Chris’ note: This morning, the third annual Legacy Investment Summit kicked off with a bang. World-renowned crypto expert Teeka Tiwari took to the stage. And he laid out his case for why mainstream adoption will send bitcoin to $500,000… and beyond.
If you have a livestream pass to the event or made it to the Mandarin Oriental hotel here in Washington, D.C., I hope you caught Teeka’s talk. If you did, you’ll know he pounded the table to buy bitcoin now… before prices really take off.
And if you missed this talk… don’t worry. Below is an insight from Teeka that touches on many of the themes he hit on today. It’s about a secret he learned from his Wall Street days about how to get rich in an asset as explosive as bitcoin…
My biggest stock market regrets have come from selling too early…
Whether it was dumping Microsoft (MSFT) and Oracle (ORCL) in the early 1990s… or getting out of Apple (AAPL) far too early in the 2000s… I’ve left tens of millions of dollars on the table from exiting early.
I got into Oracle and Microsoft in 1990. I got into Apple in 2003. Had I kept just $100,000 in each, I’d have an extra $108 million today.
Even just $5,000 in each stock would be worth $5.4 million today.
Why didn’t I stick around? Volatility.
In the early days of a high-growth stock, there are always doubts that the company will make it. Often, we magnify those doubts when the market goes through bouts of huge volatility.
For instance, Oracle once dropped more than 80% as doubts rose about its survival during an accounting scandal. Microsoft would often swing down 30% or more.
And investors were always questioning Apple’s direction as it transformed into the powerhouse it is today.
Stocks poised for massive growth are highly volatile in their early days.
If you don’t grasp that volatility is the price you pay to be able to turn a few $5,000 investments into millions, you’re doomed to always sell early.
So how do you stay in a position in the face of gut-wrenching volatility?
I had to learn this lesson myself… and I’m happy to share it with you today.
The first step is to always position-size wisely. Invest a dollar amount you’re comfortable losing. Not a cent more.
It may be as little as $400… Or maybe losing $5,000 is a non-event for you. There’s no one-size-fits-all number. Just pick an amount that’s right for you.
The second step is to get 100% clarity on what will drive the value of that asset higher over the long run.
The long-term driver for Microsoft was the adoption of the desktop computer. The company had a monopoly on desktop computer operating systems.
When I bought Microsoft shares in 1990, only 15% of homes had a desktop computer. Today, 89% have one.
To make money on Microsoft, all you had to know about was its monopoly… and that desktop computers would soon be in every home.
Wall Street calls these circumstances “narratives.” While working on Wall Street, I discovered narratives drive much of a stock’s price action… both up and down.
When Wall Street grew fearful of desktop computer adoption rates slowing, Microsoft’s stock would drop.
The stock price would streak higher when Wall Street became convinced that everyone would eventually own a home computer.
All high-growth assets have short-term, medium-term, and long-term narratives at play.
And we hurt ourselves when we focus on negative short-term and medium-term narratives instead of the bigger, positive long-term narrative.
In Microsoft’s case, the short-term negative narrative was that folks wouldn’t want a “business machine” in their house.
The medium-term negative narrative was that IBM (IBM) would displace Microsoft with its own operating system.
From time to time, drops in the share price would amplify these short- and medium-term narratives… and investors would bully Microsoft’s stock even lower.
But if you focused on the long-term narrative – that just about everyone would own a Microsoft-enabled PC – then you saw all those moves lower as buying opportunities.
And to confirm that narrative, all you had to do was track the sales of Microsoft operating systems. They were through the roof, dwarfing the sales of their competitors.
Bitcoin (BTC) and Microsoft are very different. But they share the long-term narrative of global adoption.
I first recommended bitcoin to my Palm Beach Confidential and Palm Beach Letter subscribers in April 2016. Back then, you could buy one bitcoin for $428.
Today, one bitcoin will set you back about $46,400. So that’s a roughly 10,741% gain for folks who acted on my recommendation and held on.
And since then, I’ve focused on one thing above everything else – adoption. When I first grasped the power of bitcoin, I realized billions of people would one day own it.
It didn’t take a genius to realize that with a maximum supply of 21 million coins, it wouldn’t take much global adoption to significantly increase bitcoin’s value.
In 2016, about 500,000 people owned bitcoin. Today, over 200 million do.
Cryptocurrency exchange Crypto.com estimates that 1 billion people will own bitcoin by 2025. And by 2030, that number will swell to 3.7 billion.
Just like Microsoft’s massive user-growth days of the 1980s and 1990s, all you need to know to make money in bitcoin is that usage will continue to explode higher.
So when I see bitcoin fall in price… I remember when Microsoft would get whacked and “experts” would speculate on the end of the desktop PC revolution.
It’s the same narrative… just a different investment vehicle.
That’s why I believe we’ll see $500,000 bitcoin by 2025.
Here’s a conservative estimate of the price effects if Wall Street allocates just 1% to 5% of its total capital to bitcoin…
Again… these are highly conservative estimates. The truth is, $500,000 is just the beginning for bitcoin. It could go a lot higher still.
So short-term sell-offs are great buying opportunities.
The key to surviving these pullbacks is to think in five-year time frames.
If you’ll need the money before five years pass, don’t put it in bitcoin. But if you don’t need the money now, invest it in bitcoin when the crypto is beaten down.
No other asset in the world will make you more money over the next five years with less risk than bitcoin.
If I’m right, and bitcoin hits $500,000 by 2025… we’ll see an average annual compound growth rate of about 121% between now and then.
Is there any other asset in your portfolio capable of that type of growth?
I doubt it…
I remind myself of this all the time. Especially if I’ve just paid $65,000 for bitcoin, which I did a while back… and then it drops into under $60,000.
I say the same thing I said back in 2018 when I bought more bitcoin at $16,000 and watched it drop to $3,800…
“When you look at the chart five years from now… you won’t even see these blips. They won’t even register on the chart.”
In the 1990s, I thought in time frames that were too short for my investment thesis to play out. And that had me selling positions way too early – sometimes even selling positions during market crashes, which is a huge mistake.
So if you’re a reader who had the courage to withstand bitcoin’s volatility since I recommended it in 2016 at $428, congratulations.
Even with the most recent pullback, if you’d simply held on to your initial $500 investment, it’d now be worth $46,400. And a $1,000 stake would be worth $92,800.
If you want to take a small amount of money and radically grow it into a multimillion-dollar fortune, you must deal with the short-term and medium-term negative price action.
There will be more volatility. I don’t know how much. But it doesn’t matter. Just don’t draw long-term negative conclusions about crypto based on what happens over the short term.
Always remember that widespread adoption is the main driver that makes crypto an asset class that can generate life-changing wealth.
If you can stay true to that narrative, you’ll look back in the years ahead from a position of comfort and wealth instead of regret.
Let the Game Come to You!
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Teeka Tiwari
Editor, Palm Beach Confidential