Conor's avatar
$24.8m follower assets
Bitcoin or Smallish-Cap Growth Stock $NET
$BTC.X is currently trading at $22,893.70 USD a bitcoin. Bitcoin reached an all-time high of $64,400 USD on November 21, 2021. Your best-case scenario is it goes back to its all-time high is a 300% gain. The low of the past 5 years is $3,200 which would be a 687% drop from today's price.

On a speculative asset without any underlying earnings or business, you can really say your risk/reward is up 300% and down 687% or somewhere in between. Of course, it can go up way higher and down way lower, but I am trying to be realistic.

Now, let's analyze a smallish-cap growth stock in comparison. Let's take a look at $NET Cloudflare Inc. Cloudflare is a very popular growth stock that was featured as one of Brian's Commonstock investments. Click on this link to learn more about Cloudflare.

Cloudflare currently is trading at $46.76 per share with a market cap of $15.25 billion. Cloudflare has been growing revenue at a 50% rate every year with a strong underlying business and moat, IMO. Cloudflare reached an all-time high at a similar point in time as Bitcoin with a price of $211 on November 19, 2021. KIND OF SCARY how correlated assets are.

For Cloudflare to go back to its all-time high, it would be a 449% gain versus a 300% as I mentioned above for bitcoin. Cloudflare reached an all-time low of $15.29 on October 19, 2019. If Cloudflare reached that low again, it would be a drop of 304% which is way less extreme that a drop of 687% for bitcoin.

At the end of the day, would you rather own an asset with no underlying business that is valued purely on faith or a small-cap growth stock such as Cloudflare that has a strong underlying business and has more potential to go up and less potential to go down?

*Disclaimer: this isn't an endorsement of Cloudflare. I was using Cloudflare as an example of a growth company.

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Benjamin Tan's avatar
Cool graphics ! I would rather own $NET, partly because I have not spent any time reading more into crypto.
Joey Hirendernath's avatar
I understand how businesses work and prefer to stick to them rather than newer assets I don't understand and consider to have too many unknown variables.
Joey Hirendernath's avatar
@conorvalue hope you don't mind me asking a question in a slightly different direction. What % of your portfolio are you comfortable allocating to small cap stocks?
Conor's avatar
@joeyhirendernath I don't mind at all! Thank you for commenting on my post.

Ideally, I would like to allocate 75% or more of my portfolio to small-cap stocks. I think I probably only allocate 25% or less currently. Creating an ideal portfolio and reality sometimes don't mesh.
Jensen Butler's avatar
$BTC.X every day and twice on Sunday
Conor's avatar
@jensen handshake bet $NET outperforms $BTC.X in the next 5 years
Jensen Butler's avatar
@conorvalue you got it. And 10,15 & 20 years too
Conor's avatar
@jensen a really good chance Cloudlfare will either get aquired or go private by then, but I'm game. :)
Jensen Butler's avatar
@conorvalue bitcoin network won’t 😉



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