The Shoplifter’s Investing Secret

The Shoplifter’s Investing Secret

With gold and Bitcoin down modestly from their all-time highs… today’s as good a day as any to explore a different kind of asset class to preserve your money’s ever-dwindling purchasing power.

Our own James Altucher began exploring this asset class at a tender age — although it wasn’t an auspicious start.

“I was 9 years old and convinced my life was over,” he recalls, sheepishly. “I had just shoved six packs of football cards into my pocket at the KB Toys and Hobby Shop at the local mall in New Jersey.”

Long story short, he was caught shoplifting. “How could you do something so stupid?” his grandfather asked as they walked out of the store.

“I had to have the cards. They were the key to the material success I knew I wanted, even at a young age. Football cards were the coolest thing to have in school, one of the most valuable currencies on the playground.”

To be clear, we’re not talking about just football cards. We’re talking about football cards as a subset of the asset class known as “collectibles.”

Collectibles encompass everything from rare coins to trading cards to comic books to bobbleheads.

Like every other asset class, collectibles have their bull and bear markets. James has seen more than a few over the decades.

When he was a schoolboy, “It was the early years of sports card mania — when the price of sports cards could seem to go nowhere but up.

“Although enthusiasm for trading cards dropped off for two decades between the 1990s and 2010s, the easy money of the pandemic shifted the market back into full swing.

“That is — until inflation picked up in 2021. The Fed began to raise interest rates shortly after, leading to a sell-off in risky assets like cryptocurrency, tech stocks, biotech and baseball cards.”

Which brings us to an intriguing point…

“Collectibles like coins and trading cards do not make money the way that some other investments do,” James goes on.

“When interest rates are high, people can earn more interest in a savings account or bonds. So they won't want to pay high prices for collectibles that just sit on a shelf and look nice.

However, these investments can start to look appealing again once interest rates begin to plateau.”

Which they are now — even if the Fed intends to keep rates “higher for longer” than conventional wisdom on Wall Street had it at the start of the year.

But while the short-term performance of collectibles is tied to interest rates, “long-term investors might be less concerned with this,” says James. “Historically, collectibles have been one of the best-performing asset classes and have even outperformed the market in some circumstances.

“If you have the luxury of a long time horizon, collectibles could be worth a look at this point in the cycle.”

If you have limited investment capital, James says you can explore online collectibles markets such as Rally — where you can “buy fractional shares in extremely rare and priceless collectibles.

“Although this significantly reduces flexibility to sell, it also provides exposure to the high-end of the market that has historically seen the best returns.”

And if you want a little seed money to start your journey in collectibles, James is giving away $1,000 every minute for 60 minutes on Thursday afternoon.

That’s when he’s hosting a live Zoom call to unveil his investing playbook for the second half of 2024. Among the topics he’ll cover…

• The ONE crypto trend you should watch post-halving — and why its rise could hand you returns as high as 1,695% in 14 months

• How a single announcement from Apple is going to send AI even further into the stratosphere in the second half of 2024 (if you have an iPhone, you’ll want to hear this)

• How a tiny, often ignored sector of the market could soon hand you gains 2x bigger than tech giants like Nvidia in the coming months.

It all gets underway about 48 hours from now — Thursday at 2:00 p.m. EDT.

Be advised, Zoom has a cap of 10,000 participants per call, so you’ll want to secure your spot right away. You can register for free at this link in only 15 seconds — submit your name and email address, and you’re in.

A 24/7 Stock Market?

Crypto trades round the clock — why not stocks?

“The New York Stock Exchange is polling market participants on the merits of trading stocks around the clock as regulators scrutinize an application for the first 24/7 bourse,” says the Financial Times.

This concept exasperates Paradigm trading pro Greg Guenthner at least as much as the guy in the FT’s stock photo.

“Sure,” he says, “the younger generation might love to trade meme stocks and manage their crypto holdings at 3:00 a.m. But I need what precious sleep I can get. The last thing I want is my brokerage account pinging me with price alerts at all hours…

“A market that never closes would kill the excitement and anticipation of the opening bell — and the great FOMO buying sprees that have accompanied so many power hours between 3:00 p.m. and the close. A 24/7 market would lose much of the drama and personality that make the day-to-day grind so captivating.”

A compromise of sorts might be 24/5 trading. Treasuries, major currencies and the big stock index futures already do that.

If the NYSE doesn’t go round-the-clock, hedge-fund manager and New York Mets owner Steve Cohen might set up a new exchange that does; he’s already applied for SEC approval.

Do you have an opinion? Would you buy or sell overnight? Drop us a line: feedback@paradigmpressroom.com

As for the market action today, it’s shaping up to be a second-straight session in the green.

At last check, the S&P 500 is up 1.1% to 5,066. The dip below 5,000 didn’t last long. The Nasdaq’s gain is stronger, the Dow’s weaker. Treasury yields are pulling back.

Gold was in danger of cracking below $2,300 early in the day, but as we write it’s back to $2,325. Silver’s up a dime to $27.23. Crude sits a hair below $83. Bitcoin is stuck below $67,000.

Zuck Frets About AI’s Energy Suck

Long before AI reaches its full potential, it will run up against the limits of available electricity.

Paradigm tech authority Ray Blanco sounded the alarm on this issue at the start of the year. As we noted last week, the mainstream is starting to wake up. And now Meta CEO Mark Zuckerberg is weighing in.

Speaking last week on a podcast called Dwarkesh, Zuck said there will come a time when further investments in AI will no longer be cost-effective. "But I actually think before we hit that, you're going to run into energy constraints.

"If we wanted to stand up some massive facility to power that is a very long-term project. I think [some people will] do it, but I don't think this is something that can be quite as magical as 'you get a level of AI, get a bunch of capital and put it in [a big data center].'"

No, it’s not. Zuck talked about a time when someone will build a 1-gigawatt datacenter — acknowledging it “would be the size of a meaningful nuclear power plant only going toward training a model."

Yikes. By one estimate, a gigawatt is what it takes to power a city of 750,000.

As far as we can tell, Zuck’s comments were picked up only by one trade-press website called Data Center Dynamics. So this topic is still struggling to reach mainstream awareness.

The phenomenon is investable, as we said last week. Paradigm’s value-and-dividend hound Zach Scheidt recommended a power play recently in Lifetime Income Report. Our other editors are seeking out additional opportunities, so stay tuned…

The IRS, Powered by AI (Uh-Oh)

Meanwhile, the IRS is looking to leverage AI for its own sketchy purposes.

IRS commissioner Danny Werfel — not to be confused with 1996 Heisman Trophy winner Danny Wuerffel — spoke last week at a conference in Washington. He described two ways in which the taxman could put AI to use — virtual chatbots to answer taxpayer questions and, of course, running AI algorithms to ensure compliance with the tax code.

Although Werfel promises in-person and telephone help will still be available to people who want it, “We're going to need an AI-powered solution to help taxpayers get the answer that they need.”

Yeah, and how’s that going to work when the AI “hallucinates” and gives the taxpayer a wrong answer? That could get interesting.

And when it comes to enforcement, Werfel says he thinks of “a chess analogy to where we are going to be assessing some of the complexity of how money is moved across different subsidiaries, into tax shelters and holding companies… A human makes the decision, ultimately, when we do these types of efforts on the enforcement side, but we want the computer essentially helping us be a better chess player.”

That makes it sound as if the agency is going to go after gazillionaires engaged in uber-complicated tax avoidance schemes. But if history is any guide, the IRS will simply use AI to amp up its shakedowns of self-employed folks and small-business owners.

The good news is that there’s a bill in Congress dubbed the “No AI Audits Act.” The bad news is that it has only two sponsors…

Mailbag: What Do “Left” and “Right” Mean Anymore?

On the subject of the “Everyone Is a Spy” legislation spotlighted in yesterday’s Bullet No. 2, we heard from a member of our Omega Wealth Circle…

“I saw the list of how all 100 senators voted on the bill to extend the FISA spy authority, and it was clearly non-partisan, at least in the red-blue sense.

“Of the 60 votes in favor, the split was 28 D-30 R. Of the 34 votes against, the split was 17 D-16 R. And of the six who were absent or abstained, 3 D-3 R

“Aside from noting how odd this looks, I don't know what else to say.”

Dave responds: Matt Taibbi weighs in on the “weekend wipeout in Congress for the war-and-spying crowd” at his Racket News Substack site: “It’s been bizarre watching politicians and press keep up the pretense that terms like ‘left’ or ‘right’ still have significance, when it’s so obvious that the only things in the Trump era that still matter are tribal considerations.”

Put tribal considerations aside, and the lines in this case become fairly clear: The 34 no votes were a grab-bag of liberals (Ron Wyden) and conservatives (Mike Lee) for whom the Fourth Amendment still matters, at least now and then. The 60 yes votes were dominated by deep-state douchebags like Mark Warner, Tom Cotton, Tammy Duckworth, and Marco Rubio.

Taibbi, by the way, is catching on to something I wrote about in 2019 — how the power structure in this country now resembles that of Oceania in Orwell’s 1984:

The concept of “adults in the room” assumed central importance in the Trump years. After his election, citizens were assumed to be incapable of correct choices... Adults must be allowed to keep us safe. Who are the “adults in the room”? The numbers are probably like Orwell calculated in 1984, with a political establishment led by the 1% (Orwell had it at 2%, calling them the Inner Party) and administered by a nomenklatura of educated loyalists comprising a little over 10% of the population (the “Outer Party”). The Inner and Outer Parties Orwell described as the brain and hands of the state, surrounded by childlike prole-deplorables who make up the remaining 85% of the populace.

Alas, Taibbi’s piece sits behind a paywall for now…

Best regards,

 

 

 

 

Dave Gonigam
Managing editor, Paradigm Pressroom's 5 Bullets