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Stocks vs Crypto: Investors Better take Notice

The S&P 500 just finished up a year with gains of 20%. That is by all means a terrific year, but it does not come close to the performance of crypto currencies during the same span.

As seen in the chart to your left, the comparison of top stock performers in the S&P 500 vs the top performers among crypto currencies isn't even close. It's not even comparable. 

A $1,000 in NRG Energy Inc (NYSE:NRG) at the beginning of 2017 would have been a cool $2,320 by years end. Hey, that's not bad. 

Yet, that same $1,000 in OmiseGO, the 10th best performing crypto of 2017, would have been worth nearly $35,000. This is a college education, or one hell of a start towards building an investment portfolio. 

What about Ripple? That $1,000 would buy you a nice home, in cash!

So here's the catch: Wall Street elitists have been calling cryptocurrencies a scam and fraud for the last year. Now that they have soared in value, virtually every single one, these same experts have changed their tune. Instead of being a scam and a fraud, now the cryptocurrencies are a bubble (or so they say). 

A bubble? It's not that easy!

It is very hard to look back in history and find a bubble market that virtually everyone saw coming. It is a bubble because the valuations rise to obscene levels, and no one sees it coming. Let us look at the three most recent bubbles. 

First, the Dotcom bubble, which is easy to look back on and call a bubble. Although, even the brightest minds in tech and Wall Street were pouring billions of dollars into dot-com companies, all the way until the bubble burst. These were companies with no revenue selling for billions of dollars. Even in the ICO market today of cryptocurrencies, the most raised is $100 million. Hence, ICOs are nowhere near the valuations we saw in the Dotcom era. 

Second, the financial crisis. Everyone was buying homes, and no one saw that mess coming. And just recently, crude oil. Most don't realize it was a bubble, but we saw a major commodity lose two-thirds of its value in less than a year. That was a bubble. 

Then what is crypto?

If we look back to the Dotcom era, almost all of the companies that were acquired or raised billions of dollars no longer exist today. Yet, companies like Alphabet Inc (NASDAQ:GOOGL) and Amazon.com Inc (NASDAQ:AMZN) came from that era too. 

Unfortunately, there is a lot of bad in the crypto world today. There are a lot of scams, and 90% of the underlying companies don't even have a product. They are raising millions of dollars with ideas. 

Then, there are companies that truly embrace technology, being built with blockchain, and legitimately use crypto to gain a competitive edge or break barriers, much how Amazon used the Web to reduce merchandise prices and disrupt an entire retail sector. I think HADE Technologies has that underlying potential, with a legitimate product/service for financial institutions, finance professionals, and individual investors alike through the HADE Store. 

As previously explained, valuation and business matters, as does the ICO itself, which must make sense. Cryptocurrency like HADE with a solid business plan, a cheap valuation, and is doing an ICO because it makes sense will stand the test of time. Thus, the bottom line is that owners of cryptocurrency, and participants in the ICO space must be selective. The days of just participating in an ICO and watching the value of that coin or token appreciate 1,000% are over.

Looking ahead, buyers have to remember these three important rules (valuation matters, business matters, ICO must make sense) if they want to stay on top. Regardless, when you look at crypto vs stocks, there is no question that crypto as an industry is still very cheap in its infancy, and the S&P 500 at 26x earnings is historically expensive. The bottom line: Crypto is a place you want to be exposed too.