Opportunity Cost is the Cost

Opportunity cost is the cost of choosing to do something instead of something else. I remember learning opportunity cost in my college economics class, and for whatever reason struggled to understand the concept as it was taught to me. The simplest explanation works in this case. It is the potential outcome you could have realized from choosing a different decision.

You choose to take on student loans to become a doctor instead of graduating and finding a job. The opportunity cost here is your income being deferred multiple years and hindered by student loans. However, once you pay off the loans, you typically make multiples more annually than other professions. Opportunity cost.

You choose to take on student loans to become a doctor instead of founding your own company. The opportunity cost here is your income being deferred multiple years and hindered by student loans. However, chasing the entrepreneurial path is different than graduating college and finding a job. There is boom or bust potential. Yes, deferring your earnings to become a doctor will lead to long-term stability; however, if you succeed as an entrepreneur, you will far out-earn what you could have if you followed the path of a doctor. On the flip side, you can also go into immense amounts of debt chasing an idea and end up failing with nothing to show for it. Opportunity cost.

You choose to go to trade school instead of pursuing a degree at an out-of-state college that would put you into debt. It’s not the sexy choice, but there is an increasing demand and sustainable nature to people who learn trades. Opportunity cost.

Where there is risk, there is oftentimes reward.

But again, the opportunity cost is always the cost.

The above examples are all opportunity costs that span years and take years to materialize into reality. But opportunity cost is everywhere with everything you do.

What could you be doing with your time right now instead of what you are doing?

What choices do you make daily at the expense of others?

Every decision and action has some amount of opposite that could have been the choice you made.

In the world of investing, there are countless opportunity costs.

How much you invest.

When you invest.

What you invest in.

If you chunk buy or dollar cost average.

Everything has an opportunity cost.

As it relates to bitcoin, I adamantly believe that over the next decade, every dollar you place somewhere besides bitcoin comes at a minimum of a 10x opportunity cost.

$1 into the S&P 500 index comes at the expense of a potential 10x had it been placed into bitcoin.

$1 into insert any company available and it comes at the expense of a potential 10x had it been placed into bitcoin.

Now, I do think certain companies can, and will, outperform bitcoin over the next decade. But the question here becomes, how do you find them? I willingly opt for logical and clear reasoning when making my choices as opposed to speculating and educated guessing.

To me, it is logical that in an ever-increasingly digital and global world, bitcoin reaches the market cap of gold and becomes the store of value standard for governments, corporations, Wall Street, and retail alike. I also believe it is used for borderless, near-instant settlements in a way that gold can never compete with. Think of the United States shipping gold to the UK to settle a trade. How much time, effort, and expense go into that? The answer simply is countless multiples more than if it were a bitcoin transaction.

Back to opportunity cost. If you walked to Wall Street banks and told them you had a stock that would logically 10x in a decade, they would kill you for it.

Bitcoin is the logical 10x when you frame it in terms of a scarce asset emerging in an ever-increasingly digital world.

So, that coffee I paid for this morning at Starbucks, call it $6. In a decade that $6 could be worth $60 if I had opted to purchase bitcoin instead.

That pair of pants from the brand you love costs $120 today, but in a decade, that is $1,200 had you opted to just wear the pants you already have.

That new car you think you “need” today, where you put down $5,000, cost you an additional $45,000 had you just bought bitcoin. This doesn’t even factor in the increase in insurance and all the monthly car payments you make.

I do implore people to live their lives. This is not a monologue stating that you should only defer consumption to the future by throwing all of your dollars into bitcoin. You leave this Earth with nothing. Go on vacation, buy the house for your family, and live the life you want to live. I just want people to be aware that every single decision has an opportunity cost.

Opportunity cost is the cost for everything. In the case of bitcoin, there are nonzero probabilities (I would argue high probabilities) that the opportunity cost for anything other than bitcoin is extreme.

Stack SATs.

The views and opinions expressed here are for entertainment purposes only and should, in no way, be interpreted as financial or investment advice. Always conduct your own research when making an investment or trading decision, as each such move involves risk. Nothing contained in this e-mail/article constitutes, or shall be construed as, an offering of financial instruments, investment advice, or recommendations of an investment strategy.