a check and pay for things. It doesn't mean that that check has inherent value, that the ability to write checks as the inherent value, and that's essentially what a Cryptocurrency is. So it has none of the positive economic attributes of real estate and has none of the positive economic attributes of stocks at all. So again, it has no intrinsic value. It produces no cash it's not backed by the government. It's not backed by any central bank. It's unpredictable. And even though the stock market and real estate markets are relatively unpredictable as well, in terms of what the prices are going to be in the short term, they're actually quite predictable in the long term again because we can measure the cash. Most businesses we can measure how those things change. You could measure what is being produced. You can measure the value of assets as well. And that's what accounting is all about is how do we measure those things? There's no accounting system for measuring Cryptocurrency, so it's totally unpredictable. It's really difficult to understand. Most people are not gonna even understand the underlying technology unless you're a really intelligent, highly trained programmer technologist. Some that's been working as an engineer in these fields really difficult to understand, let alone, you know, to have faith in it as an investment. And it's not even that useful as a currency, since most places right now don't even accept it anyway. So its main value is as a currency, and even there it's extremely limited. So obviously it's in the middle of a crazy bubble. It's going up in value for almost no reason other than the fact that people want to make money off it, and as long as people believe that they buy, it will go up. It will continue to do so until the party ends. Which, of course, is going to happen. On the next lesson, we're gonna do a few more comparisons on how it is similar and different from gold. 8. Lesson 7 Cryptocurrencies vs Gold: as I've already mentioned, Cryptocurrency is somewhat somewhere to gold in that they are based mostly on the belief of a market, the belief of the investing public that they have value. However, Cryptocurrencies even lacked the positive attributes of gold. Gold has a long history that could be studied and understood the physical product that can be used and enjoyed. Whereas Cryptocurrencies have another one of those things, they're also untested. They're so new that they have no history. We have no idea what's going to happen with the regulation or with the technologies themselves. How they're going to be changed. I mean, would have 1000 cryptocurrencies accurate. How will any of those have any more value than the other? If all of them could be used to the same thing again, it becomes a commodity, and what happens with commodities is that their price goes down due to competition. They only can compete on price because they're interchangeable commodities, something that is the same. It's interchangeable, and so it only can compete on price. So the laws of economics are going to make it so. The more cryptocurrencies that I produced, the left utility must value each individual one will have. So cryptocurrencies have no use again except as a medium of exchange is writing a check, whereas gold, at least even the goal is not as good of an investment into real estate of stocks. At least have some uses. And so cryptocurrencies aren't even that useful as their primary of selling point, which is as a medium of exchange. So if you think about that, it's crazy. I mean, to invest in these things. What are you investing? It's hard to even say what it is that you're buying. You back up the currency. What are you getting? You're not really getting anything, you know, gold eyes becoming increasingly valuable in the direction of computers and technology. So Goldman actually do well because it's being used even more when it comes. Teoh. All these new technologies that we have in terms of transistors and making new wafers and chips and all kind of different parts and new technologies in computers and stuff like that . So go will always be used, a za hedge against economic downturns. It's something that has a very, very long history. It has scarcity because it has to be mined out of the ground and what cryptocurrencies have scarcely because they have to be mind. They're not scarce if you think about the fact that you can create unlimited number of them . So actually Bitcoin itself is scarce, but it's only ever gonna have 21 million units. But if people are accepting all the other cryptocurrencies, if Bitcoin is accepted, this is the same as either is or light point, etcetera, etcetera. Within that scarcity is not actually really. It just means about that one currency, maybe scarce. But cryptocurrencies in general, as commodities will not have scarcity. And that's what gives money. Historically speaking, it's value is that scarcity factor. But gold will always have scarcity because there's a limited amount of it costs money to get it out of the ground. Um, and of course, it will always be used for jewelry. It has been used for this purpose for thousands of years. Both men and women. We like to decorate ourselves with jewelry, and, of course, gold is one of the most popular forms of jewelry, so complicate and sees have nothing on gold as an investment or in their utility, either. Okay, um and now we're going to start to prepare some of the difficult appearances themselves, to see how they how they differ and what value they may have in terms of how they can be used. 9. Lesson 8 Bitcoin vs Ethereum: so it's really confusing. We talk of the currencies. A lot of people like a suffered a Bitcoin friends of the Cryptocurrencies. But all of them have so differences. Some of defense is a really subtle as we try to learn light coins. Basically, I went to him from big pointing that it's faster to mind spastic to produce, whereas the theory is that this whole huge platform, its currency, is called either. So Bitcoin is nothing more that currency, whereas in fear, Um, Ethereum is this huge opens software platform based on the Blockchain is felt decentralized applications. So people called it through him here in at two point. Oh, and but it's totally separate and independent from the Internet. Um, it provides security, and anonymity is like governments don't like it. And as I mentioned before, it's a double edged sword. It's an amazing technology, but it's easily used for nefarious purposes. So has his dark side, whereas in the real world you know businesses and gold and real estate and things that to the government there may be some some dark side in terms. You know, sometimes people cheat. As we saw some of the accounting scandals many years ago with Enron, and we've seen a lot of scandals in business. But when it comes Teoh Cryptocurrencies, there's no way of, uh, rooting out the scandal. There's no way of knowing what's being about what's going on so that they're used for drugs and they used for sex trafficking and abuse for slavery, and so course criminals about the world. They really, really like this cryptocurrencies. And while a lot of people who support that may not be criminals on, just be technology enthusiasts or just like the idea of not having the government involved in how they use their money, there is a big dark side to these cryptocurrencies that when you buy them, you're supporting that. And, uh, you know, whatever your beliefs are, that's just a fact of of these instruments. So it's something to think about. There's no centralized authority that is needed to marry as a platform. The Blockchain system allows for there not to not to need the government or essential bank . It's both their biggest. It's the biggest attraction, and it's also the biggest downside to the technology, and essentially you compare Bitcoin ethereum. If there was much more useful than Bitcoin Bitcoin security while the theory also has a currency either which is becoming widely accepted, like the coin out there in the Cryptocurrency universe. But it has this whole entire decentralized at platform or software engineers could make all kinds of cool abscessed up. So Ethereum is really exciting if you like technology. If you like software. If you are you interested in all the things that you're gonna be able to do with these applications? Ethereum is really cool. That doesn't mean that each unit of its currency called ether, has some huge intrinsic value that you want to be putting your money into. So really issues me maybe some confusion from the investing public when they think about investing the Cryptocurrency it. But they're behaving like assets. They're behaving like a piece of artwork. For example. We think that okay, the Mona Lisa is valuable because his pain about Leonardo Therefore the public believes that that artwork is valuable. The price will be based on that. Believe right now, that's all that we have going for us. Cryptocurrencies people believe the valuable and so they're they're buying them. But as an asset, they're totally different from a currency. There's no reason that currency has any major intrinsic guy. I was gonna keep hammering the point home because it just doesn't make any sense on any level that has anything related Teoh economics to macroeconomics and microeconomics or to investing at all. Which is why it's actually quite confusing for a lot of us business people to look at this and see what's happening. It's just so obvious that it's a bubble, and every time someone says, well, this time, it's different in your technology. It's exactly the same thing that everyone was saying during the dot com boom in the 19 nineties. We thought these companies that were making any money, we're going with trillion dollars because they've got a domain name and because they're on the Internet, it's intense, is really amazing new thing. And now, finally, 20 years after the dot com bubble burst, we actually are starting to realize some of the potential that people foresaw at the birth of the Internet. But it took a long time and 99% of all those dot com companies that were created they went bust with that big bubble pop over that we're seeing something that looks identical to that period of time in the 19 nineties with that great bubble, as it's been called. So big one, especially because it's the most famous and well known currency, has become a pure investment play, even though it is simply a currency that could be used for online transaction. That's all it is. Okay, Andan this one. How many introduce you get some other cryptocurrencies because there are a lot of them out there, and these ones in the next lesson are some of the most popular ones, and they all have slightly different attributes. We're gonna look at how you can use them and how they differ. 10. Lesson 9 Other Cryptocurrencies: so the popular one is called Z Cash. This one allows horrible private and public transaction, depending on the user preferences. This is different than the other Cryptocurrencies, because people can elect to have the transactions be public if they want them to, so it's kind of interesting thing that they have chosen to do so. That makes this one unique in a certain way. Another really block the ones called Dash. But it was originally known as dark coin or originally known as Dark Coin, even more secretive than Bitcoin, and uses a secret centralized authority with super strong encryption technology. So Dash might be like the safest one in terms of having to be anonymous and virtually impossible to ever be hacked. And so again, that probably also makes it a popular one among of black markets and criminals out there hold Dash Little Ripple and has his economic x R p. It allows banks to sell transactions in real time, using the Blockchain and encryption technology so it doesn't actually use mine. He's a different type of technology is that makes it really fast. Ripple is one that's exclusively, you know, used for the banking industry and doesn't use the mining techniques, so it's a little different than the others. Manero M X M R It's another secure public currency that is donation based, so that's what makes more narrow, unique. It uses something called ring signatures to increase security. So basically what it is, is it. It uses one signature of the real person that coins that owns the coins. And then it is the whole bunch of fake signatures in like a ring. So when you're looking at the code, you can tell which one is real. Which one speak. And apparently there's just no way ever figure it out. So it's really, really safe because of that. And but it's donation day. So the whole time thing, instead of being mine, um, you have them be donated. And so that makes this, uh, unique platform with some sort of different attributes to it, as well called made safe coin. Or it's also just known at ST Point, which is a crowd sourced Internet that you can trade space on your computer in exchange for coins. That's kind of interesting. So if you want Teoh let you know some people out there on the Internet you sell your hard drive space that you're not using, you can get some coins in exchange for that. So it's kind of a way to maybe earn some money on the Internet. Sexually interesting. So you can see there's some really cool stuff that this technology can do and because they're all different, they are from different applications. It is really interesting and exciting. These technologies. No. What are they gonna lead to having what What is gonna happen in 10 or 20 years? This is what people are calling it Internet. Why don't holding technologies a whole new type area? I can do all kinds of really, really cool stuff that we couldn't do before. But it doesn't mean that the coins themselves are worth some huge amount of money and you should be putting your money into That's my main point here, and that's why I made this course. I want to basically warn everybody. Don't get caught up in this mania that you should be investing in these things. I don't want you guys to lose your money, even though I've got friends that are really, really into this, and they're making a lot of money Right now, I've got some friends that are basically living off of their earnings from these coins. That doesn't mean it's a smart thing to do. I mean, I also you hear stories of people winning the lottery or hitting a jackpot in Las Vegas, right? That doesn't mean that you should go gamble every day. You should spend all your money on lottery tickets, right? So just because you heard that some people are getting richer cryptocurrencies or that they've gone up a lot, that does not mean that you should put your money into it. That's my main point. And we're trying to show you guys in the scores why you really shouldn't do that from an analytical, objective point of view. But again, as we see from from looking at what somebody's Cryptocurrencies can do with their really cool technologies and, you know, look into it yourself. There's this dozens of now, so you really it's hard to go through all of them in one course. Maybe I'll make a follow. Of course, we'll analyze a lot more on how we can actually use the currency in cool ways. I really like this one right here is this safe 10.1 where you can trade space on your computer and maybe earn some some coins for that and basically earn some money for that way to earn a passive income. So if that's an interesting sort of idea, but I wouldn't spend a lot of money on these safe coins. Then list of its unique, crowd funded Cryptocurrency that allows anyone to create decentralize assets like a theory . Um, but it uses jobs. So whereas Ethereum used to centralize APS on his own platform and like it's open forum list is limited to just job script. But of course, Java script is the Internet language that's one of the most popular languages that there is . And so that's what makes list unique. And that might be kind of cool and kind of useful. So people could make a lot of these new Java script type APS on this new of platform that is crowd funded. That's interesting as well, so people can see that you're making some illegal app and they could support you with crowdfunding in encrypted currency, so you can see from these examples that the technology is really cool. It's going to open the stuff that we haven't even for senior is gonna happen from the currency, and it's pretty exciting. I'm really excited off cryptocurrencies and about the Blockchain technology for what it's gonna do for humanity. But in terms of investing in them, obviously, by now you can see that it doesn't make any sense. If you want to keep your money, you want to save your money and you want a you know, build well. Over time, you can see that it is nothing more than a gamble, just like going to the casino. So if you want to gamble, if you want to put some money into it, just know that that's what you're doing. And I guess there's nothing wrong with that. But in the next lecture or lesson we're gonna look at, why the whole idea that, well, it's the new technology this time different, which is what everyone is saying to all the all the naysayers out there like me, who are critical of investing in complete currencies were gonna analyze this point of view 11. Lesson 10 This Time It's Different: So during every asset bubble, the bulls say this time is different and new technology markets have changed New World out there. It's a brave new world, right? And they've been saying that for hundreds of years. Ever since we had the the Dutch tulip bubble and every boom and bust cycle, the bulls say it's gonna last forever. In the early two thousands, we have the housing bubble in the United States. We thought, you know, the price of real estate is gonna go forever and course real estates one the oldest assets history. And even then people were saying, This time is different. This markets and go on forever doesn't make any sense. If you would have analyzed the banks the time you analyzed mortgages, as a few people did do you would say, Whoa, these words is don't look very good. They're being They're being sold off multiple times and bundled into the giant Um, you know, huge mortgages and the subprime market. He analyzed that you would say whom there's no real reason here, while Richard State should be worth this much. And indeed it wasn't real estate was still just real estate. It was still just buildings and land, and eventually the market found it out when the whole first and assets before they went back to their intrinsic value. They job really, really, really well, and people lost all their money, and we know what happened there. So new technologies exciting. It makes people forget about investing fundament. So this is why Warm Up and Charlie Munger and others are against these things. You can't throw away the whole history of economic fundamentals just because you have a new technology. Technology still has to be value, and so when you invest in something, you look at the intrinsic value. That's what you're doing. You can't just throw that stuff out the window. And so, even if the new technology is cool, even if it does change the world, it doesn't mean that it's a good investment and were clearly in a bubble. All bubbles eventually pop, and all of bubble is it's a rapid rise of asset prices that are not. It's not based on any intrinsic real value. In the 19 nineties, stock market went crazy heights. It was not based on real earnings. It was based on the hope and the belief that this new dot com companies were going to make trillions of dollars in the future. Now some of them have turned out to be extremely probable since then. It took a good 20 years to get to the point where were at. So obviously it wouldn't justify all of those stocks being worth what they were in the 19 nineties, right? So during the duck on bubble, people thought that, you know, the stocks were gonna go up forever and the old systems of measuring value no longer apply . And, of course, they were wrong. The same systems of measuring value, the business or any asset still apply. Just remember that that's not going to change. New technology will happen. Markets will change. The world's going to change. But things will still only have intrinsic value based on how much money they produce and based on how much utility they have. So those that continued to invest back in those days using fundamental, proven investing strategies like Warren Buffett, they came out ahead. Everyone else lost, their sure lost all their money. And even though someone like Warren Buffett, you had a lot of money invested in stock market they weren't invested in those over priced dot com stocks. His stocks went down briefly, went down too much, much lesser of a degree. And then they were covered quickly because they while they went up less during the bubble, they really went down at all during the pop. Because they were, they were priced at their intrinsic value. If you own real estate and you own energy companies, you own paint companies. You own this regular companies that are really predictable and produced of stable earnings , then the values are not gonna go up and down a lot all the time. They're very stable, and so the intrinsic value is pretty easy to measure. Over time, the profits are going to be reinvested, and it's going to compound those earnings. And that's why people build wealth over time in the stock markets like Warren Buffett in the 19 nineties, they didn't lose which money and ended up being fine within just a couple of years after the bubble burst. But people that had all their money invested in in the bubble in those stocks number that was the tech stocks. There were way, way overpriced. They're the ones who lost all of their money. So even though some people got richer in the nineties, if you're lucky enough to sell those assets of the right time, you'd be happy. But just like right now, Cryptocurrencies people are reinvesting their money, I would say, because where there are now, if you're listening to this and you have money invested Cryptocurrency I would sell it all right now because you could lose it all tomorrow. Basically, and investing in highly volatile assets s so called assets, like of the currencies, it's stressful. It's stressful because risky and you're likely to end up losing your money. So every day that you're sitting there looking at the markets and watching them fluctuate by, you know, 10 or 20 or 30% points in a day or even mawr, that's very, very stressful. That that affects your health. It affects your state of mind. It can affect your family, you got kids, and you're always a nervous wreck because you have this money investing in these things. It's just not worth it. When you can invest in a stable, cash producing business i e. Stock market. It allows you to sleep well at night, It's really low risk over long time periods, So as long as you're going to sit out the fluctuations and wait, you're virtually guaranteed to make money. So it's important. Understand that when you look at investing in the stock market is actually really safe over a long period of time. It's still risky in short period of time. But it's why you know, investing in general is a long term activity. It's something that you just need Teoh need to wait for the results from Warren Buffett often uses the analogy. He says. I can't get a woman pregnant by, um, I can't wait. Capri is a baby in one month by getting nine women pregnant, something just take time. And I think that's a good analogy because it shows that you know the reason stocks go up is because of earnings. It takes time for companies to increase earnings because it means they're actually selling things to people. And activity in nationally takes time, just like it takes time in nature. For trees to grow. It takes times national, but because of compounding, you can become very wealthy over time. As Warren Buffett obviously is a good example, of the idea that you want to get rich quick and turn five or $10,000 into a $1,000,000 like a very, very small number of people were lucky enough to do if they bought Bitcoin, like in 2010. You know, that idea is very dangerous. It's a very dangerous thing because it's the same thing as gambling. You hope it will work, but usually will the vast majority of cases of will and you're just gonna lose your money. But if you're conservative and you know you don't, you don't expect miracles and you just invest in assets that are valuable and are likely to be more valuable. The future you're gonna build Well, you're going to sleep well at night. You don't have to worry every time you turn on a computer that you lost all of your money. Okay, so I hope you guys take some of that stuff, the heart, and then the next lesson we're gonna compare the Cryptocurrency bubble to the great to the bubble, which is very interesting 12. Lesson 11 The Great Tulip Bubble: So the 17th century tulips started to be imported to Holland and during the seventh century was when the Dutch were at the height of their power, and they were the most dominant country in all of Europe at the time. They had a great empire and two of Bold became really fashionable and expensive because they were beautiful. They were unique. There were different. There's something that came from far off lands, you know. And there are different types of bulls that had different colors and things like that. So it became very trendy. And during this period, between the 16 34 and 67 so it's almost a 30 year are over a 30 year period. You have this long increase in the values of tools, and you look at that 30 years every long time when you think about an asset. So maybe a lot of people that they traded in tulips. They made a lot of money during this time. But eventually, he asked, read such a absurd valuation. It crashed down to zero and that was the end of it. Now we're seeing cycle of asset bubbles much, much more condensed because the efficiency of markets because of the Internet. So whereas back then you saw 30 year boom in two lips, you know the dot com bubble last only a few years, and it's Cryptocurrency. One is probably is likely to be similar, although there's no way to know. So in 67 the market crashed. And that's why the tulip mania is not used as a buzzword to refer to any asset bubble. We say tulip mania. So at the peak of the bubble to up actually sold for as much as 10 times the earnings of a single craftsman. And so you Bitcoins nowhere near that yet. So maybe it has a long way to run. Who knows? Your guess is as good as mine. Also, 12 acres of land were offered at one point for one particular rare bulls, so the value of these tulips was truly astronomical back then. It just shows you how far a bubble can go before it. Finally, Burt's. I would say that there's no way there's ever gonna be an asset bubble that lasts long in modern times because the economy was Westmore primitive back then, and this would be something that would totally new. It was just a sort of a fluke s o. I just don't see how any with so much sophistication in terms of how we measure assets now in so much knowledge of economics, how we could ever let any asset go up unadulterated for that long. But we have seen Bitcoin guys for many years and wrote, So whenever the party's gonna end, it's impossible to say So you know, who knows that you invested in it now you could get rich off. It's still, uh, but I wouldn't recommend it. Obviously, Um, s O with two lips as a value increased more and more speculators in the market. That's what this is what happens in a bubble because people see that other people are making money. You have this big fear of missing out. And so it creates is weird psychology to which is a sort of clinging psychology, which is not good. It's stressful. It is based on greed. Essentially, you don't want to be left out. You want to be making money to, and so you drives the market ever higher. As more people see people making money, it creates this cycle. It's feedback loop or more and more people invest. We're seeing that right now with Bitcoin keeps going up. People are afraid that you know everyone. They know that that's a nothing is making money and they're not? No, they're putting the money. So at the point when it's going up the most and it seems like most people are getting rich , it's actually by far. It's a riskiest point and which to invest in it. So just think about that. Most people are investing in, actually exactly a long time as I want. But this says again, be greedy when others are fearful and fearful when others are greedy. So again just to emphasize his 0.1 more time to lips like Cryptocurrencies have no intrinsic value above what they could be used for. So two lives obviously have value because they're considered beautiful, and so you could decorate your home with them and things like that, and then complete bridges have some value because they could be used as a medium of exchange. But that doesn't mean they have some huge intrinsic value, like a business that could produce cash. That's it that's producing something that could be used to buy anything OK, so tubes and Cryptocurrencies are really similar, and they're both like gold. Only Gold arguably has even more intrinsic value than both of them asset classes like stocks and real estate. They are safe in the long run because they produce profits and they can be reinvested form or grow forever. Ad infinitum, right? You could take a proper through a business, and you re invested either in that business or you could buy another business. This is what a lot of conglomerates to him. This is what Warren Buffett's Berkshire Hathaway doesn't take profits from some of the businesses, and if they don't see a way to reinvest them in that business to increase its profit, it is by another, different business that has really good economics or a buy. Stock is some business, and so every time you have profits, those profits can be grown by being reinvested. You even buy back your stock, which increases the earnings per share because you have fewer stocks through it, fewer shares outstanding. You can release the cash as dividends to shareholders, and then they can use the money for things. And there's this very positive we call the velocity of money give me use over and over again. And it's perpetual. It lasts forever. Whereas cryptocurrencies the opposite. Actually true, because more and more of them were being created and the becoming commoditized, as I mentioned. And they're competing with each other, you have the opposite effect. Whereas businesses in real estate produced earnings that grow forever over time, Cryptocurrency to do the exact opposite things. So, actually, instead of creating world, they will end up destroying Well, just because of the nature of the thing itself. Okay, so if you understand economics, you understand what I'm talking about. It this stuff is all new to you. Then, you know, encourage you good toe read up on economics and business. Don't just take my word for it, but, um you know, I hope that you will heed my warning on def. You listen to this course. You know, stay away from investing in cryptocurrencies at least until the bubble pops right, and they go way, way down in value. Then maybe it might be a good time to buy them. I don't know, but in any case, in the next lesson, we're look at something very important, understand? and it's ah, it's called. It's called Behavioral Finance is a big new area of psychology. Now, on duh, it's related to investing. So this case, we're gonna look at the psychology of investing in crypto currency. 13. Lesson 12 The Psychology of Cryptocurrency Investing: so due to the volatility of perfect currencies, investing in them is just inherited stressful. And there's no way of getting around the fact that you're gonna be stressed out to some degree as your money fluctuates so much on a day to day basis. Unless, of course, you just buy a teeny tiny bit of them with each Cohen training on $10,000 That's pretty big chunk of money for even just one coin and do the nature of cryptocurrencies valuations. This a Z we've learned they aren't based on profits. Investing in them is literally like gambling, not better, since they're not based on anything has intrinsic value. It's literally like gambling. And so you're gonna have massive fluctuations. And so you're going to have stress. And then with this leads Dio is that you know, if you lose money, it also could lead to other gambling like behaviors and addictions, which, you know usually means you put in more money to win back what you've lost, right? So you start chasing your losses when you throw good money after bad and often times that leads to it. Downward spiral. Not exactly what we want when we set out to build wealth and invest in something it's going to go up over time. One, our money to compound. We want to get a reasonable return. We want to do it safely. And so investing in. There's nothing state at all about investing in Cryptocurrency, and actually, it might do the exact opposite of what we set out to do. Not only would we lose money, but we could go into a sort of downward spiral that happens to gamblers and throw good money after bad trying to win it back, hoping it'll go back up and then it never does so psychologically. Investing cryptocurrencies is very dangerous, in addition to the fact that you just probably gonna lose money anyway. But the opposite when you're investing in cash, bridging assets like stocks and real estate, it's not really stressful if you use a simple buy and hold strategy, because when you buy high quality assets and you hold it for a long period of time, not only do you have tax benefits but not having to pay taxes at all when you sell them, but you're your money compounds over time, compound interest and you don't really have to do much up. You buy them if I buy a new index like S and P 500 index or by by really good stable stock , like let's say for sure halfway, for example, Warren Buffett's company, I could be very certain that over long periods of time, 10 20 years, whatever my money is going to compound reasonable rate and I'm gonna have a lot more in the future. So you sleep well, don't have toe really worry. There are gonna be times in the stock market goes down significantly, and they're also every time something goes up significantly. But we know that because we can study it, We could look at the history of it. We could see how the market behaves. So as long as you understand that and as long as you're going to hold, um, your stocks for a long time it doesn't have to be stressful at all. And it feels good knowing that you are getting wealthier over time and you don't even need to follow fluctuations of the market. But you don't really have toe check what your stocks are doing, just like when you when you buy a house you don't check every single day. How much did the health words? How much is the house where you know you don't hiring a freezer to come every month and say , How much is the house worth? Right. Well, if you have the same attitude when you buy stocks and you just know that you're you know, you own a piece of the business and that business is gonna do well over time, you actually don't need to check the price of your stocks very often. It's probably hard not for most people, because it's so easy to see how much stocks today, you know. But if you realize it when you blast off, you're buying a piece of, ah, business proper producing business. It shouldn't be very stressful. All and you really don't even need to look at the fluctuations at all. I mean, since good companies whose profits they're either return to shareholders in the form of dividends on buybacks or reinvested for more growth, they can produce an ever increasing amount of well for the patient investor. I mean, this is why people like Warren Buffett, who did nothing his entire life except for investing stocks, became one of the richest men holding the whole entire world. At some point, she has been Richmond Rule right now is worth like 70 or $80 billion or something. All they ever did was buy stocks. Just think about that. The reasons is something. Obviously, he's like the best investor ever. But it's because if you owned companies, they produce profits. It's profits. They are reinvested. There's compounding that happens, and it happens forever because they're making cash, whereas other assets assets don't actually do that. When you actually look at the appreciation rates of real estate and gold, they're much, much lower than stocks because they don't produces many profits. I mean, you don't make so much money running out houses now. There have been times when real estate has done really well during certain periods, but that's because of the use of leverage. Will see, because do you buy real estate, you use debt and you can acquire large amounts of properties with a relatively small amount upfront cash. But because of leverage, you also have, uh that the risk of something happening when the market goes down and it crashes, you could lose all of your properties to so real estate has been used by people to make a lot of money in short time, actually have courses about real estate that spend a lot of time in my career investing in real estate on this platform as well. But in terms of dislike, appreciation over time, stocks basically crush all other asset classes If you're going to buy and hold and be patient. So cryptocurrencies obviously have. We have no way of knowing if what's gonna happen to them. And so they're inherently stressful and they're inherently risky. Demand may not go up as I mentioned. The facing competition among them is a downward force on the value. So it makes a lot of sense that as the rules of economics start, Teoh assert themselves over time. Just because of that one factor, the competition of the price will go down as well. And next we're going to look at the relative, and the absolute return on investments is important concept. Understand on Did you invest in any asset class 14. Lesson 13 Relative vs Absolute ROI: So there's something that happens when we see other people making money, right? It's a sphere of missing out. Psychologically human just don't like to see other people getting richer fashion. There's fear of missing out. It caused him to act irrationally, and we act irrationally. We tryto follow what they're doing, and then we lose money. This is something that's been measured in behavioral finance. It's just keep up with the Joneses mentality. It's fear of missing out Italian. So right now, especially, you see this happening in the market, and this happens during every single bubble. People are are seeing everyone else get rich. They want in on the action. They put their money in there. It's too late. At that point, everyone has already made the money, and then usually those late comers are the ones who get burned the most. And so people are putting money into cryptocurrencies at the exact time when they are most risky, and it drives the prices higher in the short term. So as long as it's more money and he put into them, as long as people have this fear of missing out on the bubble will continue. But eventually there won't be any more money to be put into them, and eventually the whole thing will be after collapsing. It is basically a house of cards, right? A bubble if the asset is inflated simply because of so much money being put into it up because of any intrinsic value. It's a house of cards. It's inflated. That's where the word for it is a bubble. It has to pop because nothing is holding it up. And it's human psychology that is driving this, and primarily it's this fear of you see how and so. That's why when you're investing, you don't want to compare your investing results to others. You know Charlie Munger, Warren Bucks partner, says, It says someone will always be getting richer faster than you. This is not a tragedy, right? I mean, it's not the goal of life is not any get rich faster than all my neighbors of editing says . As long as you get where you need to go in terms of your investments, us safely and you do it without taking undue risks, then you should be happy because you be achieving your goals and the goal of investing over time. is the have, in the words of Benjamin Graham, a safety of principal, an adequate return. If you can compound your money at 89 10% whatever, then you're going to build wealth, and you're going to be very well to do over time, if not rich, the Warren buffets and Charlie Munger to the world OK, their outstanding investors. And they can compound their money at around 20% over time in this, so they got super rich. But I don't feel bad because I'm not as good at investing as Warren Buffett, and you guys shouldn't feel bad when you see other people making money right now. Cryptocurrencies, because they're probably gonna the ones that are crying in the end, have lost a lot of money. So it's psychologically. It's good. Understand that, though, don't have this fear of missing out. Okay, so it's better to think in terms of absolute return on investment and not to compare yourself to others. This allows you again to sleep peacefully and not to worry too much about your investments . Right? Life is too short. We don't want to constantly worrying about that that we have or the investments we have going down and getting poor. It's just not worth it for our peace of mind. And there's a quote When there was a retiree living in upscale area of Florida called Broken Britain, When asked what was his return on investment that he averaged during his investing career, he said, I don't know my return on investment. All I know is I made enough to end up in Boca, and that's that's the Ventana, which have We don't really need to be always measuring exactly how much our assets are producing. You make good conservative at investments in good companies or just in a stock market index . Then you're going to end up where you where you want to be, which is, you know, a comfortable retirement for most of us, or maybe even early retirement. But the goal is to build well over time. Another thing that I'm warmed up in a study says you should have an internal score car, basically meaning that don't compare your results to others. Just, you know, compare your results to yourself and what you want to. But she and that way you don't worry about what people think. You have to worry about other people's investing performance. I just think about yourself and a lot of time. That's easier said than done, because we're really social species are always comparing ourselves each other. We're very competitive. And so it is. A lot of psychology involved investing, but if you understand it, if you're aware of that, that could be much easier for you. Teoh control yourself knowing that this is better behavior and that and you will act irrationally. Okay, so with that, we're going to go now to the last few lectures of the course. And next, we're gonna look at the pretty much the best, most proven wealth building system. You're history. 15. Lesson 14 The Best Wealth Building System in History: as you probably guessed, what I'm going to say. The best proven wealth building system in history is to invest in businesses. You invest in great companies not just any companies but the best companies that are creating value through their products and their services. You hold these investments over long periods of time for the compound interest, and additionally, you wanna have a focus portfolio of you. If your goals are built well, you want to have a focus portfolio, which is the opposite of having a diversified portfolio. Now this is the first time you guys ever hear this. The reason is we diversify your portfolio. It's good for preserving wealth because it lowers your risk, right? That's what all the financial girls on TV is. A diversify. Diversify that I That way you won't lose as much money or whatever. But in the words of Warren Buffett himself, he says diversification is good for preserving world. But concentration is the way to billable, the reason being that if if you diversify your basically, you reverting to the mean. If you want 50 companies because you're well diversified, you're going to get average results and average results. If that's what you want. Or if you're happy with that, well, then, by all means, you can do it. But if you want to build well, that's the best system to do. It is just very carefully select a small number of companies to invest in that are very highly likely to outperform the average market indexes and then hold those for a long period of time so that they can compound your money. For example, if you would have elected to buy amazon dot com in the 19 nineties and held your investment until now, you would be extremely wealthy. If you would have bought Apple even 10 years ago, 10 or 15 years ago, all the better. You would be extremely wealthy now because these were extraordinary companies above average companies that produce an increasing amount of money over time. They grow over time because they're adding so much value. How many people use the iPhone? How many people shop on Amazon, right? How many people use Facebook? OK, the only the main cabbie I hear is that even though it's actually relatively simple to identify the best companies, the hardest part is not to over pay because at certain points. You know, these stocks are trading at really high valuations and was on oftentimes James that, like, you know, several 100 times earnings. So you won't be very careful when it comes to doing that. If you don't know how analyst businesses and you're not good at it. Well, then, the best thing to do, in the words of warmed up it again, are to invest in the stock market in next one like the S and P 500 which is averaged nine or 10% over, you know, decades and is likely to average something similar in the future. So of you happy with compounding money at nine or 10% which most people would be, that's actually better than most hedge funds. Do People have a lot of money in hedge funds, The wealthy people that a lot of money to hedge funds in order up on the market. Actually, research has showed conclusively that over long periods of time, the market indexes actually up from the hedge funds, which is really ludicrous when you think about how much money the wealthy pay to those Hedge fund is also why indexing has become more popular in recent years. People are trying to figure this out, and so only the index is fine. But if you really want to build well and you want to beat the market, the way to do it is with a focused investing strategy. Having a concentrated portfolio in something like 5 to 10 businesses. But you want to select those businesses very, very carefully, and then you wanna hold them for a long period of time so you could have the compounding best of your money. So they go up, you know, 12 or 13 15% on average in those few companies. Not only are you use your money in a compound faster, but one of the great things about only fewer companies. That's really easy toe. Follow them and know what's going on of them. If you only own seven or eight companies in your portfolio you contract with doing, it's hard to keep track of 20 to 30 companies, right you can't really follow with doing. And so there's another benefit of having a focused portfolio. But this has been a bone among um, excuse me far and above, beyond every other asset class, real estate investing in art or collectibles or gold or any other commodity investing in the stocks of the great companies that are producing great products and services and holding those over time. This has been proven time and time again to be the best way to build well, in addition to simply starting your own company, right? I mean, the fastest way to get rich actually start your own company, your own business and have it be successful. But as we know, it's very, very difficult. Most businesses fail, and not all of us have the ability to do that or even want to do that, frankly, right. But anybody can take your savings and invested in the stock market. You just have to know what you're doing. Um, and if you don't know what you're doing, then buy index funds and have the discipline to hold it during depressions during recessions and during boom times as well. People buy and sell their stocks too often, and they pay off. He's going to pay taxes if you have profits, and then you have to make a lot where decisions you got inside, which I bought, when should I sell? But when you have a florist portfolio, and you only have a few companies hoping the best companies and you hold it for a long period time. You don't pay anything. Fees were holding them. You don't pay anything taxes, because all the capital gains you've made the matter. If you made a $1,000,000 or $10 billion on your stocks, you haven't sold them. There's no taxes, there's no taxable event. And so you gain a lot by doing this, you also have less stress. You sleep well at night. You know that your money is probably safe invested in the S and P 500 index or investing in a company like Apple. It's probably safe over the long term. You don't have toe worry about it. And you also know from statistics that stock market outperforms every other asset class by far. So it's the easiest way to invest. It's the most proven system in history, and as long as your patient, you will do fine the heart. But for most people, because of Begin, our human psychology is we get, we get bored. We have a fear of missing out. We want to make money faster. It was the other people making money fast. We don't think any faster. And then we do stupid things. Okay, so But if you understand, um, the nature of the stock market, you understand the nature of human psychology and you can just simply look at statistics. We now know the best way to build well over time. If you're not a successful business owner, is to buy stocks and hold them. This is proven if you can't, you can't debate it, can't argue with it. This is something that's basically fact at this point. So again, if you want to try to beat the indexes, you want to select something like 5 to 10 excellent companies that are trading at reasonable prices and as warm, But this isn't by a meaningful amount of stock. So if you find a really good opportunity, find a really good companies trading at reasonable now you want by a lot of that. It's just like if you're gonna play black jacket you the only edge you might have it is the house is if you find you have a high probability event wedding that that because of what the dealer showing you want to make a really big that will stocks are the same. So if you see something that looks really clearly you to be a really good opportunity in a really stable company and the stock market has gone down for some reason, in the short term, I'm giving you a really good entry point. Basically, then you want to buy as much of that stock, and you been floor because you want you want to get as much of his you can, so it will go up a lot. So again for no nothing investors is Warren Buffett says, I don't know how to analyze businesses. You invest in E. T s and indexes, and the average return on will be approximately, um, 10% over time, just a good return. It's a really good mature. If you get that over 20 or 30 years, you're going to do really well, especially if you are able to save a lot of money and by a lot but for know something investors that can analyse businesses and understand accounting right, which is just the language of business, and that's how we analyze the business. We have to look at all the accounting metrics as well as you know what, the company is doing some more intangible, qualitative factors you want to use A concentrated portfolio strategy. Also known has focused investing. You want to read books on investing recommended by the best investors in history, such as Charlie Munger and Warren Buffett, and I've given you guys a reading list for a few that will get you started. These the ones that Warren Buffett recommends that most. I've read them all many times, and they have helped me a lot in my investing career, and they inform how I think about the markets, inform how analyze businesses and they are invaluable. They're also very, very interesting and fun to read. If you like finances, I'm guessing if you've taken this course on Cryptocurrencies, you're interested in these topics. So 1st 1 is the intelligent investor of Benjamin Graham, who was warm ups, a mentor, and he's considered a father of value investing. It's like the basically the Bible of the stock, or did you want to understand how to think about investing and how how to go about it? This is the book that you should start with next. What is common stocks and uncommon profits. But Phil Fisher he was another really famous investor. You've got a slightly different strategy from Benjamin Graham. So it's interesting to compare and contrast the two things that they say Warren Buffett Over time, he started out as a value investor in in the Benjamin Graham Mole. And then he slowly, over time kind of was converted more and more to fill Fisher style investor, in large part because of influence by Charlie Munger, his partner. And you have to read those books toe. I understand why, but another look is culturally Munger the complete investor. My trend. Griffin. It's all about Charlie's career, and now he has made money in the markets, even though he and Warren buffet our partners and they happen for a long time. They have invested in different companies, and they do think differently. Sometimes about investments was really useful to so listen, to read about the different thought processes where they're making these decisions. And then finally, the Warren Buffett Way is excellent. Look by someone named Robert Hagstrom, who is also really good investor um, and money manager in his own right. This really breaks down what Warren Buffett has been able to do in his career tons and tons of examples of what companies he bought and why, and his thought processes like that. So if you read these four books and you really ingest the lessons within them, you will already be able to start investing with confidence and being really, really good investor. So I hope you guys go ahead and do that Well, because if taken hard what I've said about cryptocurrencies, it is course and how dangerous they are least in terms of an investment. Having been, I'm not knocking down as a really cool innovation as a very, very useful, potentially world changing technology. But just remember that that doesn't mean just because the new technology that it's a good investment, okay, and then the next lesson was kind of rapid up and go over the most important points in that one more time 16. Lesson 15 Cryptocurrency conclusion: so when it comes down to it, investing is not rocket science. It's not brain surgery. It's not actually that complicated. It's simple, but it's not easy. And the main reason is not easy is not because you have to be a genius. To do it. The major is, is not easy is because it's psychologically difficult. Holding onto investments as markets go up and down over long periods of time is very difficult, because if you go down, we feel like we're losing money. We want to sell. If they go up with, like we've made some money, we want to and so we want to buy make more eso. It's weird because it makes us behave in a way that is not rational, actually, because what we need to be doing is we want to be buying when prices are low, which most people are afraid and then holding them, even throughout periods where stocks go up and just holding them through multiple market cycles. So you can get the compounding force of all the profits that are being made and being reinvested over time. So psychologically investing is difficult, but the process is itself is simple. You find great companies that you wait for them to be trading at reasonable prices by a lot of those stocks and you hold it, and that's all you're trying to do. But the reason most people can't do it well is because they don't have the discipline, the fortitude. They don't have the psychological makeup to be able to do well. So when you study the works by Warren Buffett, Charlie Munger and those other books and recommended, you're gonna start to develop the habit in yourself the right way to think about stocks and to invest, and so you try to buy great companies reasonable prices, and then you simply stay the course. And again stocks continue to outperform every other asset class over time. As long as you understand that and you have faith in that, they're going to do fine. Okay? Again. Just remember, the businesses produced cash for the sale of goods and services and reinvest this cash or they return to shareholders so businesses make money. That's why stocks go up. And while some businesses may have a reversal of fortune, you can't sell those shares in those businesses and put him into new businesses you buy and hold this when you never sell, somebody might make a mistake and you still that someone you might have a stock of up just really, really, really high, far above the intrinsic value of the business. And you do sell. Warren Buffett buys and sells stocks all the time, but ideally, we want to be buying and holding for a long period of time if we can. And so just the nature of the stock market, since the ownership of a stock is the ownership of a business partial ownership of business . The nature of it is such that a lot of the company makes money. Stock will go up. You have to be patient, and you have to wait. Go to Cryptocurrencies. Do not produce any profits. They have no inherent value. And since they compete with each other, they're becoming commoditized, and that puts downward pressure on billings. Everything we don't want in an investment. Basically, they're highly volatile, and therefore their stressful toehold buying and selling over time is going to be a losing strategy. The same goes for day trading stocks. That's why buying and holding over time it's so good, because when you when you try to trade all the time. You think that you're going to make more money by selling, your stocks are high and the buying of the stops in the low First we have to be right over and over and over, which is extremely good. Book is impossible for anybody to guess what's going to happen in the markets. You have to be a super genius to even be able to predict what's going to happen with one company one time, let alone over and over and over again. Research has shown that nobody can do this basically, and then you're also paying fees. You're also paying taxes, so it's basically a losing strategy to be buying. Selling of stocks. All the time will be buying, selling any asset all the time. The best thing to do is make a really good initial purchase was with a meaningful amount of money and then hold that for a long period of time. Otherwise, it's no different than gambling at the casino. Uh, of course, we know that gambling at the casino the house has a huge edge, and over time you're gonna lose money for sure. So I just want and the course for saying cryptocurrencies are maisie technology, but they're terrible investment. Thank you, guys for taking the course of hope. You got a lot out of it and good luck with your investing and wealth building.