The Weed is Coming and The Bitcoin is Not Leaving

I hear the word ‘bagholder’ a lot lately.

Investopedia has a definition of it:

An informal investment term used to describe an investor who holds a position in a stock which decreases in value until it is worthless. Typically, the bag holder will hold the position for an extended period of time in which most of the investment is lost.

I imagine the word came into vogue in the chatrooms post the internet bubble and it is VERY popular term in social finance circles today.

Seeing that most stocks go to zero (I have read it’s 58 percent), it has become hip to throw the term around when the subject of semiconductor stocks, biotech stocks, bitcoin, marijuana or any difficult to explain phenomenon sweeps the markets.

In other words, the bagholders are real, the people using the term loosely today are lazy.

Let me try and explain why you should refrain from loosely using ‘bagholder’ in 2017.

The digital craze has been fast and furious.

Every human is being onboarded onto digital platforms.

It’s no wonder Visa, Mastercard, Square, Paypal, Tencent and Alibaba are at or near all-time highs. They are in the middle of it all. Payments is the ultimate digital prize.

The most exciting and of course volatile proxy for this latest stage of the digital (and payment) boom has been the digital assets like Bitcoin and Ethereum. I like to say that they offer all the digital juice without the costliest pieces (employees and their benefits).

Digital assets like Bitcoin and Ethereum are still in their infancy. At Passover, the topic of Bitcoin came up with my 17 year old nephew Aaron who said a friend of his was buying. I told him his friend was interesting and smart. My father in law called it a scam. Thank goodness gold is going up so we just congratulated him on his yellow metal prowess and changed the subject. I only like to argue on Twitter.

If you think Bitcoin is volatile today, I give you this tweet from 2010:

If only I was the ‘bagholder’ that paid .37 cents that day for Bitcoins!

The digital boom was wicked volatile until Facebook became a monopoly. It is a must read. The big get bigger. Bigly is here to stay.

The weed craze is a little different. It is like Bitcoin in 2010. It’s not as disruptive as digital, unless you are a gangster.

Large booze and tobacco conglomerates are fine. They will likely own a big chunk of the marijuana industry as it matures over the decades to come.

Today, Bloomberg put some fuel on the weed fire (naturally on 4/20) with this piece entitled ‘54 Stocks Deep in the Weeds‘.

The ‘bagholder’ tweets were fast and furious.

There will be ‘bagholders’ for sure…but I will focus on the bigger picture and the truth of opportunity and profits.

Also published on Medium.