The reasons why
I’m not investing
Over the last few weeks, the word Bitcoin has slowly consumed the little time that falls between ‘pillow talk’ and my deep-REM-dribble. “But babe, one guy made a million bucks in a year!” is how it usually starts and from there the sales pitch ensues zzzzzzzzzzzzzz. It’s not every night, maybe once a week and it’s enough to put off my sleeping chi whilst making my brain spin. So here I am, not just losing my (very important) beauty sleep but researching all there is to know about bloody Bitcoin. And you’re right, it’s a Bitcoin-fusing. HA! Blame the lack of sleep on the bad joke.
The problem is, from the start to the finish of my hubby’s half-ass pitch, the price of Bitcoin could fluctuate anywhere from a few hundred to a few thousand currency units. That right there, is too risky for me. Sorry babe, but if it’s too good to be true, it usually is and spending $5K+ on one Bitcoin is going to take a bit more than a 10pm sales pitch…if you know what I mean.
If you haven’t heard of cryptocurrency (crypto for short – I know right, it sounds like some kind of bad party drug), you’re not alone. Like me, you probably have better things to spend your time on than googling the meaning of a word that’s clearly been made up over a long lunch and one too many expensive reds. So, what is it about this crypto-thing that has attracted the deep pockets of men all across the world and intrigued every millennial who has ever sat behind a screen?
If you ask my hubs, he seems to think it’s the financial quick-fix we’ve all been waiting for; the easiest way to make a million bucks. And me? Heck, I have no idea. It’s the complete opposite of everything we know about investing for the long-term. Completely speculative. Bad news. You would have the same if not better odds gambling $5K at the casino, then you do investing in cryptocurrencies. If your risk profile allows for significant loss, then maybe it’s the gamble for you. I’d also like to take this opportunity to say that Warren Buffet agrees with me *pats herself on the back* and if the king of finance doesn’t believe in the crypto-phenomenon, then no one should.
You see, unlike shares which are part of a company providing legitimate products or services, cryptocurrencies are electronic cash replacements that are generated by a computer algorithm. They’re not real. Bitcoin isn’t real. They were first introduced as an internet currency for dodgy peeps to anonymously pay for drugs and weapons on the dark web. Today they’re being used as a universal currency to buy anything from anyone at any time across the internet. They call this ‘mining’ and to the technologically-savvy, it is the internet’s version of morning glory. Buying Bitcoin is also quite simple. You visit the Bitcoin Australia website, set-up a wallet and buy Bitcoin using your AUD monies. Easy, you’re in bit-ness.
But before you get excited and want to follow the rest of the Bitcoin-buying-sheep, just hear me out. Economic experts (not me) believe that cryptocurrencies and its investors are “divorced from reality (AFR, 2017)”. It’s a decentralized, uncontrolled, unregulated investment that has the instability rating of a magnitude 7 earthquake – that bit was me. The price fluctuates dramatically each week simply because another cryptocurrency has become available, or one of the 21 million bitcoins available has been sold. I don’t know about you, but that is not the type of long-term investment I’m looking to put my money into.
Oh and by the way, rumour has it some investors store their wallet offline because the chance of hackers stealing their precious #cryptos is so high. You may have also heard the story of Hamish and Andy who bought $500 worth of Bitcoin about 3 years ago but forget the password to their wallet and weren’t able to verify their login with ‘customer care’! Gone, lost forever. Could you imagine that happening at your bank? Hell no! There are no Bitcoin police to save the day…because it’s not regulated. So, while y’all are losing sleep over whether or not you will eventually lose it all, I’m just going to be over here with my shares, enjoying 12% return per year, compounding away. No stress and certainly not ‘hiding’ them from hackers!
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And if I still haven’t convinced you, I want you to cast your minds back to the late 90’s shortly before the dot com crash in the early 2000’s where portfolio managers were regularly asked whether the wireless telecommunications stocks were overvalued, to which they replied, “it’s not a mania. Look at the outright growth, the absolute value of the growth. It’s big!” (B.Graham, The Intelligent Investor). Not long after this interview in 2000, Nokia lost 67%, Winstar Communications lost 99.9%, Cisco Systems and Motorola lost more than 70% and investors lost more than $400million. That’s a shit load of zeros.
I don’t know about you, but there are an awful lot of similarities between the catastrophic bull market of the early 2000’s and the unregulated cryptocurrencies of today. If I were you (refer to disclaimer, pretty please), and I owned cryptocurrency, I’d be selling up now and getting the hell out of there. But that’s just me and I’d just like to remind you again, disclaimer.
Wanna know what I will put my money into? Blockchain. But maybe I’ll save that one for another day…
Fearless Female Traders
(Disclaimer: The opinions and views described in the Fearless Female Traders blogs are those of the author(s) only and do not take into consideration your personal financial situation. Should you wish to make financial decisions, please seek advice from a qualified financial specialist)