The Stages of a Market Mania

What is a mania? It is defined as mental illness characterized by great excitement, euphoria, delusions and overactivity. In investing, this translates into investment decisions being driven by fear and greed without being tempered with analysis, reason or balance of risk and reward outcomes. The mania is usually running parallel with the business development of the product, but timing can sometimes run askew.The late 90′s technology.com boom and today’s cryptocurrency boom are two examples of how a mania operates in real time. These two events will be highlighted with each stage in this article.The Idea StageThe first stage of a mania starts out with a great idea. The idea is not known to many people yet, but the potential for profits are huge. This is usually translated as unlimited profit, since “something like this has never been done before”. The internet was one such case. People using the paper systems of the time were skeptical as “how can the internet replace such a familiar and entrenched system?” The backbone of the idea begins to get built. This translated into the modems, servers, software and web sites needed to get the idea into something tangible. Investments in the idea stage start off lackluster and made by people “in the know”. In the case, it may be the visionaries and people working on the project.In the cryptocurrency world, the same question is being asked: How can a piece of crypto code replace our monetary system, contract system and payment systems?The PossibilitiesThe first web sites were crude, limited, slow and annoying. The skeptics would look at the words “information superhighway” that the visionaries were spouting and saying “how can this really be that useful?” The forgotten element here is that ideas start out at their worst, and then evolve into something better and better. This sometimes happens due to better technology, more scale and cheaper costs, better applications for the product in question, or more familiarity with the product combined with great marketing. On the investment side, the early adopters are getting in, but there is no euphoria and astronomical returns yet. In some cases, investments have made decent returns, but not enough to sway the masses into jumping in. This is analogous to the slow internet connections of the 1990′s, internet sites crashing or information being incorrect on search engines. In the cryptocurrency world, it is being witnessed by high mining costs for coins, slow transaction times and hacking or theft of accounts.The AccelerationWord starts to get out that this internet and “.com” is the hot new thing. The products and tangibility is being constructed, but due to the massive scale involved, the cost and time expended would be massive before everyone is using it. The investment aspect of the equation starts to get ahead of the business development since markets discount the potential of a business with the price of the investment. The euphoria is starting to materialize, but only among the early adopters. This is happening in the cryptocurrency world with the explosion of new “altcoins”, and the large media press that the space is getting.The EuphoriaThis stage is dominated by the parabolic returns and potential that the internet offers. Not much thought is given to the implementation or problems because “the returns are huge and I don’t want to miss out”. The words “irrational exuberance” and “mania” begin to become common as people are buying due to sheer greed. Downside risks and negativity and largely ignored. Symptoms of the mania include: Any company having.com in its name is red hot, analysis is thrown out the window in favour of optics, the investment knowledge is getting less and less apparent among new entrants, expectations for 10 or 100 bagger returns are common and few people actually know how the product works or does not work. This has played out in the cryptocurrency world with the stellar returns of late 2017 and the incidents of company shares popping hundreds of percentage points by using “blockchain” in their name. There are also “reverse takeover offers” where shell companies that are listed on an exchange but are dormant have their names changed to something involving blockchain, and the shares are suddenly actively traded.The Crash and BurnThe business scene for the new product is changing, but not nearly as quickly as the investment scene is changing. Eventually, a switch in mindset appears and a huge selling spree begins. Volatility is massive, and many “weak hands” and wiped out of the market. Suddenly, analysis is being used again to justify that these companies have no value or are “overvalued”. The fear spreads and prices accelerate downward. Companies who do not have earnings and who are surviving on hype and future prospects are blown out. The incidents of fraud and scams increasing to take advantage of the greed are exposed, causing more fear and selling off of securities. The businesses who have the money are quietly investing in the new product, but the rate of progress slows down because the new product is “an ugly word” unless the profits are demonstrated convincingly. This is starting to happen in the cryptocurrency world with the folding of lending schemes using cryptocurrencies and higher incidents of the theft of coins. Some of the marginal coins are crashing in value due to their speculative nature.The SurvivorsIn this stage, the investment landscape is charred with stories of losses and bad experiences. Meanwhile, the great idea is coming into tangibility and for businesses that use it, it is a boom. It starts becoming implemented in day to day activities. The product starts to become the standard and the visionaries are quoted in saying that “the information superhighway” is real. The average user notices an improvement in the product and it starts mass adoption. The businesses who had a real profit strategy take a hit during the crash and burn stage, but if they have the cash to survive, they make it to the next wave. This has not happened in the cryptocurrency world as of yet. The expected survivors are those that have a tangible business case and corporate backing – but it remains to be seen which companies and coins these will be.The Next Wave – Business Catches Up to the HypeIn this stage, the new product is the standard and the profits are becoming obvious. The business case is now based on earnings and scale rather than the idea. A second investment wave appears starting with these survivors and extending to another early stage mania. The next stage was characterized by social media companies, search engines and online shopping which are all derivatives of the original product – the internet.The ConclusionManias work in a pattern which plays out in a similar fashion over time. Once one recognizes the stages and the thinking process at each one, it becomes easier to understand what is going on and the investment decisions become clearer.

How Cryptocurrencies Are Adding Complexity to the Divorce Process

If you don’t personally invest in cryptocurrency, then it’s likely that at this point you have friends, family members, or colleagues who do. Cryptocurrencies have risen from a very niche market to becoming nearly fully mainstream, and they’ve done so in a very short amount of time. Now that they’re so ubiquitous, there’s a new question to wrangle with, and that’s the matter of how cryptocurrencies are handled in the divorce process.Determining and distributing financial assets, as well as determining alimony payments, are central issues to be resolved during the majority of divorce proceedings. There are many tools at an attorney’s disposal for the disclosure of financial assets, however when you combine Bitcoin and divorce, you’re left with something entirely new.Handling Bitcoin and divorce is different from handling other financial assets for several huge reasons. One is the sheer volatility of their value. Bitcoin and other cryptocurrencies have been known to undergo absolutely wild swings, both up and down, in value. Therefore, value either needs to continue to be tracked and updated on the fly, or set at a particular time, when it could end up being worth something much different down the line. In either instance, it’s a less than ideal circumstance for determining and distributing assets or setting alimony.Another key issue to understand between cryptocurrency and divorce is that these markets and their transactions were designed to be both anonymous and secure. Looking up the holdings, accounts, or transactions of an individual is not the same as looking into a bank account, retirement account, or stock portfolio. The traceability of an individual’s crypto accounts will be difficult at best, and whether or not the courts put any subpoena power behind that remains unclear at this time.Clearly this is only the beginning of the issue of Bitcoin and divorce, because all cryptocurrencies are still on the rise. As more people begin or continue to use them, and they become more common and accepted, how they’re handled as financial assets during divorce proceedings will continue to be in the spotlight. It’s the fact that they rose so quickly to begin with that has left many people off guard today with how to treat them in such matters. Keep in mind, Bitcoin was launched less than a decade ago.As always, be sure to consult with an experienced professional in your local area. While there’s still much uncertainty about how Bitcoin and divorce will be treated, and what types of rulings may await us in the future, an experienced divorce attorney will be able to guide you through the process, and offer insight into the areas of financial discovery and all aspects of a pending case.

Things That Look Positive for Cryptocurrencies

While there have been market corrections in cryptocurrency market in 2018, everyone agrees that the best is yet to come. There have been a lot of activities in the market that have changed the tide for the better. With proper analysis and the right dose of optimism, anyone who is invested in the crypto market can make millions out of it. Cryptocurrency market is here to stay for the long term. Here in this article, we give you five positive factors that can spur further innovation and market value in cryptocurrencies.1. Innovation in scalingBitcoin is the first cryptocurrency in the market. It has the maximum number of users and the highest value. It dominates the entire value chain of the cryptocurrency system. However, it is not without issues. Its major bottleneck is that it can handle only six to seven transactions per seconds. In comparison, credit card transactions average at few thousands per second. Apparently, there is scope for improvement in the scaling of transactions. With the help of peer to peer transaction networks on top of the blockchain technology, it is possible to increase the transaction volume per second.2. Legitimate ICOsWhile there are cryptocoins with stable value in the market, newer coins are being created that are designed to serve a specific purpose. Coins like IOTA are intended to help the Internet Of Things market exchanging power currencies. Some coins address the issue of cybersecurity by giving encrypted digital vaults for storing the money.New ICOs are coming up with innovative solutions that disrupt the existing market and bring in a new value in the transactions. They are also gathering authority in the market with their easy to use exchanges and reliable backend operations. They are innovating both on the technology side regarding usage of specialized hardware for mining and financial market side by giving more freedom and options to investors in the exchange.3. Clarity on regulationIn the current scenario, most governments are studying the impact of cryptocurrencies on the society and how its benefits can be accrued to the community at large. We can expect that there may be reasonable conclusions as per the result of the studies.Few governments are already taking the route of legalising and regulating crypto markets just like any other market. This will prevent ignorant retail investors from losing money and protect them from harm. Abling regulations that boost cryptocurrency growth are expected to appear in 2018. This will potentially pave the way for widespread adoption in future4. Increase in applicationThere is enormous enthusiasm for the application of blockchain technology in virtually every industry. Some startups are coming up with innovative solutions such as digital wallets, debit cards for cryptocurrencies, etc. this will increase the number of merchants who are willing to transact in cryptocurrencies which in turn boost the number of users.The reputation of crypto assets as a transaction medium will be reinforced as more people trust in this system. Although some startups may not survive, they will positively contribute to the overall health of the market creating competition and innovation.5. Investment from financial institutionsMany international banks are watching the cryptocurrency scene. This can lead to the entry of institutional investors into the market. The inflow of substantial institutional investments will fuel the next phase of growth of the cryptomarkets. It has captured the fancy of many banks and financial institutions.As the surprises and bottlenecks around cryptocurrencies reduce, there will be more uptake from traditional investors. This will lead to a lot of dynamism and liquidity much needed for any growing financial markets. Cryptocurrency will become the defacto currency for transactions all over the world.

Are You Choosing the Right Stock Market Advisory Company

What do you do if you want to learn driving a car? You will try to find an expert teacher, isn’t it? You do not want to avail the services of a novice individual to help you out, but a professional person can provide you the vital tips and most importantly guide you efficiently. Similarly, when it comes to investing in the stock market for the first time, you require a knowledgeable advice to attain your financial goals and get profitable returns.

If you are a beginner, then it is quite obvious that you may be having no information about the process of buying the right shares in the market. In such a situation, getting the right tips from an experienced financial advisor or a registered advisory company will truly prove to be a great blessing in disguise. However, there are some of the important things that have to be kept in mind while choosing the top stock market advisory company, which are as follows:

How much assistance do you actually require?

Before you make up your mind to hire an advisor, it is imperative that you must first decide about the kind of service you require from them. You may need their help at the beginning or during the time of any issues. This is because an advisor has to formulate a map according to your requirements. Hence, it is suggested to ascertain your needs first and then take further action.

Choose a top ranked advisory company

It is a very important point that has to be taken into the consideration. Availing services of the well known advisory company or a financial advisor is an absolute necessity. Make it a point to carry out a proper background or research work about the company. Check out their credentials, reputation, experience, etc before hiring them.

Asking for a sample financial plan initially makes sense

When hiring a financial advisor, then do not forget to ask for sample plan first. It is imperative to note that there is no such thing called the perfect plan. A sample plan will help you to determine whether an advisory company is actually making sense according your requirements or not.

Conclusion

The financial planners or advisory companies can really turn out to be the greatest asset for you if you choose the best one. They are just like the professional sailors who can help you out to sail through stock investment related problems quite efficiently.

Deepak is a financial advisor who likes to provide quality tips to the people facing any issues with regard to investing in the stock market. He likes to keep himself updated about the stock market by reading articles, news and blogs, etc.

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