Which Investment Would You Choose?

Hi Reader,

Whenever an asset class performs well over a short period of time, investors inevitably start asking whether or not they should buy some (or more) of the high performer.

Given the recent performance of Bitcoin, Ethereum, gold, and silver, I wanted to share some thoughts on these assets.

The Past

It's difficult to provide a detailed historical analysis of Bitcoin and Ethereum because they are relatively new (2009 and 2013, respectively).

However, their performance since inception has been nothing short of remarkable.

Despite their brief but impressive history, it's worth noting that many crypto enthusiasts are the same individuals who recently believed a JPEG of a cartoon ape was worth $2 million.

This fact might raise some doubts about their judgment and cause you to think twice before following their advice.

Turning to gold and silver, the last few decades have not been kind to the owners of these so-called "precious metals."

Although gold is often touted as an inflation hedge, it has struggled to keep pace with inflation since 1980 (it has also been highly volatile).

Silver has fared even worse, with its current price still below the all-time high reached in 1980.

The Future

As we consider the future, the first thing to remind our readers is that none of these assets produce anything.

And because they don't produce anything, they don't generate revenue, earnings, or dividends.

And because they lack revenue, earnings, and dividends, the entire investing thesis for these assets is built on the hope or expectation that someone will pay more for them in the future.

As we just learned about silver, this is no sure thing.

That said, let's consider the future potential of these asset classes by comparing two investment baskets to see which might offer more value over the decades ahead.

Basket #1: Below is the current approximate total value for each of the asset classes noted:

  • Bitcoin: $1.4 Trillion
  • Ethereum: $456 Billion
  • Gold: $15.8 Trillion
  • Silver: $1.7 Trillion

Total cumulative value: $19.4 trillion

Basket #2: Here's what you could own for the same $19.4 trillion:

  • ALL of the farmland in the United States ($3.2T)
  • ALL New York City Real Estate ($1.5T)
  • Microsoft ($3.1T)
  • Apple ($3.0T)
  • Nvidia ($2.9T)
  • Alphabet (Google) ($2.2T)
  • Berkshire Hathaway ($890B)
  • Wal-Mart ($536B)
  • Visa ($557B)
  • JP Morgan ($571B)
  • Costco ($366B)
  • Toyota ($283B)
  • Coca-Cola ($275B)

Now the big question:

Which basket of assets do you think is likely to provide more long-term value over the decades ahead?

And over that time, would you prefer to own a basket of assets that produce billions (maybe trillions) in annual cash flow?

Or a basket of assets that relies primarily on speculation and hope for future growth?

💡 Want to learn more about Bitcoin? Check out my two-part series on the topic: (Part 1) The Bullish Case for Bitcoin and (Part 2) The Bitcoin Counterargument.

Thank you for reading!

Stay wealthy,

Taylor Schulte, CFP®

Taylor Schulte

I'm the host of the Stay Wealthy Retirement Show and founder of Define Financial, an award-winning retirement and tax planning firm. When I’m not helping people lower their tax bill, you can find me traveling with my wife and kids, searching for the next best carne asada burrito, or trying to master Adam Scott’s golf swing.

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