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The Heterodox Investor

Real Estate & Crypto Investment Focused

Heterodox is an old Greek compound word. “Hetero” means ‘different’ and “dox” which means ‘opinion’. The colloquial meaning being something that goes against the accepted wisdom. The word has a lot of meaning in the realm of religion, which I won’t touch on here. In the last 100 years or so, however, the word has drifted into the realms of economics. There are several schools of heterodoxy economics. They range the ideological gamut from free enterprise to Marxian, but what they all have in common is a rejection of the ‘conventional’ wisdom.

That’s the spirit I want to bring to this blog - I want to buck the trends. I want to look at all the available investment opportunities, and find the ones that have the best risk/reward ratios, the best projected returns, the easiest to manage, and the ones that, frankly, just interest me more than others. I’ve got a long background in real estate investment, and I’m familiar with the world of cryptocurrencies. Those are going to be the two focal points moving forward.

Most financial blogs are centered around the stock market. That strikes me as . . . .misdirected advice. As of 2017, less than 50% of Americans owned stocks. To hammer on that point, only 13% of Americans own stock directly, and the top 10% of American households own over 80% of the value of the American stock market. In fact, of the average middle class home, stock market holdings only account for 10% of their net worth.

Why is there so much financial advice focused on a market that directly serves relatively few people? That’s an answer that I can only speculate. While most financial advice about stocks is good advice, it definitely has a problem finding a widespread audience.

Digging into the numbers more, I found a stark fact about how middle class wealth is created. The net worth of homeowners is 44x larger than non-homeowners. I don’t think I can state that enough. Just look at this graph to get a sense of the disparity.

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Paths Toward Wealth Creation

I’m a path-of-least-resistance guy. When I see how markets perform and how systems are incentivized, I try to follow those rules. What about the current financial system rewards focusing on stock investments over home ownership? It appears to me, and these figures bear this out, that stock investments should be a supplementary, long-term, passive investment strategy. The emphasis should be on home ownership.

So how does that happen? In the United States, and in Idaho in particular, the government has chosen to incentivize and promote home ownership as a means of wealth creation for our citizens. 30 year, fixed rate, federally insured mortgages don’t exist in the rest of the world. In Idaho, there are even more programs available to promote home ownership, including available Rural Development loans and Idaho Housing & Finance Authority grants. I’ll definitely be going over these in depth in the future.

Where the “Heterodox” comes in

It’s 2019. As a society we’re almost two full generations into the age of the Internet. It seems like every two years there has been one quantum leap after quantum leap. Cell phones, cloud computing, digital entertainment, travel, social media - the list goes on and on for industries that have been completely upended in the last thirty years. There are two industries, among others, that have adopted technology, but have not been upended by it: real estate and financial markets.

I believe that the advent of distributed ledger technologies, and blockchain in particular, is that upheaval laying in wait. Bitcoin was the first manifestation of blockchain, but there are others available now and many more yet to come. Blockchain is equivalent to the Internet in 1994. Even the people making the most wild projections of the future are understating its potential.

I have been trading cryptocurrencies for two years now. I’ve made a lot of money, and I’ve lost a lot of money. One thing I know for sure, though, is that the space is filled with liars, cheats, and thieves. DO NOT TRUST ME. I promise that I won’t lie, cheat, or otherwise deceive you in this blog, but the first lesson with cryptocurrencies is to trust no one. Hopefully, in time, I will prove to you that I’m just giving honest, good-faith opinions.

I’ll explain what Bitcoin and Blockchain are in future posts, but I’ll leave you with this. This is a price chart for Bitcoin going back to 2015. You tell me if this looks interesting or not. Oh, and it’s in logarithmic form, for the mathematically inclined.

BTC.JPG

So that’s my spiel - that’s my introduction - and that’s what I’m about. Future posts will be found here, but I don’t have a content schedule yet. My first objective is to just produce content that 1) I’m passionate about 2) people are interested in.

So with that, what do you want to read about next? Crypto/Bitcoin/Blockchain or Real Estate?