A pop quiz for smart investors.
If you could go back six months and make one trade, what would you invest in?
What is NVDA, a chip company specializing in advanced artificial intelligence? This is the latest fad on Wall Street, and the world of AI is sure to grow and change the global economy.
Or Bitcoin BTC, a cryptocurrency that is still in its infancy but continues to garner attention from Wall Street? There are currently a number of exchange-traded funds available to investors to make profits, including Grayscale Bitcoin Trust (GBTC), iShares Bitcoin Trust Registered (IBIT), and Fidelity Wise Origin Bitcoin Fund (FBTC). Masu. There are a few others.
Or do you go to a futures exchange and buy a bulk cocoa contract? Cacao is the main ingredient in chocolate.
surprise. Cocoa was the best performer during this period. Its price has risen more than 180% in the six months to Wednesday, according to the Trading Economics website. One tonne of cocoa beans recently sold for $9,830, a record high.
The reason for the rise is simple, according to Trading.Biz analyst Tobi Opeyemi Amre, who explains the issue this way:
- “The supply shortage causing the rally is due to bad weather. crop diseases Ghana and Ivory Coast account for 70% of the world's cocoa production. Ghanaian farmers are also incentivized to take advantage of higher prices and smuggle beans, as they are bound by fixed contracts with the government. ” My emphasis.
Bitcoin rose 157% over the same period, according to Yahoo data. By comparison, Nvidia rose his 112.5%, according to Yahoo.
Clearly, cocoa has had the edge over the last six months. But, of course, none of us can go back in time and make the right trades.
The real question is what to attract in the future.
To that end, it's clear that avoiding cocoa is a good idea. Sean Hackett of Hackett Financial Advisors cautions investors against betting on falling prices for now. The recent bull run could last for some time, before peaking and dropping dramatically. However, it is difficult to predict everything.
Here's what he says:
- “All cocoa farmers around the world do everything in their power to maximize the yield of disease-free trees. Yields will increase dramatically and will offset some of the production losses from trees that need to be replanted.”
As production increases and supply reaches a higher than expected level, the price of cocoa will fall.
Of the other two bets, I would avoid Bitcoin and favor Nvidia. Legendary investor Warren Buffett said that Bitcoin doesn't produce anything. And I think that's correct.
NVDIADIA will undoubtedly contribute to the global economy by helping to manufacture chips that improve workplace efficiency. The company is also likely to increase its dividend from just 0.02% currently as the business grows.
Of course, there are risks as well. All major technology companies operate in a world of creative destruction. Innovation turns into disruption and then into failure. At least that's what Silicon Valley has taught us.
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