Every January, we release our Palm Beach Letter asset allocation guide.
It’s a must-read for every PBL subscriber. It shows you how our investment philosophy works and where every position fits into it.
This model has been the backbone of our success.
Since our newsletter’s inception on April 13, 2011 through June 30, 2019, Palm Beach Letter’s recommendations have averaged annual returns of 129.7%.
By comparison, the S&P 500’s average annual return during the same timeframe is just 11.6%.
So over the last eight-plus years, our Palm Beach Letter portfolio has done over 10 times better than the market.
Generally, we make a few updates here and there to the model to reflect our new positions. But this year, editor Teeka Tiwari overhauled the whole shebang.
You see, Teeka believes the stock market will continue to move higher. But equity returns may not be as high in the 2020s as those of the 2010s.
Here’s what Teeka recently said:
If you want to move the needle on your net worth, it’s not going to happen by owning Amazon, Apple, or Google. They’re mature market leaders now. And their millionaire-making days are long gone.
So where will life-changing gains come from next?
The answer is: the crypto market.
A $10 Trillion Asset Class
According to the World Economic Forum, the blockchain (crypto’s underlying technology) will store 10% of the world’s GDP by 2027.
That’s $8.6 trillion – a 295,762% rise from today’s $2.9 billion.
Meanwhile, global investment bank RBC Capital Markets estimates the blockchain ecosystem could be worth up to $10 trillion within the next 10 to 15 years.
So in less than a decade, the crypto market will be worth more than gold’s global market cap of $8 trillion.
As Teeka says, “That’s extremely bullish.”
But don’t just take our word for it. Here’s what the Federal Reserve Bank of St. Louis penned in its quarterly journal in 2018:
It is likely that crypto assets such as bitcoin will emerge as their own asset class and thus, have the potential to develop into an interesting investment and diversification instrument. Bitcoin itself could over time assume a similar role as gold.
Now, in our previous asset allocation model, crypto was part of our “smart speculation” class. It included penny stocks, shorting stock on margin, and small caps.
But in the next decade, crypto will play a central role in world finance. So we believe they deserve their own place within our new asset allocation model.
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But we’re not only adding cryptos just because they’ll become a global currency. They’ll also improve the performance of your portfolio…
The Holy Grail
On Wall Street, a “Holy Grail” is an uncorrelated asset that performs well under diverse market conditions – and maintains its ability to rise at the same time.
And cryptos fit the bill…
You see, cryptos are uncorrelated to the markets. In other words, their movements aren’t tied to the stock market or overall business cycle…
Correlated assets move together in price direction. For example, healthcare stocks generally move in the same direction as each other. They’re usually affected by the same events.
And inversely correlated assets move in opposite price directions. For example, when the U.S. dollar goes down, gold prices usually go up.
But uncorrelated assets aren’t affected by these forces. And Wall Street is starting to realize that the price of bitcoin is unrelated to the prices of gold, stocks, bonds, or commodities.
Plus, a study last year by Bitwise Asset Management concluded that allocating just 1–10% of your portfolio to bitcoin gives better risk-adjusted returns than just holding only stocks and bonds.
Not only does bitcoin hand you better returns… the greater diversification also results in lower risk and better protection for your money.
Perfect Timing
And the timing couldn’t be better to add some crypto exposure to your portfolio…
One is the increasing demand from institutions. The other is a decrease in incoming supply due to the halving event that begins in May 2020.
The last two times this event happened, bitcoin prices shot up 5,097% and 6,334% in 18 months on average. Just a $1,000 investment in bitcoin would’ve turned into $51,970 and $64,340, respectively.
In the future, bitcoin’s underlying blockchain technology will revolutionize nearly every facet of our lives – from how we bank to how we transact for goods.
So now’s the time to add some bitcoin to your portfolio. We generally recommend allocating up to 2% of your portfolio to cryptos.
And remember, cryptos offer you a chance to make asymmetric bets. That means you only need to invest a tiny stake to make life-changing gains.
Regards,
Chaka Ferguson
Managing Editor, Palm Beach Daily
P.S. This rare phenomenon only happens every four years. For the past six months, Teeka has been on a world tour, jetting across the globe to investigate this millionaire-making event.
And on Wednesday, March 18, he’ll reveal five tiny coins he’s identified that could turn $500 into $5 million – the Final Five.
Teeka says this could be the biggest discovery of his 30-year career. And he’ll show you with your own eyes the phenomenon is real.
To book your seat on this “trip,” click here… and you’ll be among the first to have the chance to learn the names of these five coins – and how to access them.