Forget the "Magnificent Seven" Stocks: 1 No-Brainer Cryptocurrency to Buy Instead
In 2023, the so-called "Magnificent Seven" stocks produced an outstanding average return of 111%. The Nasdaq Composite index, by comparison, rose by just 43%. The artificial intelligence boom, coupled with investors' general appreciation for dominant tech companies, has propelled shares higher.
But we have to assess the current situation with a fresh pair of eyes. If you want the potential for massive returns, I think investors are better off forgetting the Magnificent Seven. It's probably a good idea to buy this no-brainer cryptocurrency instead and hold it for the next decade.
To the moon
Since the start of 2023, Bitcoin's (CRYPTO: BTC) price has skyrocketed 208% (as of Feb. 23). Its performance would fit in well with the Magnificent Seven. If we maintain a long-term perspective, though, I think the cryptocurrency has higher upside than any of the megacap tech businesses.
Bitcoin spot exchange-traded funds were just introduced in January, and they have quickly amassed billions in assets. This is an early indication of the huge amount of interest in having an easy way to gain exposure to Bitcoin's price. It has become a legitimate financial asset.
There's also the upcoming halving, set to happen in April. This cuts the new supply of Bitcoin in half, reducing its inflation rate. The halving occurs roughly every four years, providing a periodic catalyst that should result in Bitcoin's price hitting new all-time highs, if historical trends provide any evidence.
More and more people are using Bitcoin as a store of value, thanks to its fixed cap of 21 million coins. Just over 70% of Bitcoin's outstanding supply hasn't moved in the last 12 months. This is despite its price continuing to climb higher. Bitcoin is more divisible, transactable, portable, and verifiable than gold, which has been considered the top store of value asset for thousands of years.
If we view things with a big-picture perspective, Bitcoin is almost like a hedge against financial catastrophe. This is especially apparent if we look at the situation in the U.S.
The world's largest economy has $34 trillion of debt, a figure that has soared since the financial crisis and that doesn't even include Social Security or Medicare and Medicaid liabilities. Even more alarming, the U.S. fiscal deficit is only going to expand, making matters much worse.
Owning a purely digital asset outside of the unsustainable monetary and financial system seems to be a no-brainer financial decision. This gives me confidence that as more people, businesses, and governments learn about Bitcoin's attractive properties, they will want to buy and hold it. Consequently, its price could be astronomically higher than it is right now.
Understand the risks
I view Bitcoin as one of the best investment opportunities out there today. Thanks to the factors I mentioned above, the digital asset still has huge upside over the long term.
However, it's also smart to understand the risks. Perhaps the biggest threat Bitcoin faces is from the possibility of governments of major countries banning it, making it illegal to own or mine the crypto. Its price could tank in this instance, as investors would struggle to find ways of trading or using it.
This issue doesn't exist with the Magnificent Seven companies. They sell products and services that generate revenue and cash flows, and their regulatory outlooks aren't in question to the same degree as Bitcoin's.
Investors who are interested in owning Bitcoin might be better off initiating a tiny position. The goal should be to continuously learn more and gain greater conviction. I believe if you look out 10 years from now, your portfolio will thank you.
Should you invest $1,000 in Bitcoin right now?
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Neil Patel and his clients have no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.
Forget the "Magnificent Seven" Stocks: 1 No-Brainer Cryptocurrency to Buy Instead was originally published by The Motley Fool
