El Salvador – which made bitcoin legal currency in June – just announced plans to construct “Bitcoin City.”
Apparently, Bitcoin City will be circular and feature a central plaza designed to look like a Bitcoin symbol from the air. Geothermal energy from the Conchagua volcano in southeastern El Salvador will power it.
From CNBC:
InvestorPlace - Stock Market News, Stock Advice & Trading Tips
The city will have residential and commercial areas, services, entertainment, restaurants and an airport…
From El Salvadorian President Nayib Bukele:
This is going to make El Salvador the financial center of the world.
It’s yet another sign of crypto adoption – a massive one at that.
***However, bitcoin’s price has been slumping in recent weeks, down roughly 16% from its high earlier this month
The financial press has been all-too eager to point this out.
For instance, last week, we highlighted an article titled “Has the ‘crypto winter’ arrived? Bitcoin slides back to $60,000, Ether under pressure.”
Yesterday, Yahoo! finance brought us another zinger: “Why you can still lose it all in cryptocurrencies.”
So, should we ignore stories of adoption like Bitcoin City and instead panic about a crypto winter that results in us being penniless and destitute?
Let’s turn to our crypto specialist, Luke Lango, and his Saturday Crypto Investor Network update:
With respect to the recent drawdown in Bitcoin to below $60,000, we are not at all concerned.
Now, if you’ve been following along, some of the anxiety about the crypto space in recent days has related to fears of government regulation.
The government has been slow to respond to the growth of the crypto sector. And many investors worry that when it finally acts, it will be heavy-handed, enacting policy that kneecaps sector growth, resulting in a steep selloff.
Back to Luke:
On the regulation front, we think it is largely determined what is going to happen with the regulation and development of stablecoins in the U.S.
We’ll keep you up to speed with developments on the regulatory front. But for now, ignore the noise, ride through this volatility, and keep focused on the future.
***Meanwhile, even as the market dances around new highs, don’t forget about dividends
It surprises many investors, but when measured over the decades, dividends make up nearly half of all gains in the market.
A study of S&P 500 returns from January 1926 through December 2008 found an annualized total return of 9.69%. What shocks many investors is that price appreciation only accounted for 5.5% of that average 9.69% gain. Meanwhile, dividends were behind the remaining 4.19%.
In other words, dividends drove more than 43% of the long-term return of the market.
Now, there’s been some structural changes that could skew this number today. For example, companies often use their cash to buy back stock, which wasn’t an option available decades ago. This has reduced the money flowing into dividends.
But the broader point remains – dividends are incredibly important for long-term returns. And who doesn’t love some “mailbox money” anyway?
A few days ago, our technical experts, John Jagerson and Wade Hansen of Strategic Trader, highlighted five top income plays for 2022.
We’ll get to those in a moment, but first, let’s address a common misconception about dividend stocks in a rising rate environment – something we’re likely to see in 2022.
From John and Wade:
Rising interest rates are also an issue for income stocks (those that pay a high dividend) because the future cash flows are “discounted” at a higher rate. So if all else remains the same, a big dividend payer becomes less valuable as interest rates rise.
In John and Wade’s free newsletter, Trading Opportunities, they highlight five top income plays for 2022. But one that caught my eye was Energy Transfer LP (ET). It’s an energy pipeline company that just saw a 106% jump in revenue from last year.
From John and Wade:
Companies like ET are interesting because they are relatively unknown outside of oil-focused investment circles. They have upside and rise quickly when a catalyst hits.
Best of all, ET boasts a dividend yield of 6.14%. That goes a long way toward beating inflation.
You can click here for the entire list.
***Finally, a quick homework assignment for Thanksgiving weekend
If you’re looking to escape from family, turkey, or football for a stretch this weekend, how about doing something productive with your portfolio?
As the market hovers around all-time highs, let’s enjoy it, but let’s be realistic – at some point, it will end.
So, a little preparation today will go a long way if/when these blue-sky conditions turn.
On that note, here’s our macro specialist, Eric Fry, with an assignment for you:
We should take a few minutes to reexamine each of our investments to be sure that we are still enthusiastic about each of their prospects going forward.
As you run Eric’s assignment, remember that you don’t have to be “all in” or “all out” of stocks.
For example, if you find yourself a little uneasy with your exposure to the market, you can keep all your current positions, but just trim them to a “sleep easier at night” level.
If you’d like to sign up for Smart Money, click here. Each issue is loaded with valuable, actionable content, and best of all, it’s totally free.
Have a good evening,
Jeff Remsburg
The post Ready for “Bitcoin City� appeared first on InvestorPlace.
