Investing in the digital economy
Legitimacy of Cryptocurrencies
Carel de Jager
The perceptions around Cryptocurrencies are generally changing in cycles and are likely to have a long-term uptrend in society ’ s understanding ( and optimism ) about this asset class .
Typically , people would label the crypto phenomenon a scam or criminal enterprise upon first encounter and declare it dead as its inherent volatility causes another price crash and eventually forget about it .
What are Cryptocurrencies ? While everyone has a slightly different narration and understanding of what cryptocurrencies are , Investopedia explains these currencies as a digital or virtual currency that is secured by cryptography . This then makes it nearly impossible to counterfeit or double-spend . Many cryptocurrencies are decentralised networks based on blockchain technology ; a distributed ledger enforced by a disparate network of computers .
The Narrative VS Reality As cryptocurrencies live through another of their normal four-year cycles , and as they make their way back to the dinner table discussions , those who wrote their obituaries will start investigating why they have been wrong and a whole new world will open .
• We have seen these events play out at scale in Wall Street over the last four years . After threatening to fire anyone who mentions the word “ Bitcoin ” for being “ stupid ” in 2017 , the CEO of JP Morgan Bank now has a price target of $ 146 000 for the digital gold .
• Shark Tank celebrity Kevin O ’ Leary previously labelled cryptocurrency “ garbage ” and a “ giant nothing burger ”, but he is now diversifying 3 % of his net worth into Bitcoin .
• Ray Dalio , a famous billionaire American hedge fund manager and author of several books on macroeconomics , has been vocally critical about the magic internet money in the past . However , he , too , recently changed his mind , calling it “ one hell of an invention ”.
Although Warren Buffet and Bill Gates remain cynic , the list of those that changed their mind on the decentralised currency is growing fast .
The Proof Microstrategy was the first public company to buy Bitcoin in August last year , investing
16 MARCH 2021 SA Real Estate Investor Magazine
this very uncertainty and fear create
opportunities to purchase properties from
panicked sellers who have no regard for
the intrinsic value and long-term economic
worth of the properties they are selling.
8 Lessons from
By making great investments over his life time even at 90 years
old, one of the most successful investors globally, Warren
Buffett has created a huge and unstoppable snowball effect.
lthough I primarily invest in property
and not stocks as he does, I’ve
learned so many principles from
him that I apply to my property investment
strategy. Here are some of my favourite
quotes by or lessons from Warren Buffett.
“We simply attempt to be fearful when
others are greedy and to be greedy only
when others are fearful.”
To buy when everyone is selling and sell
when everyone is buying is easier said than
done. It requires tremendous emotional
intelligence and discipline. When everyone
is selling property, don’t be swept up
32 MARCH 2021 SA Real Estate Investor Magazine
by fear, and follow the herd. Also, when
everyone is buying property, don’t be
swept up and buy for the sake of buying
when the numbers don’t make sense.
“Uncertainty is the friend of the buyer of
We often fall into the trap of thinking that
when the economy is doing well, it will
never make a turn for the worst and when
the economy is not doing well, it will never
Currently, there is a lot of uncertainty and
fear in South Africa and the world. However,
“It is not necessary to do extraordinary
things to get extraordinary results. I
don’t look to jump over 7-foot bars, I
look for 1-foot bars that I can step over.”
You don’t need to shoot out the stars or
hit a home run on every pitch. The secret
is consistency. Anyone that consistently
acquires the right property at the right
prices and with the right amount of cash
reserves built up should move towards
“Only when the tide goes out do you
discover who’s been swimming naked.”
When everything is going well, you can get
away with building and running a sloppy
property portfolio. But when the tide goes
out, and the economy or property market is
not doing so well anymore, your sloppiness
will get exposed.
You need to run a tight ship with the
acquisition of properties and management
of your property portfolio. You also need to
ensure that you have sufficient cash reserves
in your portfolio because you do not know
when the next economic crisis can come or
when interest rates will skyrocket again.
“You can’t do well in investing unless
you think independently. And the truth
is, you are neither right nor wrong
because people agree with you. You’re
right because your facts and reasoning
are right. In the end, that’s what counts.”
Do not undermine independent thinking
and do not mind others’ opinions too much.
Listen to others, but think for yourself.
“Forecasts usually tell us more of the
forecaster than of the forecast” and “A
public opinion poll is no substitute for
thought”, Mr Buffet would often imply.
There are a lot of opinions out there, but
look at the facts. Success is like a snowball.
And people’s opinions are the debris on
the mountain that only serves to slow the
snowball down. Facts allow you to grow
your snowball so it can pick up momentum.
“Price is what you pay. Value is what you
What you pay for a property determines the
value you will get. If you pay too much for
a property, you will only get a little value. In
property investment, you make your money
when you buy. So, you want to ensure that
you don’t pay too much for a property.
“You’ve got to be the kind of person that
the snow wants to attach itself to. You’ve
got to be your own wet snow in effect.”
You are where you are in life because of
WHO you are. And if you want to change
where you are, you need to look inwardly
and change WHO you are by developing
yourself. You develop yourself with the
books you read, the things you watch, and
the people you spend time with.
At a BRK Annual Meeting in 2010, Warren
Buffett said, “Avoiding the dumb things
is the most important thing to do. Learn
more, know limitations, and avoid the
dumb things.” Now, the question remains,
are you going to avoid the dumb things by
learning as much as you can about property
investing and doing what is necessary
to grow your snowball? Or will you be
watching from the sidelines?
SOURCE Prosperity Enterprises
SA Real Estate Investor Magazine MARCH 2021