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The Ten Year Project: Update #1 Thumbnail

The Ten Year Project: Update #1



UPDATE #1                                    INCEPTION DATE:  DECEMBER 2016

Article by: Eric Foster, CFP®, CPA

Launching a New Project

“I like thinking big.  If you’re going to be thinking anything, you might as well think big.” – Donald Trump

Investing is complex, fascinating, sometimes maddening, and always evolving.  The world and its uncertainties coupled with the various competing objectives of investors around the globe require an evolving mind in order to be successful.  If you don’t believe that, reread the quote I picked to start this missive and pay special attention to who said it (would’ve thunk?)!  Learning and evolving our thinking is a challenge, as we generally have plenty of things to fill our day and exhaust our mental capacity.  How do we force ourselves to learn new things?  Painfully, I’ve learned over the years that I usually need to start with a plan, exercise discipline, and throw in some accountability in order to find success.  To that end, I thought I would launch a “Ten-Year Project” to encourage my own exploration of a frontier technology idea.  The clock just started ticking…

One of the things that drew me to a career in the investment field was the ever changing and shifting nature of the global financial mosaic.  I spent a few years as an auditor, and while I wouldn’t change that experience for anything, there wasn’t a lot of changing or shifting going on there.  Those that know me well would tell you that I am a big picture kind of thinker.  I am capable of getting down into details (hence the two accounting degrees), but I am certainly not drawn there naturally.  Big picture themes really fascinate me, especially ones that, a few years before, virtually no one saw coming.  The internet would be the greatest example in my lifetime.  I can still remember ribbing my roommate in college for descending into the dorm computer lab to “email” his girlfriend.  I saw little value in his emailing hobby, and what kind of a lack of vision was that!  It is pretty stunning to think how our culture has been reshaped by the internet and the technology arms race that supports or provides access to it.  It is safe to say a few things have changed in the last 20 years.

I thought it might be interesting to pick a big picture idea and follow it over the next decade.  Given the incredible pace of change in the world of technology, it seems like a good place to start.  I can also see how incredible advances could be found in biotechnology over the next decade.  Perhaps we will have major strides in renewable energy using solar and nuclear power more than fossil fuels.  Driverless cars might even be zipping around our roads in another decade.  Artificial Information may finally experience the bridge from lab to the economy as robots take over human jobs and begin to learn themselves (seems like Sarah Connor and the Terminator mentioned something about that about 30 years ago or so).    The idea though that interests me more over the coming decade is less knowable than any of those ideas.  I have absolutely no idea if this project’s topic of interest will even exist in 10 years.  Nor do I know if the idea will revolutionize the world of finance.  That’s the problem with frontier technologies I suppose.  They are just really difficult to get your head around because for the most part they don’t yet exist.  Few people could envision something like Facebook or YouTube prior to the internet worming its way into our lives.  Discovering applications for the internet took incredible risks, saw lots of money become vaporized, and to a select few, incredible riches.  The graphic on the first page estimates the number of occurrences that happen each minute in various technology applications.  Pretty stunning that other than email and Amazon (1994), none of those opportunities even existed 20 years ago. 

The initial topic for the 10-Year Project is Bitcoin (more on that below).  Hey, Donald Trump encouraged me to “think big”, so I took his advice (let’s hope we can generally take him at his word over the next 4 years too).  Until 2 ½ years ago I was completely in the dark on Bitcoin.  I had heard of the concept, but knew little about what it was or how it worked.  It was only when I had a few clients ask me about it that I realized I needed to gain a basic understanding of the idea.  Importantly, I’ll borrow a key phrase from the 1999 movie Fight Club and emphasize the First Rule of the 10-Year ProjectThe goal is not to recommend or encourage anyone to invest money into Bitcoin.  The future of Bitcoin is very uncertain, and any dollars you exchange for the digital currency could literally vanish, never to be seen again.  Unlike the first rule of Fightclub, the 10-Year Project should be talked about and shared openly.

Bitcoin is a polarizing idea with really smart and successful people who surmise it is nothing more than a modern day “chain letter” and others who think the global financial marketplace will be significantly disrupted by its presence.  {Disclosure – I own a few Bitcoins which I purchased in 2015 for around $250 each.}  We can watch together how increases in price serve to increase the popularity and confidence around Bitcoin, while price declines make the idea seem foolish.  It’s one of the greatest traps of investing which forces investors to buy at high prices and sell at low prices.  Basically 100% opposite of ideal. 

So, to kick this off here are some initial pieces of information on Bitcoin:

  • Bitcoin is a digital currency.  It is purchased, sold, and exchanged for goods and services on a “de-centralized” network, meaning that no one entity or authority controls it. 
  • Bitcoin supply is limited to 21 million Bitcoins.  Unlike most of the world’s currencies, the supply cannot be increased (or decreased). 
  • Transactions involving Bitcoin are recorded and verified on what is referred to as the “Blockchain.

This rabbit hole runs pretty deep, so we’ll start with developing these three basic concepts next time.  Until then, here’s to learning more about an emerging technology together.  Like all such ideas, it’s fraught with both risk and opportunity.  Let’s see where it takes us.  Maybe we’ll learn a thing or two along the way.

Note: Current Bitcoin Price - $774.48 as of December 7, 2016 at 4:30 PM

Read the next update in The Ten-Year Project Here.

The opinions expressed are those of PYAW’s Investment Team. The opinions referenced are as of the date of publication and are subject to change due to changes in the market or economic conditions and may not necessarily come to pass. Forward looking statements cannot be guaranteed. 

 PYA Waltman Capital, LLC (“PYAW”) is an investment adviser registered with the U.S. Securities and Exchange Commission. Registration does not imply a certain level of skill or training. More information about PYAW’s investment advisory services can be found in its Form ADV Part 2, which is available upon request.