TradeSmith Daily

December 2020

Revisiting the Great British Bicycle Bubble of 1896

December 4, 2020John Banks

In 1890s Britain, the bicycle represented a social and environmental breakthrough. Public enthusiasm for bicycles — and for the shares of publicly traded bicycle manufacturers — then fueled the Great British Bicycle Bubble of 1896. The bubble inflated quickly, with share prices in British bicycle companies tripling in the space of months in 1896, even as the number of bicycle companies expanded more than five-fold. But then a flood of low-cost American bikes invaded the market, and the mood soured.

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November 2020

Privacy Concerns are Not an Existential Threat to Bitcoin

November 30, 2020John Banks

On Nov. 24 we asked, “When will Bitcoin have a meaningful correction?” The very next day, a concerning piece of news triggered a correction-worthy sell-off into the Thanksgiving holiday (crypto markets never close). But the Bitcoin correction then self-corrected, almost wholly reversing over the weekend that followed. At the worst point of the correction — or perhaps call it a crypto flash-crash — Bitcoin in U.S. dollar terms (BTC/USD) was down close to 16% from its pre-Thanksgiving high. But as

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The Mechanics of Negative Interest Rates

November 27, 2020John Banks

Editor’s Note: One of the strangest things about the modern financial era is the dawn of negative interest rates. Who knew such a thing was even possible? And why do they exist in the first place? In today’s “best of” piece, originally published in May, we revisit the mechanics of negative interest rates and explain how they work. — JCL Earlier this week we discussed the bond market’s ominous message, while emphasizing a forecast for negative U.S. interest rates. Scott

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Bitcoin is the Purest Form of ‘Hard Money’ Ever Created

November 26, 2020John Banks

Bitcoin could be one of the greatest public investment opportunities in all of recorded history. That’s not hyperbole. We are serious about this — and we come to that view having studied Bitcoin intently for more than two years, and global markets overall for more than 20. There are venture-capital opportunities and private-investment opportunities that can deliver multi-thousand-percent returns. But these opportunities are not public in the sense of being widely available and easily accessible for any investor at any

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Why Mental Capital is Just as Important as Financial Capital

November 25, 2020John Banks

Editor’s Note: When the end-of-year holidays roll around, we like to revisit an assortment of “best of” pieces taken from throughout the year. And what a year it has been. Given the degree to which 2020 has been mentally taxing for almost everyone, it seems fitting to revisit the topic of mental versus financial capital, and the reasons why both are equally important. — JCL Investment success depends on two types of capital, financial and mental. We are all familiar

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When Will Bitcoin Have a Meaningful Correction? (Don’t Hold Your Breath)

November 24, 2020John Banks

Bitcoin’s performance in recent weeks has quietly shocked Wall Street. At the time of this writing, Bitcoin is up more than 41% for the month of November alone — with a week of 24-hours-per-day trading left to go — and less than $500 from its all-time high set in 2017. The drumbeat of Bitcoin endorsements from financial heavy hitters is starting to feel relentless. In these pages we have talked about MicroStrategy, Square, Paul Tudor Jones, Stan Druckenmiller, and even

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What Ray Dalio is Missing About Bitcoin

November 19, 2020John Banks

Paul Tudor Jones and Stanley Druckenmiller have at least three things in common. They are both multi-billionaires. They are both hedge fund legends in the global macro space. And they have both publicly endorsed Bitcoin and confirmed they are long. Ray Dalio is another global macro hedge fund legend, with a net worth in the vicinity of $15 to $20 billion. Dalio is the founder of Bridgewater Associates, the largest hedge fund in the world and one of the most

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The Three Types of Uncertainty (Aleatoric, Epistemic, and Knightian)

November 5, 2020John Banks

“The political polling profession is done,” Republican pollster Frank Luntz told Axios on Nov. 4. “It is devastating for my industry.” The frustration with polling was further echoed by a New York Times opinion piece titled, “Can We Finally Agree to Ignore Election Forecasts?” The Atlantic also piled on with a piece titled, “The Polling Catastrophe.” Our hunch is that no, we can’t ignore election forecasts, and the polling industry will stick around. The polling industry will keep revising its

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