- How to invest in crypto without a wallet…
- How long can Wall Street keep Big Money moves quiet?
- Why I don’t see a path forward for nuclear fission…
Welcome to our weekly mailbag edition of The Bleeding Edge. All week, you submitted your questions about the biggest trends in technology.
Today, I’ll do my best to answer them.
Thank you once more to everyone who tuned in on Wednesday night for my first-ever livestream to talk about the cryptocurrency and blockchain technology space.
We are seeing so much development here… Blockchain technology is going to impact almost every area of our lives over the next few years.
And especially exciting, it’s providing the building blocks for the next generation of the internet – Web 3.0. This will be a censorship-free, secure, and decentralized internet that will enable all kinds of new services and products.
And that means there’s enormous profit potential here. Through cryptocurrencies, we’re able to invest directly in the underlying technology itself.
It’s like owning a piece of the next generation of the internet, or the next generation of banking technology, and watching it grow exponentially as the world scraps the old, centralized ways of doing things. I can’t wait to get started.
If you weren’t able to watch on Wednesday, please don’t miss out on the chance to become a charter member of my new research service, Unchained Profits, where we’ll begin to explore the incredible projects and platforms in this space. Simply go right here to learn all about this new venture.
And if you have a question you’d like answered in next week’s mailbag, be sure you submit it right here.
Exposure to blockchain technology…
Let’s begin with a question on investing in cryptocurrencies:
Dear Jeff, I am a big fan and follower of yours. I’d like to get more exposure to blockchain technology without investing in cryptocurrencies. As I wrote you in another message, I’ll be 90 years old in a couple of months. My brain is functioning well, but remembering passwords is a high risk.
I do hold some trust shares covering bitcoin and Ethereum but have read that they are imperfect ways to track those cryptocurrencies. But I have read some bizarre suggestions for how to keep track of crypto passwords. Not for me. I’d like to invest in companies exploiting blockchain technology, without having to use wallets, etc. Thank you.
– John W.
Hi, John, and thanks so much for the kind words. I’m glad to hear you’re interested in this exciting asset class, and I hope you tuned in for my presentation on blockchain technology this past Wednesday night. (Simply click here to catch the replay if you weren’t able.)
I certainly understand wanting to gain exposure to the growing blockchain and cryptocurrency space – and right now is the perfect time to do so. We’re seeing so much under development right now, from non-fungible tokens (NFTs) and decentralized social media to identity verification systems and even a whole new generation of the internet.
I could go on and on with all of the ways blockchain technology is disrupting our legacy systems and making them faster, cheaper, and better.
And because this asset class is growing so quickly, it is a great investment class at any age. We won’t have to wait long for incredible returns from the digital assets that I will recommend in Unchained Profits.
Years ago, when the blockchain industry was in its infancy, it was normal for investors to have to self-custody their digital assets. This meant having to manage our own private keys and digital wallets. Doing so meant risk.
To your point, if we lose our private keys and can’t open our digital wallets, we’re done. This resulted in the loss of our assets. And there was no one to call, no customer service.
Fortunately, those days have passed. And there are many safe options out there for investors who do not want to self-custody their assets. The experience is now very much like having an online brokerage account. That means the only password that you’ll have to keep on hand is the one you need to log into your account. And if you forget that password, you can reset it and establish a new one.
A great option for you is to simply open up a Coinbase account. Coinbase employs the top security measures in the world, and its accounts are easy to use. They are very similar to working with a normal stock brokerage.
Coinbase follows know-your-customer (KYC) rules, which means it verifies your identity when you open an account. So in the event that you forget your password, your coins are not gone. As long as you can prove your identity, then your account access can be restored.
So for anyone who is just beginning to learn about the blockchain and cryptocurrency space, this is an excellent way to add crypto exposure to your portfolio.
The timeline of Big Money moves…
Next, a reader wants to know more about Big Money buying. This is an excellent question for my colleague Jason Bodner.
Jason is an expert editor here at Brownstone Research. In his Outlier Investor research service, he pinpoints “outlier” stocks that institutional players are piling into – all so he can help regular investors profit from those moves (learn more about that here).
And today, a reader wants to learn more about the timeline for this kind of “Big Money” buying:
When Wall Street “Big Money” does the kind of position-building activity that Jason monitors, how long can the Wall Street folks keep their purchases of stock in a target company quiet or private before their activity becomes public? One month? Two months? Or what? I assume that after these quiet purchases become public, the time until “lift-off” can vary.
– John M.
Hi, John, and thanks for your great question! Big Money can and likely will keep its buying quiet for as long as humanly possible.
13F and 13D are the names of regulatory filings that are required by the Securities and Exchange Commission (SEC). Let’s use the 13D as an example.
If I’m a multibillion-dollar hedge fund and am quietly buying up stock, I take my time. Buying too quickly lets the cat out of the bag, and others are suddenly on to it. When that happens, I end up competing with myself.
Why? Other people will opportunistically buy shares ahead of me in order to sell them back to me at higher prices. To avoid that, I take my time. But I have a threshold to pay attention to.
Let’s say I’m an activist hedge fund… I want to get a board seat and control the company to try and make changes.
In that case, I have up until I reach a 5% ownership stake to remain unfiled. Once I hit 5% ownership, though, I must file a 13D with the SEC. That becomes public information within 10 days of hitting that threshold.
Now here’s how to answer your question… Depending on what my strategy is for buying the stock, my activity may look like the following:
Day 1: I buy a chunk and try not to make waves.
Day 2: I’ll buy some listed options (knowing I’ll likely push the stock higher soon).
Day 3: I’ll buy more stocks “in line” with current prices.
Day 4: Prices are starting to lift, and I buy more. At this point, Wall Street suspects something is going on. They know there’s a big buyer out there somewhere.
Day 5: I do more buying of stock and options, possibly “over the counter” to avoid options exchanges.
It keeps going on like this until I hit that 5% threshold. I’d buy up everything I could to get more exposure. I’d buy options and buy, buy, buy until I’ve had my fill and I’m required to report it. Then the race is on.
Not all orders work this way, of course. But some I personally handled on Wall Street went exactly like this.
There isn’t a clock on the wall that says, “12 days after Big Money buys is the limit for privacy.” Different managers have different goals and strategies. Sometimes the cat’s out of the bag right away. Other times, it stays hidden for a long while.
The biggest order I handled myself took almost a month from the first day of buying until the 13D hit the newswires.
On the other hand, a 13F filing is submitted every quarter by every fund manager that is managing $100 million in assets or more. 13F filings must be filed within 45 days of the end of each quarter. It’s a regulatory requirement to do so. 13F filings are useful because they allow us to see all of the securities that a fund is holding and how large its positions are.
To be very specific, the absolute longest period that a fund could keep its buying secret would be three months plus the 45 days, thus 135 days. That assumes the purchases were made on the very first day of a quarter and that the buying remained beneath the 5% ownership threshold (which would trigger the need for a 13D). The shortest period would, of course, be 46 days, which assumes that the purchase was made on the last day of the quarter.
In either case, in my service, we focus on when Big Money is loading up on shares in an unusual way so that we can ride that buying to higher prices in the near term while investing in the best-quality stocks in the long term.
Hope that helps, and thanks for the question!
– Jason Bodner
The challenge of using nuclear fission…
Let’s conclude with a question about nuclear fission:
Jeff, you might want to look further into your concerns about radioactive waste from fission reactors. The high-level waste that usually gets media attention is in the form of solid fuel pellets inside zirconium rods, which after cooling for five years can be loaded into concrete and steel containers for transport or storage.
If transported to any of the proposed storage or disposal sites in the arid southwest, there is essentially zero chance of it ever migrating into the environment. Compare that to the tons of toxic (and some radioactive) particulates and carbon dioxide that fossil plants discharge into our air, and it is clear nuclear fission is millions of times “greener” than fossil plants.
The only real problem with high-level waste is the government’s inability to meet its commitments for handling it. This flows from the widespread ignorance among the general public about radiation in general and the tendency of politicians to prey on that ignorance for short-term gain.
Although fusion power plants would likely be cleaner than the old fission plants, we should not be reluctant to deploy what is already a million times better than what it would replace. Many of the new fission plant designs produce less (or no) high-level waste. Some are capable of burning the existing high-level waste for fuel. Many of the smaller new designs feature “inherent safety,” in that the meltdown scenario is not just unlikely, it is physically impossible.
– Dwight B.
Hi, Dwight, and thanks for sending in your note. Energy production is one of our favorite topics at The Bleeding Edge, and I’m happy to discuss nuclear fission’s potential.
As a reminder for new readers, nuclear fusion is very different from nuclear fission technology. In short, nuclear fission produces energy by splitting the nucleus of an atom. When most people refer to nuclear power, this is the kind of energy they are thinking of.
Of course, this has trade-offs. Fission creates nuclear waste that can poison our environment if it’s not properly stored. And many people associate this technology with high-profile nuclear meltdowns from fission reactors.
In fact, I was living and working in Tokyo during the nuclear meltdowns in Fukushima back in 2011. I sent my family to the southern part of Japan to be safe while I guided my company through the crisis.
I had radiation meters in my office so that my team could understand that they were safe, and the radiation hadn’t spread to Tokyo. There were, however, periods when there was the risk of radiation clouds depending on the weather and winds, and when that happened we needed to stay inside.
This was an unbelievable experience to have gone through. It was one that I could have never imagined. And it was all avoidable.
There were terrible management failures on the part of the power company in Japan. This resulted in the reactors not being safely shut down in advance. And there were faults in the plant design that also could have been addressed sooner to prevent the meltdowns.
So some people might be surprised to hear that I am not at all against nuclear fission. I believe nuclear fission is one of the few technologies that could get the world off fossil fuels, reduce carbon emissions, and provide baseload power for our electrical grids 24/7.
In fact, third-generation fission reactor technology has been around since the ’90s. These designs are far safer and even more efficient than the reactors the U.S. currently has online. Yet these third-generation reactors are mainly being built in India and China, not here in the U.S.
And fourth-generation fission reactor designs are even more economical and safer than third-generation reactors. Technologies like sodium-cooled fast reactors (SFRs), gas-cooled fast reactors (GFRs), very-high-temperature reactors (VHTRs), pebble bed reactors, and molten salt reactors (MSRs) all show great promise.
Nuclear fission technology is based on mature technology and releases no CO2 into the atmosphere. So why isn’t the entire Western world building third- and fourth-generation nuclear fission reactors?
The answer is politics.
Ignorance and negative emotions around nuclear fission technology are very real, even if these reactions aren’t based on logic. The media coverage and popular sentiment against fission technology tend to be visceral despite the technological advances.
Yet those same people think that they are doing something good for the environment when they drive their electric vehicle that is fueled by electricity that comes from natural gas (carbon). It is completely absurd.
Due to the “bad politics” of fission, I don’t believe that we will ever get the approvals to upgrade our infrastructure with modern, safe fission technology. This deeply saddens me because we have had a clean and carbon-free solution available for decades and we haven’t used it.
We could have literally been at a stage of zero carbon emissions today had we simply adopted third-generation nuclear fission technology. And you are correct – there are safe ways to store the waste that is produced. There are even ways to use or recycle that waste in existing reactors.
Fusion, on the other hand, is an easier sell to society. After all, it’s the power of the Sun. It is harder to argue against that. It’s the combination of two separate nuclei to form a new nucleus. In that process, huge amounts of energy are released. That’s why I’ve written many times about the exciting potential of nuclear fusion.
My favorite approach uses a proton-boron (pB-11) fuel. The advantage of using pB-11 is that the reaction produces no neutrons. The output is just three helium nuclei and a whole lot of clean energy. No radioactive waste at all.
These advanced reactors are immensely complex. Yet with our advancements in materials science and artificial intelligence, we will be able to optimize the reaction for the best energy output.
This will change the political debate entirely and put the world on a path to clean energy. And I can’t wait to see it happen. That’s why I’ll continue covering developments in this space as we head toward a world of completely clean energy.
That’s all we have time for this week. If you have a question for a future mailbag, you can send it to me right here.
Have a good weekend.
Editor, The Bleeding Edge
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