There are a lot of proven ways to build wealth, but few, if any, have delivered consistently better returns over the long run than the stock market. Stocks might not top bonds, gold, or housing every year, but they've performed far and away better than these other asset classes over the very long-term.
But over the past decade, the supremacy of equities has been called into question by the rise of cryptocurrencies. For instance, the world's largest digital currency, Bitcoin, moved from around $1 per token to more than $64,000.
Yet, it's not Bitcoin that's creating the most buzz in the cryptocurrency space. Instead, it's the so-called "people's currency," Dogecoin (DOGE -2.12%).
Seven reasons Dogecoin is the worst cryptocurrency you can buy
Why Dogecoin? Enthusiasts often point to its lower transaction fees, relative to crypto's Big Two (Bitcoin and Ethereum), its increasing adoption, and the growing support of Tesla CEO Elon Musk, who frequently tweets about Dogecoin.
Unfortunately, all of these catalysts are misplaced or based on misinformation within the Dogecoin community. If you do any sort of digging on Dogecoin, you'll find seven reasons to completely dump it or ignore it. Here's a quick rundown:
- Dogecoin's transaction fees may be lower than Bitcoin and Ethereum, but they're considerably higher than Ripple, Nano, Ethereum Classic, Dash, Stellar, Bitcoin Cash, Bitcoin SV, and a long list of other coins. In other words, you're not getting the full story.
- Dogecoin is handling about 50,000 transactions daily on its blockchain. At this rate is would take more than 38 years for it to handle as many transactions as Visa and Mastercard process, combined, in one day.
- It lacks meaningful utility outside of crypto exchanges. After eight years, Dogecoin has approximately 1,300 worldwide businesses that accept it.
- "Hodlers" are being diluted by the release of more than 5.2 billion Dogecoin annually. This might only increase the outstanding token count by 4.1% in 2021, but it's been more than a decade since we've seen actual price inflation this high in the U.S.
- Elon Musk's tweets are the primary catalyst. Think about this... your investment thesis is based on tweets from one person.
- Dogecoin is centralized. Around 100 addresses control two-thirds of all outstanding tokens.
- Every single bubble in history has eventually burst, and Dogecoin will be no different.
This trio of stocks makes for a smarter investment
Instead of throwing your money away with a baseless cryptocurrency like Dogecoin, you should consider buying into companies with tangible long-term growth prospects. The following trio of superior stocks have all the tools needed to put Dogecoin to shame.
If you think Dogecoin's returns are impressive, wait till you get a closer look at what Warren Buffett's company, Berkshire Hathaway (BRK.A 0.41%) (BRK.B 0.11%), has achieved since he's been at the helm. Since 1965, Berkshire has averaged an annual return of 20%. That may not nominally sound like much, but investors who've been holding on for 56 years are up more than 2,800,000%!
One of the keys to Buffett's success is playing the numbers game. Although recessions are a normal part of the economic cycle, downturns tend to last only a few months or a couple of quarters. By comparison, bull markets and periods of expansion often last many years. Berkshire Hathaway's investment portfolio is chocked full of cyclical companies in the technology, financial, and consumer goods space. Buffett knows that if he's patient, his strategy will pay dividends.
Speaking of which, another reason the Oracle of Omaha's company is such a success is because it generates a boatload of income. Berkshire Hathaway should easily top $4 billion in dividend income this year, with the company's yield on cost (i.e., its yield based on the original cost basis) for longtime holding Coca-Cola at nearly 52%!
In short, Buffett's portfolio is designed with consistency and profitability in mind. You'll be able to sleep well and get rich while doing so.
Wheaton Precious Metals
Another smart way to make money while putting pump-and-dump scheme Dogecoin to shame is with precious metals. But I don't mean buying actual gold or silver. Instead, consider purchasing shares of Wheaton Precious Metals (WPM -1.07%), which'll allow you to take advantage of leverage and collect a 1% dividend yield in the process. You won't collect a dividend owning physical gold or silver.
What makes Wheaton Precious Metals so intriguing is that it's a streaming company. Instead of physically mining precious metals, Wheaton provides mining companies with the capital needed to build out a new mine or expand an existing asset. In return, it receives a percentage of the output from the mine at a cost that's well below spot. This allows Wheaton to sell what it receives at the spot price and pocket the difference as profit.
As of the end of March, it had in the neighborhood of 30 separate streaming deals, most of which target gold and silver. It does, however, have deals in place for palladium and cobalt, as well. In the first quarter, Wheaton paid its partners $6.24 per silver equivalent ounce (SEO) and $449 per gold equivalent ounce (GEO). But it netted $1,848 per GEO and $25.66 per SEO, leading to some of the highest margins in the mining industry.
As the icing on the cake, the catalysts for upside in gold and silver remain firmly in place. Dovish monetary policy from the Federal Reserve is a major catalyst for gold. Meanwhile, silver demand should pick up as the U.S. economy rebounds. This should lead to even higher cash operating margins for Wheaton Precious Metals.
Zoom Video Communications
A third company that should be able to run circles around Dogecoin is cloud-based Web conferencing company Zoom Video Communications (ZM 1.57%).
There's absolutely no denying that Zoom was one of the biggest beneficiaries of the coronavirus pandemic. With workplaces completely disrupted, businesses had little choice but to turn to Web conferencing to keep projects and communication on track. Not surprisingly, Zoom's sales skyrocketed by 326% in 2020 to $2.65 billion. This was about three times the full-year revenue Zoom expected to bring in last year, before the pandemic took shape.
But this aggregate growth isn't the most impressive statistic of all. That goes to the 470% increase in customers with at least 10 employees. It's great that Zoom is snagging bigger clients, but it's even more important that small-and-medium-sized businesses are finding value in the platform. Zoom's freemium model, which allows businesses to test-run its platform, appears to be hitting a chord with these smaller enterprises.
Though some folks might be worried about what'll happen to demand for Zoom's Web conferencing platform once the pandemic ends, I wouldn't be concerned. Zoom controls approximately 40% of U.S. Web conferencing share, and it's abundantly evident from the subscriber numbers that businesses are finding value with the service. Plus, not all workers will be coming back to traditional offices, which means Zoom will remain firmly entrenched in the workplace.