Dear Reader, |
I was cleaning out my file cabinet yesterday when I found something that stopped me cold. |
A newspaper clipping from 1995. Headline: "Internet Stocks: Fad or Future?" |
The article quoted a Wall Street analyst saying the internet was "overhyped" and that "most of these dot-com companies will be worthless in five years." |
Sound familiar? |
I saved that clipping because I thought the analyst was right. The internet seemed too speculative, too new, too risky for serious investors. |
Boy, was I wrong. |
Looking back now, I realize I've been here before. Multiple times, actually. |
In the 1970s, I thought credit cards were a fad. "Why would anyone pay to use plastic instead of cash?" I asked. |
In the 1980s, I dismissed personal computers. "What's the average person going to do with one of those things?" |
In the 1990s, I avoided internet stocks. "It's just a bunch of kids in garages." |
In the 2000s, I laughed at the idea of banking on my phone. "No one's going to trust their money to an app." |
Every single time, I made the same mistake. I looked at new technology and asked whether it was better than what we already had, instead of asking whether it solved problems people actually cared about. |
Credit cards weren't better than cash because they were more convenient. They were better because they separated the moment of purchase from the moment of payment. That's a fundamentally different thing. |
Personal computers weren't better than typewriters because they typed faster. They were better because they turned every desk into a publishing house, accounting department, and communication center. |
The internet wasn't better than libraries because it had more information. It was better because it connected every person to every other person, instantly and globally. |
And Bitcoin? Bitcoin isn't better than dollars because it's digital. It's better because it can't be printed, can't be frozen, and doesn't require permission from anyone to use. |
That's the pattern I keep missing. New technologies don't just improve old systems. They create entirely new possibilities. |
Which brings me to what's happening right now with crypto. |
For the past decade, I've been watching this space like it was some kind of curiosity. A toy for tech people. A speculation for gamblers. |
But that's not what's actually been happening. |
What's been happening is the slow, steady building of entirely new financial infrastructure. Infrastructure that doesn't depend on banks, governments, or traditional financial institutions. |
Infrastructure that works 24/7, across borders, without intermediaries taking their cut of every transaction. |
That's not an improvement on the old system. That's a completely different system. |
And like every other technological shift I've witnessed, it's following the same predictable pattern. |
First, the early adopters build the basic infrastructure while everyone else calls it a fad. |
Then, practical applications start emerging that solve real problems for real people. |
Then, major institutions quietly start adopting it behind the scenes while still publicly dismissing it. |
Then, suddenly, it's everywhere and the people who dismissed it are scrambling to catch up. |
We're somewhere between stages three and four right now. |
Tesla has Bitcoin on their balance sheet. PayPal lets you buy coffee with crypto. Fidelity offers Bitcoin in retirement accounts. Even JPMorgan - the bank whose CEO called Bitcoin a "fraud" - now offers crypto services to wealthy clients. |
The infrastructure is built. The applications are working. The institutions are adopting it. |
What we're witnessing isn't the birth of crypto. It's crypto growing up. |
And just like with credit cards, personal computers, and the internet, the question isn't whether this technology will become mainstream. The question is whether you'll position yourself before or after it becomes obvious to everyone else. |
I spent most of my career missing these transitions because I was too focused on why new technologies couldn't work instead of watching how they were already working. |
Not this time. |
Margaret and I finished reading Bryce Paul's book last night. We spent two hours talking about position sizing, dollar-cost averaging, and how much of our portfolio should be in "future-proof" assets. |
We haven't made any decisions yet. But we're having the conversation. |
Because if there's one thing I've learned from watching 50 years of technological change, it's this: the biggest risk isn't being wrong about new technology. The biggest risk is ignoring it until it's too late to matter. |
Stay sharp, |
Glenn Short |
P.S. That newspaper clipping I found? The one about internet stocks being a fad? Amazon was trading at $1.50 per share when that article was written. Today it's over $3,000. Sometimes the "fads" turn out to be the future. |
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