Tag: Delivering Alpha

Long Cryptocurrencies

Hi, humans and some robots that will flood this website’s traffic. Are you the one that brought up Bitcoin in Thanksgiving dinner? I will keep this article brief. As I started writing, I got too excited and wrote even more than I initially intended. Writing is powerful.

About 5% of my capital is in Bitcoin ($BTCUSD), Ethereum ($ETHUSD), and Litecoin ($LTCUSD). I suggest you go long these with the amount of money you can afford to lose without pain.

Mind me with “BITCOIN IS IN A HUGE BUBBLE.” Don’t waste time valuing bitcoin as it were just another type of security. There is no clear way to value these. So why not put the money you can afford to lose? It will just continue rising for who knows how long. Or you will just lose the money and continue to live as usual. Buy and Hold Cryptocurrencies.

Cryptocurrencies are a new asset class that serves decentralized applications (which allows you to do something you do today, but without the middle-man). Like stocks serve companies. Municipal bonds serve states and cities. Etc.

How can I buy Bitcoin? The easiest way to use middle-man brokerages. The most popular one in the U.S. is Coinbase.

As bitcoin price surged, so too have the number of Coinbase accounts. In the past 12 months, the number of Coinbase users increased 167% to 13.1 million. Coinbase now has more accounts than Charles Schwab which has 10.2 million accounts.

Bitcoin Price vs. Coinbase Accounts: 2013-2017
Source: Bespoke

Just today, all three cryptocurrencies, brave people and I hold hit All-Time-Highs (ATH). ATH headlines literally every day when it comes to Bitcoin.

Humans of planet Earth have been calling Bitcoin a bubble since $2000. Yet, it keeps going up and up and up…. Crashes few times about 20-30% time to time. Within days, it will hit ATH again. Like I keep saying to a countless number of people who ask me about Bitcoin. I have no idea where Bitcoin price will be at tomorrow, next week, next month, next year, next decade. But, I’m absolutely willing to put the amount of money I can afford to lose without sadness.

From what I noticed there are two types of people calling Bitcoin a bubble;

  • Inexperienced people without knowledge of basic economics and finance. Some keep comparing “Bitcoin bubble” to Tulip Bulbs, when in fact they don’t know anything about tulips. They still might turn out to be right.
  • Those people who missed out the increase in Bitcoin’s value. They still have an opportunity to buy.

At Delivering Alpha last September (which I did not attend this time around), JPMorgan CEO Jamie Dimon called bitcoin a “fraud” that will eventually blow up. Eventually.

He also joked about his daughter buying some bitcoin, and now she thinks she’s a genius. He also called any JPMorgan trader who trades bitcoin stupid and should be fired in a second.

I love and respect Jamie Dimon. But, I have to disagree with him on bitcoin. I’m a big fan of him (in addition to all other CEOs of major financial institutions haha). All jokes aside, I do respect him, his passion, his curiosity, and his opinions.

On the same day of Jamie’s comments, I along with other Baruch College students went to Goldman Sachs headquarters for a fireside chat with GS CEO Lloyd Blankfein. One of the questions I wanted to ask him was his reaction to Dimon’s comments AKA his opinion on Bitcoin. Didn’t get that chance. But, great event! Not long afterward that day, news came out stating Goldman Sachs is exploring a new trading operation dedicated to cryptocurrencies.

The technology behind bitcoin, Blockchain, is the real winner here. How can I and you benefit from it? Find companies that are heavily investing in the blockchain.

Decentralized services have a lot of challenges compared to their centralized counterparts. For one, they are slower.

  • Visa processed over 42 billion transactions in the second quarter or around 5,500 transactions per second. Whereas Bitcoin’s Blockchain is limited to less than 10 transactions per second. To put this in perspective, Bitcoin can only handle about 5% of the transactions that Paypal processes a day.
    • If you have been following Bitcoin development, you would know there was a “fork” which gave birth to a new currency, Bitcoin Cash (Bitcoin holders got free Bitcoin Cash!!!). Bitcoin cash is capable of handling about 60 transactions per second, a significant improvement I’m not going into depth about those, but to learn more about Bitcoin forks and Bitcoin Cash, check this article, Bitcoin Cash is Bitcoin. A lot of innovation in this space.
    • Remember, Bitcoin forks gives you free cash…if you own Bitcoin. If you use third-party to buy/sell bitcoin, you might run into some issues which can be worked out with the help of other Bitcoin holders and threats.

Other challenges include the cost of transactions (which Bitcoin Cash also addresses), volatile and uncertain governance, etc.

CME Group recently announced to launch Bitcoin futures at the end of the year. It could lead to more institutional investors entering the market….and more power to bears. But don’t let that stop you from buying bitcoin. Even Dimon at the same Delivering Alpha said,

“I am not saying go short. Bitcoin could touch $100,000 before it goes down. So this is not (what you) advise somebody to do.”

It is true Bitcoin could touch $100,000 before it collapses 99.99%. Or it could touch $1,000,000 before dying.

So, take 5-10% of your money which you can afford to lose and buy bitcoin and some other digital currencies with big market capitalizations.

Warning: Be careful. Some people had their cryptocurrencies stolen. Coinbase posted useful post on how to protect your digital currencies.

People who got hacked seems to be the people that announced to the public (via Twitter, blogs, etc) they are invested in the new asset class. While back, I tweeted I’m invested. And now this blog. I’m scared!!!

Twitter account: @Khojinur30

Take some precautions.

I wrote this article right after my parents asked about Bitcoin and expressed an interest to buy it. I was shocked to hear my parents say it. So now I will interview them, get access to their finances, and decide whatever they should invest in it or not. If so, by how much? #HelpPeopleAchieveTheirFinancialGoals

Disclaimer: The views expressed and any forward-looking statements are as of the date indicated and are those of the author. Discussions of individual securities, or the markets generally, are not intended as individual recommendations. Future events or results may vary significantly from those expressed in any forward-looking statements; the views expressed are subject to change at any time in response to changing circumstances in the market. Khojinur Usmonov disclaims any obligation to publicly update or revise any views expressed or forward-looking statements.

Legendary Investor Carl Icahn Was Right Next To Me And I Didn’t Even See Him!!! (Video)

As you may know, I met legendary investor Bill Ackman (Short Herbalife) in the first half of this year. He was taller and bulkier than I expected. Ackman speaks in a soft voice (to strangers of course) and has a firm handshake. My tiny hands were nothing compared to the strong hands of Mr. Bill Ackman.

Great meeting with Mr. Bill Ackman, Founder and CEO of Pershing Square Capital Management
Great meeting with Mr. Bill Ackman, Founder and CEO of Pershing Square Capital Management

In case you don’t know, Ackman is one of the world’s most famous hedge fund managers and activist investors. Pershing Square Capital Management net return was 40.4% in 2014, the highest among its peers. Since inception in 2004, Pershing Square posted net gains of 567.1% versus 135.3% return for the S&P 500. The hedge fund’s 1.5% base fee and 16% performance fee is low relative to industry standards.

Last Tuesday (September 13th), another legendary investor Carl Icahn (Long Herbalife) was right next to me at the Delivering Alpha and I didn’t even see him.

Yes, I know!!! Oh my god.

In case you don’t know, Icahn is one of the world’s most famous hedge fund managers and activist investors. As the chairman of Icahn Enterprises LP, Icahn says “Some people get rich studying artificial intelligence. Me, I make money studying natural stupidity” according to his Twitter bio. I love that quote.

How did this happen? During a coffee break before Stephen Schwarzman – Chairman, CEO, and Co-Founder of Blackstone (another legend) – was due to speak in front of investors, press, students (me unfortunately), etc…I lost my focus.

How did I lose my focus? I wanted to be on the cover of Institutional Investor magazine. Well, not the real magazine. There was a photo booth at the conference.

Why was the fake magazine cover so important? Besides being in love with finance, I wanted to get a picture of my handsomeness. Someone who works for NBC even told me I was handsome when I was leaving the event. My response was “I always look handsome” which is a fact.

…So here I am, stepping on the booth while Icahn is just passin’ by!

Baby Boy right to the Crazy Old Man
The legend is on the left. I’m on the right. Is Icahn looking at me?

I was 5-10ft away from the man I admire and I didn’t even see him. I didn’t even notice the cameraman with a strong lighting. I noticed nothing. I was thinking about how I made it to the cover of Institutional Investors magazine and Forbes is next.

Here is the video of me on CNBC for the first time and Carl Icahn on the same screen.

I messed up…for this handsome picture of myself.

Khojinur Usmonov on the cover of Institutional Investors magazine.
Khojinur Usmonov on the cover of Institutional Investors magazine.

Although I didn’t see Icahn there, I did see him on stage after the interview of Schwarzman with CNBC’s Becky Quick.

Schwarzman Interview at the 6th Annual Delivering Alpha:

Great summary of the interview can be found on the Institutional Investor’s website.

BECKY QUICK: I think Blackstone has gone from something around $35 to around $26 over the course of the last year. Why is that? What is that a reflection of?

STEPHEN SCHWARZMAN: That’s a reflection that investors are wrong.

I love the sarcasm.

STEPHEN SCHWARZMAN: I don’t want to be selling an asset that’s gone down because the world has gone down. If it’s a wonderful company, if I want to sell it, I’d sell it after everything goes well.

What Schwarzman is trying to say is…

“Investing is the only business I know that when things go on sale, people run out of the store” – Mark Yusko

Here comes Carl Icahn on stage:

Everybody excited. Their phones are out. Chairs are being moved to get a better angle of the legend.

img_5222
Carl Icahn, Icahn Enterprises chairman during his keynote at the 6th annual CNBC Institutional Investor Delivering Alpha Conference

And no, Bill Ackman did not show up again.

Transcript of the CNBC interview with Icahn can be found on CNBC’s website.

CARL ICAHN: I think Ackman’s a smart guy.

CARL ICAHN: and, again, I think Ackman’s smart

CARL ICAHN: I really think he’s [BILL ACKMAN] a smart guy.

CARL ICAHN: I sort of like him [BILL ACKMAN]. I think he’s smart.

CARL ICAHN: I really believe Ackman being smart

I also think/believe Ackman is smart and so is Icahn.

I didn’t know Icahn was right next to me until I came home. At around 8:40 P.M, I come home. Until 10:24 P.M, I eat my dinner and some snacks, while checking emails and twitter, and reading news.

At 10:24 P.M, I’m scrolling through @CNBCnow twitter and that’s when I saw the video. My reaction was too graphic to describe it here.

The rest is history.

Delivering Alpha 2016 is one of the moments I will forever remember. I really enjoyed the conference and meeting people from the media and hedge fund world.

Although I came late to the conference, at around 1:40 P.M, and missed Ray Dalio, the experience was still amazing. Not just amazing, but also incredible, stunning, astonishing, etc.

Delivering alpha as a concept is all about beating the market. Over the past six years, the investment conference has brought many great investors who got a track record of actually delivering alpha to speak in front of audience.

CNBC and Institutional Investor hosted the annual Delivering Alpha conference at NYC’s Piere Hotel.

I will forever remember this day, September 13, 2016.

What’s Next?

So far I met Ben Bernanke, Marcus Lemonis, Chamath Palihapitiyaa (CEO of Social Capital), Bill Ackman, and Carl Icahn. Who’s the next high-profile person I will meet? Janet Yellen? Mario Draghi? Warren Buffett? Stay tuned.

So far I made it to Bloomberg (for real) and Institutional Investors (literally), what’s next? Forbes? WSJ? Time Person of the Year? Stay tuned.

It’s only matter of time before I’m on stage at the Delivering Alpha and media asks me questions. Stay tuned.