TThere are many proven wealth-building opportunities here, but few, if any, have consistently outperformed the stock market over the long term. Stocks may not be the front-runner in bonds, gold, or real estate every year, but they have far outperformed these other asset classes over the long term.
But over the past decade, the supremacy of stocks has been challenged by the rise of cryptocurrencies. For example the largest digital currency in the world, Bitcoin, from around $ 1 per token to more than $ 64,000.
However, it is not Bitcoin that is causing the most buzz in the cryptocurrency space. Instead it is the so-called “people’s currency” Dogecoin (CRYPTO: DOGE).
Image source: Getty Images.
Seven reasons why Dogecoin is the worst cryptocurrency you can buy
Why Dogecoin? Enthusiasts often point to the lower transaction fees compared to crypto’s Big Two (Bitcoin and ether), its increasing acceptance and support for Tesla CEO Elon Musk, who tweets a lot about Dogecoin.
Unfortunately, all of these catalysts are out of place or based on misinformation within the Dogecoin community. If you do your research on Dogecoin, you’ll find seven reasons to delete it completely or ignore it. Here is a brief overview:
- Dogecoin transaction fees may be lower than Bitcoin and Ethereum, but they are significantly higher than Ripple, Nano, ether Classic, Line, Stellar, Bitcoin cash register, Bitcoin SV, and a long list of other coins. In other words, you don’t get the full story.
- Dogecoin processes around 50,000 transactions on its blockchain every day. At this rate, it would take more than 38 years to complete as many transactions as possible Visa and MasterCard Process, combined, in one day.
- Outside of crypto exchanges, there is a lack of meaningful use. After eight years, Dogecoin has around 1,300 global companies accepting it.
- “Hodlers” are watered down by releasing more than 5.2 billion Dogecoin annually. This could only increase the number of tokens outstanding by 4.1% in 2021, but it’s been more than a decade since we’ve seen actual price inflation this high in the US
- Elon Musk’s tweets are the primary catalyst. Think about it … your investment thesis is based on tweets from one person.
- Dogecoin is centralized. Around 100 addresses control two thirds of all outstanding tokens.
- Every single bubble in history has burst at some point and Dogecoin won’t be any different.
This trio of stocks makes for a smarter investment
Rather than throwing your money away with an unfounded cryptocurrency like Dogecoin, consider buying into companies with tangible long-term growth prospects. The following trio of superior stocks have all of the tools needed to dwarf Dogecoin.
Warren Buffett, CEO of Berkshire Hathaway. Image source: The Motley Fool.
If you think Dogecoin’s returns are impressive, wait until you take a closer look at Warren Buffett’s company. Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B)He has achieved since he was at the helm. Since 1965, Berkshire has had an average annual return of 20%. That may not sound like much nominally, but investors who have stuck to it for 56 years are up more than 2,800,000%!
One of the keys to Buffett’s success is the numbers game. Although recessions are a normal part of the business cycle, downturns typically last only a few months or a few quarters. In comparison, bull markets and expansion phases often last many years. Berkshire Hathaway’s investment portfolio is replete with cyclical technology, finance and consumer goods companies. Buffett knows his strategy will pay off if he’s patient.
Speaking of which, another reason the Oracle of Omaha business is so successful is because it generates a shipload of revenue. Berkshire Hathaway should easily exceed $ 4 billion in dividend income this year, with the company’s return on costs (i.e., its return based on original cost) for long-term stake coke at almost 52%!
In short, Buffett’s portfolio is designed for consistency and profitability. You can sleep well and get rich in the process.
Image source: Getty Images.
Wheaton precious metals
Another clever way to make money while dwarfing the Dogecoin pump-and-dump system is with precious metals. But I don’t mean buying real gold or silver. Instead, prefer to buy stocks Wheaton precious metals (NYSE: WPM), which allows you to take advantage of leverage and achieve a dividend yield of 1% in the process. You don’t get a dividend if you own physical gold or silver.
What makes Wheaton Precious Metals so fascinating is that it is a streaming company. Rather than physically mining precious metals, Wheaton provides mining companies with the capital needed to build a new mine or expand an existing asset. In return, it receives a percentage of the mine’s production at a price that is well below the spot value. This enables Wheaton to sell the goods received at the spot price and take the difference as a profit.
By the end of March, it had around 30 separate streaming deals, most of which targeted gold and silver. However, there are also offers for palladium and cobalt. In the first quarter, Wheaton paid its partners $ 6.24 per ounce of silver equivalent (SEO) and $ 449 per ounce of gold equivalent (GEO). But it brought in $ 1,848 per GEO and $ 25.66 per SEO, making some of the highest margins in the mining industry.
As the icing on the cake, the catalysts for the uptrend in gold and silver remain firmly in place. The Federal Reserve’s restrained monetary policy is an important catalyst for gold. Meanwhile, silver demand should pick up as the US economy recovers. This should result in even higher operating cash margins for Wheaton Precious Metals.
Image source: Getty Images.
Zoom video communication
A third company that should be able to orbit Dogecoin is a cloud-based web conferencing company Zoom video communication (NASDAQ: ZM).
There is absolutely no denying that Zoom was one of the biggest beneficiaries of the coronavirus pandemic. With workplaces utterly disrupted, companies had no choice but to turn to web conferencing to keep projects and communications on track. Unsurprisingly, Zoom’s 2020 sales jumped 326% to $ 2.65 billion. This was roughly three times the full year sales that Zoom was expecting last year before the pandemic took shape.
But that aggregate growth isn’t the most impressive statistic of all. This corresponds to the 470% increase in customers with at least 10 employees. It’s great that Zoom is attracting larger customers, but more importantly, that small and medium-sized businesses are benefiting from the platform. Zoom’s freemium model, which allows companies to test its platform, seems to hit a nerve with these smaller companies.
While some people might be concerned about what will happen to the demand for Zoom’s web conferencing platform after the pandemic ends, I wouldn’t be concerned. Zoom controls approximately 40% of the US share of web conferencing and the subscriber numbers clearly show that businesses are benefiting from the service. Plus, not all employees will be returning to traditional offices, which means Zoom will remain firmly anchored in the workplace.
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Sean Williams owns shares of Mastercard. The Motley Fool owns shares of and recommends Berkshire Hathaway (B shares), Bitcoin, Mastercard, Tesla, Visa, and Zoom Video Communications. The Motley Fool recommends the following options: long January 2023 $ 200 calls on Berkshire Hathaway (B shares), short January 2023 $ 200 puts on Berkshire Hathaway (B shares), and short June 2021 $ 240 calls on Berkshire Hathaway (B shares). The Motley Fool has a disclosure policy.
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.