Roblox or Bitcoin: What should you buy?

 

Roblox vs Bitcoin: What should you buy?   

We recently asked an 8 year old whether we should buy more stocks of Roblox or buy more Bitcoin.  "Roblox is where me and my friends hang out.  Bitcoin is where mom said you wasted money," she replied.

There you have it.  Roblox is the real thing.  Bitcoin is a hype.  If you invested in either Roblox or Bitcoin last year, the market has given you a Will Smith slap in the face.

Roblox is an infant metaverse stock with upside potential.  Roblox stock is currently trading at about 25% to 30% of its peak market price.  In other words, you can buy Roblox today at a 70% - 75% "discount". Bitcoin is a "digital gold" asset wannabe.  Bitcoin is trading at about 70% of its peak value.  That is, you can buy Bitcoin at about a 30% "discount".

If you make your investment decisions based on comparisons like the ones above, you are most likely than not to lose money.  The past price of a stock or asset is not the key point in investing.  The key is the present and expected future valuation of the asset.  You want to buy assets that will increase in value over time.  

Nonetheless, the past is relevant because you can learn from history. Investing is like dressing up.  In fact, the verb investing comes from vesting in or putting on an armor or piece of clothing.  The goal of investing is to dress up appropriately for the present and the future.  

In a macro or large scale, investing is dressing up appropriately for the financial "weather" expected in different seasons and localities in the long term.  In a micro or smaller scale, investing is dressing appropriately for a specific function or event in the near future. 

At the macro level analysis, you can safely bet that valuations will go up and down in cycles.  Overall,  monetary valuations will go up over time due to inflation and increases in productivity.  You can count on boom and bust cycles that over a long period of time can make you wealthy.      

Back to Roblox and Bitcoin, we have "faith", or a super speculative hunch, that Roblox will increase in value over time.  Kids are very much into it and there is plenty of monetization potential on the platform.  There will be a lot of competition coming to the metaverse in the next decade so it could be a bloodbath.  

Hopefully, Roblox does not run the fate of MySpace, but rather becomes a facebook without becoming making a privacy pact with the devil.  Coincidentally, Roblox was meta before facebook changed its name to Meta.  We recently bought a few shares of Meta.  Instagram and Whatsapp are extremely valuable holdings in the Zuckerverse.  As for the original facebook application itself, it still has tremendous value, but we despise it.  Losing money over facebook would be a joyful opportunity to offset capital gains elsewhere.

Bitcoin is developing a bad taste similar to facebook.  They have nothing or little to do with one another.  However, the Bitcoin scammers and fanatics are a tough bunch to listen to.  We are beginning to think that the world may be a better place without Bitcoin.  Now, there are many alternative coins that look promising in the long run including Cardano, Polkadot, Solana, and Mana.

We hold long positions in all the stocks and coins mentioned above.  You should do the same.  Diversify your portfolio as you would with your closet if you are into fashion.  Buy clothing for different seasons and events.  Know that when it rains it pours and winter comes every year. Even a dead clock is right twice a day so be wary about who you listen to and whose advice you follow.  Escape the echo chamber and listen diverse voices and perspectives.

What do you think?