Bitcoin…and New Cars

Do you remember Bitcoin? I wrote about it in this newsletter back in December of 2017 when the price of a single Bitcoin was over $19,800.

And while you’re free to go back and re-read that article to learn more about what it is, Bitcoin serves as a reminder that trends can be very powerful, both in how quickly they emerge and how quickly they can fade from view. As I write this, the value of a Bitcoin is down to $3,890. That’s right, it went from over $19,800 to $3,890 in just over a year. As such, also gone are the headlines of overnight Bitcoin gazillionaires.

This got me thinking about cars. I know, I know, Adam and his car fixation. Yes, I like cars a lot but this is about how all Americans seem to love cars. Maybe you’re a drive-it-until-the-wheels-fall-off kind of car person or perhaps a lease-every-three-years car person. Either way, the car sitting in your driveway makes you a car person of some type, so I’m speaking to that part of you. If you’ve ever seen a car driving down the road that caught your eye and you responded by looking it up online or going to the dealership to take a closer look, you’ve experienced a feeling that makes every other life priority fade away because you simply have to have this new car.

I get the feeling between 16 and 6,000 times a week. I’m shopping for a new car in my brain so often that I want to move to a farm and return to riding a horse just to make the car no longer part of my life. That new car feeling I get I also briefly experienced when Bitcoin’s value was rocketing to the stratosphere. It seemed as though buying into Bitcoin would make my life so much better, solving all of my problems. Just like a shiny new car seems to hold the key to a better and more fulfilling life, getting rich overnight would cure all the ills that ail me.

Except it wouldn’t. The new car gets scratched and shows wear and tear. Bitcoin’s illusive wealth-building power tarnishes and fades more quickly that I could have imagined. The hot new trend that seems inescapable and inevitable in the moment loses its supposed power only to become a thing that didn’t truly deliver on the promise it seemed to be offering.  And so we bought the hot stock or the new car and eventually began to wonder, “If this wasn’t my key to happiness, then…what is?”

Of course I don’t know your answer to that question. After all, I struggle to answer it for myself. What I can suggest though, is that we’re all fairly aware that the promise of the shiny new thing isn’t all it’s cracked up to be, yet…we still long for it. We continue to buy lottery tickets or shares of Bitcoin or new cars as if we can’t help ourselves. It’s seemingly in our nature to pursue these things. I just try to see the urge for what it is, place that temptation out on the table in front of me, and question it. I won’t win every time, but I will sometimes. I drive a twelve-year-old car and love it but find myself driving through car dealerships regularly. I bought cryptocurrency (Litecoin) in 2017 then sold it almost immediately after I’d snapped out of it. We’re all fighting these battles against restlessness; we’re all seeking the elusive paradise of contentment. A key is to know the battle is raging and to respond as best we can. Until we discover the answer, we can try to practice these boring old transcendent principles:

1. Live on less than you earn,
2. Avoid the use of consumer debt,
3. Make long-term planning decisions,
4. Avoid presuming upon the future.

Maybe a new car fits into those principles for you, maybe Bitcoin does too. Maybe not. It’s just so disappointing to learn that the real value is in driving a car a very long time before succumbing to the new car mania. The real value in investing isn’t generally found in chasing that big winner but rather in practicing disciplined long-term adherence to prudent asset allocation.  Oh man, how boring is that?!

When it truly is time to buy a new car, enjoy it. When you do get a big winner in your stock portfolio, cherish it. And feel free to swing by the office with that shiny new car so I can see it and celebrate it with you. After all, I may not be a Bitcoin fan but I sure do love that new car smell!

All the best,

Adam Cufr, RICP®