Quite the week, eh? I bet you are all sitting there wondering what I am going to write about… Wait no longer; welcome to this week’s News, Views and Truths.
First off the bat, this is a Brexit-free zone. I am frankly sick of hearing about that bloody thing. We naturally discuss every twist and turn that we have had to endure this week in particular and yes, I am more than happy to discuss my personal thoughts and that of the collective ‘Three Counties Hive Mind’ on an individual basis.
But realistically, I couldn’t, with all good conscious, bring myself to write a piece on it; avoid religion and politics like the plague and I shall do just that.
What I will write about is predictions. And the utter futility of them.
This time of year, my work inbox is full of projections by market luminaries, prognosticating on probable predictions to perk and pique interest. My personal inbox is full of Amazon delivery updates by the way.
These market mandarins maintain that they can advise as to the future, full of bravado, bluff and bluster, explaining which stocks to buy, which sectors will outperform and what central banks are going to do, the quantum of which and on what dates this will occur.
Some may say that journalists are struggling for a story this time of year; let’s be honest, that is blown out of the water. What I would suggest is more insidious and boils down to a saying that my wife has uttered many times before.
“I’ve had apples from your cart before.”
Say that in an Ayrshire accent and you get the drift.
My wife has absolutely had a hand in shaping me into the man I am today. She should be applauded for the development of my keen cynicism which I hold dear in my role as Head of Investments at Three Counties. If it is too good to be true, it absolutely will be.
And keeping that in mind, it would be my suggestion, nay belief, that predictions are designed to encourage investors into making investment decisions for the ultimate benefit of the predictor.
A case in point – Bitcoin.
At the end of 2017, investors were riding a huge wave of optimism after 24 months of uninterrupted gains and a complete lack of volatility. Moving that euphoria from traditional equity markets to the new world of crypto currency was easy; if you thought your existing returns were impressive, look what you could win here!
And so the predictions on Bitcoin came. And did not stop.
On the 1st January 2017, one Bitcoin was priced at $1,000. On the 31st December 2017, the price was $13,170.18. They are big numbers. Massive numbers. And as such, participants coined it in. The above predictions pointed to the new paradigm; traditional Fiat currencies were the past, crypto was the future.
The most conservative prediction above was a 51.86% return during 2018. The most bullish was 759%.
This is what happened.
That is a 75.24% fall in value. Distinctly different to the predictions offered by the significant owners of bitcoin. Yet very, very tempting to take up at the time.
Now I acknowledge that this could be construed as rather an extreme example. However, many, many investors got caught up in the furore and have lost rather a lot on the back of those particular apples from that particular cart.
I suppose what I am saying is that, despite this being a particular time of year, when it comes to investing, a healthy dose of cynicism is never a bad thing. In terms of Three Counties clients, raise a glass to Mrs Alexander this Christmas time for giving me mine.
And as this is the penultimate News, Views and Truths for 2018, we again finish with a playlist of a seasonal theme. Please tune in to the final edition next week; keep warm as it is to be a cold one this weekend and stay cynical!