People Don't Change

The grift never ends.

Watching Home Alone 2¹ it is very easy to miss the bloke who gives Kevin directions in the lobby of the Grand Plaza hotel.

Time truly has been cruel to us all.

Anyway, whatever you think of the man’s politics - it is a matter of public record that he has somewhat of a chequered history in business.

Interesting then that the incoming President seems to be taking such an active interest in courting the cryptocurrency community.

As well as publicly talking up the importance of digital assets, since being elected Trump has appointed crypto-friendly Paul Atkins as Head of the Securities & Exchange Commission (replacing the very much not crypto-friendly Gary Gensler).

His family even have their own crypto platform and associated coin because, well of course they do.

Maybe this project comes to represent the future of finance. Maybe it goes the same way as Trump University, Trump Vodka, Trump Airlines, GoTrump.com, Trump Mortgages, Trump Ice, Trump Magazine, Trump Tower Tampa, Trump Taj Mahal, Trump Marina, Trump Plaza Hotel & Casino, Trump Institute and Trump Cologne (a personal favourite).

I guess we will just have to wait and find out.

A declaration of interest - I don’t own any crypto and don’t recommend clients buy any (it is an unregulated asset and even if it was regulated I wouldn’t).

To me, the only use case which makes sense for Bitcoin (as an example) is that because there is a finite supply, it provides a store of value - a bit like digital gold if you like.

But for this to remain the case, you need the price to play ball and keep going up - or at least not fall for a protracted period of time. It is an asset that becomes more attractive as a rising price provides evidence that this thing is “valuable”. But the opposite is true on the way down too.

You may disagree and think I am a moron. In which case, you’ll have to join the queue.

But whatever you might think about the merits or otherwise of crypto-currency as an investment there is no denying that as a relatively new arena that doesn’t just accept anonymity as much as welcome it with open arms - it provides a fertile ground for fraudsters, shysters and conmen.

This isn’t the fault of the crypto community per se. Human nature was ever, and will ever be, thus.

One theory on why bull markets actually end, that I have read Josh Brown² talk about and that I like, is that the market just eventually becomes exhausted. There aren’t enough buyers to support prices anymore.

At times like now, when almost every asset class under the sun is rising in price, the fund raising machine begins to clank into gear churning out increasing numbers of investment opportunities for the market to gobble up. Which it does, happily, like your Uncle Tony at Christmas dinner.

But after several courses, Tony can’t take anymore and has to retire to the living room for a nice sit down and a snooze. In a similar way, bull markets end when every marginal buyer has been exhausted. Supply massively outweighs demand, and prices begin to fall.

We aren’t there yet though, if you have something to flog now is the time to sell it. Times like these are great for salespeople and investment bankers, but they are also great for fraudsters sadly.

There are two primary ways to blow up your financial plan.

The first is to abandon a perfectly sensible investment strategy at the worst time possible whenever values have temporarily fallen (as we know and accept they must from time to time).

The second is to become a “financial magpie”, again abandoning a perfectly sensible investment strategy any time something brighter and shinier comes along.

But you must bear in mind that a solid financial plan will never require massive returns to work. If your plan needs 15% annual returns to sing, you don’t have a financial plan you have a betting slip.

Times like we are in at the moment provide an assault on the senses. The grift is constant.

Shysters promising huge guaranteed returns. Ever weirder and wackier investment structures backed by ever weirder and wackier celebrities. “Forex traders” on social media plugging their online courses. The game that I love hijacked as a vehicle to promote financial self-harm.

It was the same only a couple of years ago. You would think we might remember, that we might have learnt different. We never learn different.

You, the educated and informed investor, must always remember that “this too shall pass” and when it does, the grifters will have departed stage left - no interest in shifting through the wreckage of human cost that they leave in their wake.

Never fear, their time will come.

Have a great weekend.

Nothing that I write is ever intended to constitute advice to any individual. Past performance is not indicative of future returns.

1. Better than the first one by a comfortable distance. I will be taking no further questions.

2. Mr Brown divides opinion, but I am a massive fan. If for nothing else he was the first person who made me think that financial content could not only be interesting, but actually entertaining.