U-turn for the ages

U-turn for the ages

Where Innovation Meets Investing

Before we get to the big news… a word on the S&P 500’s fresh all-time highs.

Many investors’ “Spidey-Senses” start tingling when stocks reach new heights, like they did last week. Understandable. But new highs aren’t dangerous.

In fact, you’re more likely to make money over a one-, three-, and five-year time horizon buying at record highs vs. any other time.

Continue to buy great businesses profiting from disruption, like we do inside Disruption Investor. Five of our recommended investments have hit all-time highs in the past week… including Nvidia (NVDA), which is closing in on Apple (AAPL) as the world’s second-largest company.

Let’s get after it.

  1. If you told me, “Stephen, I’m anointing you president for one day. But here’s the catch…”

“You can only change one law.”

The crypto investor in me would’ve screamed, “We need regulatory clarity!”

Longtime RiskHedge Venture members know rogue regulators tried to cut crypto businesses off from the traditional financial system. They didn’t do it by passing laws, but by REFUSING to pass laws to clarify what exactly crypto innovators were allowed to do.

This capped crypto prices and hurt ordinary investors. For a while, crypto’s future in America looked bleak.

But the US government just pulled a U-turn. It’s now embracing crypto with open arms.

This is a “180” unlike anything I’ve ever seen.

In the last week or so:

  • The first Ethereum (ETH) ETFs were approved.
  • The House passed FIT21, the first-ever wide-ranging bill to regulate crypto markets.
  • Congress overturned an obscure law that made it all but impossible for banks to hold digital assets for their customers.

Why the sudden change for the better?

Former President Trump endorsed crypto at a private event in Florida. My contacts in DC tell me this shook the Biden administration.

Over 40 million Americans own crypto. Biden doesn't want to lose those votes.

I hear The White House basically told Congress and agencies like the Securities and Exchange Commission to cut crypto some slack.

 

This is a big paradigm shift for crypto. It’s a green light from the most important financial market in the world, the USA.

This opens the floodgates for trillions of dollars to pour into crypto.

More important, it allows the next generation of great American businesses to be built on blockchain rails. No more treating crypto entrepreneurs like criminals and all but daring them to move to a different country to get stuff done.

Ethereum jumped 30% in a week on the news. It’s also led to a surge in many other crypto businesses we own in RiskHedge Venture. And we’re only getting started.

Crypto has been like a beachball held underwater by bureaucrats. Now that that’s changed, I believe we’re going much higher.

Invest accordingly.

  1. “Is artificial intelligence (AI) just another fad?”

That’s what I talked about with Wealthion host James Conner. You can watch our interview here.

It’s a great question because many folks seem to think AI is just another stock market craze that will soon collapse.

These people are simply not paying attention to the right things. The breakthroughs AI is enabling are as real as it gets.

For example, Google-owned AI lab DeepMind just debuted AlphaFold 3. It’s like ChatGPT—on steroids—for finding new drugs.

AlphaFold 3 allows us to predict how proteins… DNA… cells… and other molecules interact, with unprecedented accuracy.

This promises to transform drug discovery from a messy “trial-and-error” science into a precise discipline.

Scientists can use AlphaFold to “simulate” experiments before doing them in the lab.

This means they can get highly accurate results within seconds, as opposed to being huddled over a petri dish for weeks on end.

AI can also screen millions of potential drug compounds and predict which ones are most likely to work. This is why AI-discovered molecules have a higher success rate in clinical studies.

It now takes up to 15 years to get a new drug on pharmacy shelves. Doing so costs $2.7 billion, on average.

For that reason, drug developers tend to only tackle widespread diseases. That’s the only way they can hope to make a return on investment. Less than 50 new drugs get approved each year.

Folks suffering from rare illnesses get left out in the cold. By slashing costs, AI could help cure many uncommon diseases.

Instead of rubber-stamping 50 new drugs/year… let’s make it 50,000.

Bottom line: AlphaFold will save millions of lives by making drug discovery better… faster… and cheaper. How’s that for a use case?

  1. Today’s dose of optimism…

Austin, Texas has been one of America’s hottest housing markets.

Home prices there doubled in the five years leading up to 2022, causing an affordability crisis.

But there are far fewer rules around building new homes in Austin compared to, say, San Francisco or Manhattan. So developers started building like crazy.

Guess what happened next?

Home prices plunged more than anywhere else in the US.

Of course, instead of framing this as a “win” that helps working families afford houses, the news cartel put a negative spin on it. Here’s The Wall Street Journal:


Source: The Wall Street Journal

Your weekly reminder: Don’t read the news.

I’ll see you Friday.

Stephen McBride
Chief Analyst, RiskHedge

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