The Dollar Milkshake Theory: What You Should Buy Now

This changes everything

It was love at first sight.

A few months ago, I was visiting a financial literary conference in Harlem when someone introduced me to the “Dollar Milkshake Theory.”

This changed everything.

The Dollar Milkshake Theory is the idea that the US dollar is weaking, but at the same time all other fiat currencies are weakening more. And because the dollar is the bedrock of the global economy (meaning USD is used to buy anything worldwide) it will kill all other currencies before it itself implodes. It’s like a milkshake, when you mix all the other currencies together, the dollar is the only thing left standing.

I was smitten. But also skeptical.

The Dollar Milkshake Theory, if true, seemed out of my hands. 

Well it’s not. In fact, if you’re an investor there’s something you can do about it. But first, iPhones.

The iPhone 14 Max

Yup. The iPhone is Dollar Milkshake Theory.

Right now because of the strength of the US Dollar — the USD is at its strongest point since 2002 — Europe has to pay absorbently high prices for American goods. So while the iPhone 14 Max might cost $1099 in America, it costs 30% more in Europe.

Holy fuck.

The same goes for all of these:

• Playstation 5 getting a 10% increase

• Apple Watch Ultra 1000EUR (25% increase)

• Airpods Pro 2 300EUR (20% increase)

A strong US dollar is not good for companies that rely on exports, like Apple. In fact, it’s one of the main reasons why their stock has been struggling as of late.

America forced every other nation into a race with the Red Queen.
And nobody can keep up, as displayed by these charts:

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The strong USD is a sign of global growth slowing. It means foreign capital is parking all of their wealth in the dollar while their homeland takes a nose dive.

Moreover, all of this is breaking the offshore dollar debt system, heralding the end of dollar reserve with the backdrop of geopolitical turmoil to boot.

Holy fuck indeed.

Why I Sold My Crypto and Stocks

As I told you last month, I was beginning to dollar-cost average in the market by buying Bitcoin, Ethereum, and some value equities.

I’ve stopped.

And I even closed out a few positions.

In part, because The Dollar Milkshake Theory is so prevalent, so ubiquitous at the moment, that I believe we should all be paying attention to it.

But it’s also because Europe is about to have the worst energy crisis since the 1970s. Come wintertime I don’t think Europe will be bullish on crypto, equities, and bonds — they’ll just be trying to keep the lights on.

So what’s an investor to do?

Sell Everything

Nah. I’m not telling you to do that.

But I am saying that you shouldn’t expect any of your investments to go up on the year, especially as the Fed hikes rates into a recession. 

This means that holding cash isn’t a bad spot to be in. But, as someone once wrote in my comment section, “Cash? Can you even call yourself an investment blogger?”

Yeah. I know. But in all seriousness, if you’re holding cash right now you’re doing the most. Every asset class is down on the year: S&P 500 down 16%, Gold down 5%, Yen down 30%, Bitcoin down 60%, Ethereum 50%. 

Here are 3 other strategies to consider — 

1. The Sky is Falling Strategy

Nothing ever happens. While the Dollar Milkshake Theory might be true, there’s nothing you can do about it. Instead, stay the course, continue to invest 30%+ of your income into a 3-fund portfolio and retire someday. If the world economy collapses, you couldn’t have prevented it anyway.

2. Follow the VIX

As my friend Cody Collins texted me the other day, you can always follow the VIX which is an index that tracks the volatility of the S&P 500. Essentially it tells you how fearful investors are. If the VIX is high, it means the market is experiencing a lot of fear and selling. If the VIX is low, it means there’s complacency and bullish sentiment in the markets. Right now the VIX is as high as a hippie at Burning Man.

3. Invest in Stablecoins

For this one, I’ll give a shout-out to Lauren Como. Part of her investment strategy last year was to invest in stablecoins and receive interest payments on her USD. In other words, she was being paid to hold cash. Stablecoins are cryptocurrencies that are pegged to the US dollar, so their price doesn’t ever really fluctuate. 

The best Stablecoins are USDC, Dai, and Digix Gold Token.

And here are some platforms to make money with them:

• BlockFi (USDC and DAI): 6–7%

• Curve sUSD (DAI-USDC-USDT-sUSD): 1.42%

• Coinbase USDC : 2%

• Uniswap USDC-USDT : 2.2%

Final Thought

The end times.

They aren’t here… yet.

But that doesn’t mean you shouldn’t take precautions and have a game plan. I originally brushed off the Dollar Milkshake as a crazy conspiracy theory.

But the more I read about what’s going on in the EU, China and Japan, the more it makes sense. 

We’ll be alright, though. I’m 80 to 90% sure of it. 

But it’s always good to have a plan B.

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Ever since I was a child it was my dream to become a financial advisor. Unfortunately, it never came true. Therefore I am not a financial advisor and you should do your own research and not just listen to random people on the internet. Nothing contained in this publication should be construed as investment advice.