Hello and welcome to the May edition of the Safety in the Market Platinum Newsletter. This month, I’ll be answering a question that’s probably on many minds about an instrument that’s been in the news a lot this week, and I’ll also be taking you through four ways that history repeats. Then, Gus will explore the concept of a ‘sequence for success’.

On Thursday I read that China has banned Bitcoin from being used as a form of payment. People may still choose to hold Bitcoin, but China’s financial institutions have been told not to accept it as a form of payment. I am often asked by students whether I think it is a good idea to buy, invest in, or trade Bitcoin (or whichever cryptocurrency is the current ‘flavour of the month’), and my answer is always the same – it’s not something I would recommend.

There are many reasons I am reluctant to hold or trade in Bitcoin or any other cryptocurrency. Firstly, all it takes is government legislation to make a cryptocurrency illegal or worthless (or both). China’s decision on Bitcoin won’t render it worthless, but it does make it less attractive. The second reason is that we still hear stories of exchanges being hacked and Bitcoins being stolen, so security of capital is an issue, even if you pick the right direction of the market. Thirdly, there will only ever be a maximum of 21,000,000 Bitcoins in circulation. Last time I checked, there were over 7 billion people in the world, which works out at less than one Bitcoin per three hundred people, on average.

In its current form, I just can’t see how Bitcoin is sustainable in the long term. It will either have to change dramatically, or it will be replaced by something else. And since there are over 4,000 cryptocurrencies available to choose from at this point in time, good luck choosing the correct one! Chances are, if the world is going to move to cryptocurrency in the future, the ‘final’ or successful cryptocurrency may not even have been launched yet. Perhaps we should launch a Ganncoin? I mean, if Dogecoin is a thing, why not Ganncoin!

While I can’t tell you what to trade or not trade, I just cannot find any reason to recommend buying or trading in Bitcoin. According to Charles Mackay in his book Extraordinary Popular Delusions and the Madness of Crowds, during tulip mania in the Dutch Republic in the 1600s, a single tulip bulb at one stage sold for as much as five hectares of land. History has a funny way of repeating itself, and while we look back and wonder “who on earth would pay so much for a tulip?”, I wonder if generations to come will look back on us and wonder “who on earth would pay so much money for a bit of computer code”? Time will tell! That’s not to say that Bitcoin can’t or won’t go a lot higher – I just think there are much better opportunities for us in other markets.

In our articles this month, I’m filling in for Aaron who is unwell, and I’ll be discussing four ways that history repeats in financial markets. Then, Gus will take you through an article on the ‘sequence of success.’

I’ve been blown away by the response to my upcoming History Repeats webinar scheduled for 19 June 2021, which is filling quickly. I have a ton of great content to share with you so I’m looking forward to spending a day talking about one of my absolute favourite subjects. If you missed the email, here is the link to check it out.

Let’s begin!

Mat