Embracing Change

It has been over a year since the first COVID lockdowns changed everyone’s plans. Some people embraced the changes and others were unable to but I don’t think anyone welcomed them. I recognized it as an opportunity to accelerate achieving my financial goals. Winston Churchill said, “never waste a good crisis.”

The lockdowns didn’t affect my family as much as it did many others. Our kids have always been homeschooled. Our business is supplying digital creative content and we already work from home. Our property is basically a 45 acre playground with our own personal dirt bike and side-by-side track and walking trails.

Reading the news and seeing so many lives fall apart made it difficult to accept the blessings that we have. This is a sobering article about the effects the pandemic has had on household incomes around the globe — The Pandemic Stalls Growth in the Global Middle Class, Pushes Poverty Up Sharply. In the article it says that 152 million people moved from high or middle income to low income or poor. I often question how we could have reduced the secondary effects by handling the situation differently.

The lockdowns and winter brought my mental and emotional health down like it did to so many others. Focusing on how technology is changing finance and economics helped me cope in the dark times. I felt like it was the best way for me to proactively provide opportunities for my family in the future. I committed myself to understanding the plumbing of the financial system and market flows better. I wanted to know how the changes that were happening would shift narratives and capital flows. The first trend shift I recognized back in March of 2020 was the increased reliance on e-commerce.

When the lockdowns arrived there was a huge sell-off in the stock market. The first trade that made sense to me was Wayfair. It had dipped all the way down to about $25 per share from over $170 per share a year earlier. People were trapped in their homes and brick and mortar stores were closed. I formed my economic thesis and believed that housing prices would boom as a result of the interest rate cuts. I didn’t want to get into real estate again so Waifair was my proxy. By July it hit $350 per share.

In August of 2020 I felt like we were at a sort of inflection point in the markets and had no idea what it was so I liquidated everything. I am more of a swing trader than a long term investor. It took me nearly a month to formulate a new thesis. I saw the rollover into value from growth but I wasn’t interested in taking part in that trade. There were two trades that really caught my interest, bitcoin and Tesla.

Bitcoin had been consolidating around $10,000 USD for a few months. The volatility had just reached near record lows. The narrative was changing and it was on the verge of becoming and institutional asset. So I put 50% of my savings into bitcoin.

Tesla was on a tear. I dabbled in trading it previously and did ok. But I was scared to put significant funds behind it because of the recent run-up. But then the S&P 500 inclusion was announced. That meant that once it is included in the S&P 500 all the indexes and funds that track the S&P 500 will have to include Tesla in their portfolio whether or not they like the company. So I purchased some call options.

By the end of 2020 bitcoin more than doubled and the Tesla call options went up about 400%. I ended the year with 255% gains, my best year yet. Amazing for me but not for Emmet who turned a million into over $50 million in the same timeframe holding Tesla options throughout its entire melt up.

The first quarter of 2021 has been a continuation of what started in late 2020. In January I went all in with trading crypto assets. I know others who diversified more of their crypto portfolio into decentralized finance projects and non fungible token projects who have generated multiples of what I have. Those are people with years more experience in the space than me so I am happy with my 85% year-to-date return.

These markets are intense! COVID accelerated many things including what could possibly be the largest generational transfer of wealth in history. Demographics are changing the economic landscape. Technology is changing the way we transact. People who understand these shifts will benefit and people who don’t will struggle to keep up.

I really want to help people understand how they can achieve financial security and freedom in a world where the wealth gap is ever increasing. If concepts like appreciating versus depreciating assets, compound growth, network effects and capital flows were taught to everyone starting at a young age, maybe the wealth gap wouldn’t be so large.

A mindset of continuous learning is how I have navigated these challenging times. Setting audacious goals then doing what it takes step-by-step to achieve them has helped me stay focused and not let depression ruin my life more than it already has.

For me finding refuge in numbers feels safer than depending on people. I tend to let people down often which feels terrible. But analyzing numbers and trends feels natural to me. It also provides a nice hit of dopamine each time I get it right. And when I get it wrong there is always a lesson to learn.

Going forward I hope to continue on this path of learning and adapting. Maybe one day I’ll learn to communicate better with people so I can share what I’ve learned more effectively. Knowing myself, that is definitely an audacious stretch goal!

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