The Power of “No”: Why I Say No to Gold, Crypto, and Options

“The stock market is a device for transferring money from the impatient to the patient.” — Warren Buffet

There is a common irony in the world of finance.

I often meet people who refuse to touch the stock market because they find it “too volatile” or “risky.” Yet, those same individuals often feel much safer parking their savings in precious metals like gold and silver.

While these metals are traditionally viewed as hedges against market chaos, the reality of the 2020s has flipped that script. In recent times, the volatility of these “safe” metals has frequently eclipsed the very stock market they were meant to protect against.

I have made a conscious choice to only invest in stocks.

Despite the allure of “quick money” elsewhere, I avoid commodities, crypto, and options. I am not here to argue that you can’t make money in those assets; I am here to share why I don’t do it.

The Value Foreseeing Gap: Why No Gold and Crypto

The biggest hurdle I face with commodities and crypto is a lack of foreseeable value. They don’t generate cash and are simply “stores of value” that rely entirely on the next person paying more.

On the other hand, long-term stock prices have a high correlation to their underlying business fundamentals.

A business takes in capital or reinvests its own profits to produce products or offer services to generate cash flow. Because of this, I can analyse a company’s profit margins, balance sheet strength, and its competitive moat.

While stock valuation is also an estimation, it is undergirded by visible, audited data. This makes the projection more probable and grounded than the former.

Theoretically, one could value gold or Bitcoin by analysing global supply and demand. However, in practice, this data is exceptionally hard to find, and having access to the complete picture is nearly impossible.

Without a clear anchor of data, these assets become prone to massive waves of speculation, driven more by headlines and emotions than by underlying reality.

The Precision Problem: Why No Options

While gold and crypto lack data, options lack time.

If stocks are a way to participate in the growth of a business, options are a way to place a bet on a clock.

In stocks, you just need to be right about the business, but with options, being right isn’t enough; you have to be right on time.

You can be perfectly right about a company’s success or its impending failure, but if the market doesn’t move before your contract’s expiration date, your investment goes to zero.

I prefer the stock market because it doesn’t force me to gamble against a deadline. I want time to be my partner, rather than my rival.

Moreover, options are ultimately a leverage tool that acts as a multiplier for both your gains and mistakes.

There is no doubt that they can enhance your return if properly utilised. However, the impact can be devastating from just a couple of wrong moves along the way.

The question I asked myself: “Do I need this additional leverage precision tool to achieve my long-term goal?”

If a portfolio of great businesses can compound at a healthy rate over decades, the risk of “blowing up” just to get there faster isn’t a logical trade-off.

Ultimately, the goal isn’t the highest return, but sustainable returns that help you reach your destination.

Sustainability for the Long Run

Finally, there is the fundamental trade-off between effort and time.

Commodities, crypto, and options are high-octane, active pursuits. To succeed, you must stay constantly plugged into global news, technical charts, and margin requirements. In these markets, your income stops the moment you stop trading.

Long-term investing is different.

While effort is required, the “heavy lifting” is done during the initial setup of the portfolio. Once established, you only need to periodically check the health of the businesses and adjust accordingly.

This is far more sustainable, especially as I imagine myself in my seventies or eighties, where my life priorities might change further.

I don’t want to be a servant to the market’s opening bell; I want a portfolio of quality businesses that works for me while I pursue my other interests.

Disclaimer

This content is for informational only. I am not a financial advisor, tax professional, or legal expert, and the information shared here does not constitute personalised financial advice, nor is it a solicitation to buy or sell any securities or financial instruments.

All opinions and commentary reflect my personal views and are based on general market commentary.

You are solely responsible for your own financial decisions. Investing involves risk, and any action you take based on the information provided on this blog or channel is strictly at your own risk.

Always conduct your own research and due diligence and consult with a qualified, licensed financial professional, tax professional, or legal advisor before making any investment or financial decision.