Showing posts from March, 2022

Why the NFT market is heading for a sharp drop

  In March 2021, auction house Christie's sold a JPEG file for $69.3 million, a record for a digital work of art. Ownership of the "original" JPEG called "Everydays: The First 5000 Days" was secured in the form of a non-fungible token (NFT). In 2021, investors invested $27 billion in this market . Meta will allow users to create and sell NFTs. There is only one problem: the NFT market will eventually collapse for any of a variety of reasons . NFT is a special trading code attached to the image. A secure network of computers registers the sale on a digital ledger (blockchain). The buyer receives proof of authenticity and ownership. NFTs are usually paid for with the Ethereum cryptocurrency. And they are stored using the Ethereum blockchain. NFT combines the desire to own art with modern technology. An ideal asset for the new wealthy members of Silicon Valley and their henchmen in finance, entertainment and retail investment. The booming and speculative NFT marke

Inflation will hit both bond prices and the stock market

  Rising inflation in the US and around the world is forcing investors to assess the possible implications for "risky" assets (typically equities) and "safe" assets (such as US Treasury bonds). The traditional investment recommendation is to allocate wealth according to the 60/40 rule: 60% of the portfolio should be in stocks that bring more profit, but are more volatile, 40% - for bonds that bring less profit and are less volatile. Correlation between stock and bond prices Stock and bond prices are usually negatively correlated (when one rises, the other falls), so this combination will balance the risks and returns of the portfolio. When investors are optimistic and the economy is booming, stock prices and bond yields rise while bond prices fall. When investors are pessimistic and the economy is in recession, stock prices and bond yields decline, while bond prices rise. Inflation hurts both stocks and bonds A negative correlation between stock and bond prices sugg