Broker Check

Monday Money Report

| March 29, 2021
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Last week the market took heart from Treasury Secretary Janet Yellen and Fed Chairman Jerome Powell’s testimony to Congress. The Federal Reserve Bank also removed restrictions on banks’ ability to pay dividends, citing an improving economy and stable financial system. There is also increased optimism around the vaccine rollout.  The S&P and Dow both finished slightly up for the week.

A few weeks back, we looked at SPACs, or Special Purpose Acquisition Companies. Thankfully those are just highly speculative investments and not a new disease.  Same goes for today’s topic.  NFTs, or Non-Fungible Tokens, are neither a disease nor a new variety of mushroom.

If you think of traditional artwork, like a painting, there is only one original.  We may make copies or prints, but there is only one original.  And while a good forgery might be tough to spot for some of us, we can tell the difference between an oil painting and a print.

The same goes for music.  It used to be, if you wanted to copy a record, you put your tape recorder close to the record player and hit record. The copy was clearly not the original.

Now think to MP3 files. A copy of that is the same as the original.  How do you tell the difference? Add digital art to the mix, and we can all have a Jpg of an artwork that’s indistinguishable from the original. Because in art, price is linked to rarity, knowing that anyone can have that same file means that the value for any one copy is not very high.

Which brings us to Non-Fungible Tokens. An NFT is a digital collectible.  It uses blockchain technology to authenticate an image, song, or other piece of data as original. Sort of like the certification that comes with a signed piece of sports paraphernalia, authenticating a player’s signature.

While this may be helpful to musicians and other artists who are losing revenue when their art is copied, it has also spawned a digital version of Dutch Tulip Mania. A piece of digital art sold earlier this month for $69.3 million dollars’ worth of cryptocurrency. This artist had previously sold works for roughly a thousand times less, but without the magical-mushroom NFT attached. And now, the purchaser has started a new crypto currency, based on owning shares of this artist’s work. If you think this will end well, I have some Beanie Babies in my garage I’d be happy to sell you.

Your action to take this week is to evaluate your life insurance.  A very rough calculation is that a million dollar policy would generate $40-50,000 in annual income. Some family expenses would drop, like a second vehicle, clothing and personal care.  Others may increase, like child care, house cleaning, or lawn care.  Term policies are pretty inexpensive if you’re reasonably healthy.  We’re happy to provide quotes from a variety of carriers with just an email or two.

We have additional articles, videos and other resources on our website at covingtonalsina.com.  And for the month of March, we’re donating $5 for everyone new who likes our Facebook page to The Summit School, an independent school for children with dyslexia and other learning differences, up to $500.

Securities offered through LPL Financial, Member FINRA/SIPC. Investment advice offered through Great Valley Advisor Group, a Registered Investment Advisor. CovingtonAlsina and Great Valley Advisor Group are separate entities from LPL Financial.

All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.

The opinions voiced in this show are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which strategies or investment(s) may be appropriate for you, consult with your attorney, accountant, and financial advisor or tax advisor prior to investing.

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