Hello, I’m Mark Homer co-founder of Progressive Property and today I’m going to reveal my honest thoughts about Bitcoin and GameStop and how the world has gone crazy.
Recently everyone has been going on about Bitcoin and GameStop and so you’ve got a series of investors who have been grouped together by the internet on platforms such as Reddit who have then decided to go and buy specific stocks like GameStop and now they’re even moving investments such as silver and blackberry businesses that generally don’t have a good chance of turning around can be classed as a dying business model, and as a result you have lots of hedge funds shorting their stock which means that they have sold shares in companies such as GameStop that they don’t own and will therefore need to buy later in order to close out their positions with the potential of making a lot of money as the stock price goes down.
Now, what’s happened is GameStop investors have been buying those shares in order to take on the hedge funds and take potential profits away from them so it’s a big David and Goliath robin hood type scenario where the little man (you and I) makes money from the corporate establishment.
Since I’ve been investing I haven’t seen anything quite like this and clearly the internet has changed things in that it’s managing to group people together and platforms like Reddit have made this even easier and it’s created an increased coordinated effort from smaller investors who are investing in things on a very very short term and effectively day-trading.
I didn’t realize that Reddit would have this sort of power but clearly this is a new phenomenon and probably something that the big institutions such as the hedge funds and private equity firms need to watch out for.
There’s loads of hype around this and some people have made a lot of money, but this is a zero-sum game because when someone makes a lot of money there is an equivalent equal loss made by somebody else and there are going to be winners and there are going to be losers.
Okay, so the million dollar question….am I investing in GameStop?
No, I’m not.
It’s not really something that I believe in. I think that when you buy shares you should be prepared to own them for the long term and for at least 5 or 10 years. My strategy would be to buy into something that is fundamentally a good company so that you know, it may take a while for it to to turn around and come right but you have high confidence that the day will come where it comes right and the market will then recognise the value and I don’t feel as if GameStop and blackberry businesses fit into that category.
Okay, now Bitcoin. Lots of people are very excited by Bitcoin and one of my business partners bought in at about $300 and clearly he’s done incredibly well and I think when I was getting involved, it was sort of five or six thousand dollars, I’ve not got much money in Bitcoin and maybe I’ve made six or seven hundred percent, but I wouldn’t invest a lot of my net worth into Bitcoin because it’s clearly very high-risk.
And I don’t understand that technology behind it deeply enough to invest heavily in it and I suppose it’s still possible that governments will try to regulate it and I think governments can do all sorts of things when they really want to, it’s all about the sort of political will and imperative. So, you know, there are clearly risks there but that’s also why lots of the investors who have bought into it and made such a lot of money. So again, I won’t be putting my whole balance sheet into Bitcoin. absolutely not.
I won’t be putting a massive portion of my net worth in it as there’s clearly no income stream, which is a challenge but just as gold has no intrinsic value, it can be made into jewellery and into some industrial processes use gold.
Bitcoin is a different sort of investment and something that I would put play money into as it’s exciting and I have a very superficial understanding of it.
Is it going to go up? Is it going to go down?
I’ve no idea whatsoever. But you know in the short term I could say the same about any share or even the property market. You cannot predict these things, there is not an individual on the planet who can predict the short-term movements of this stuff. It may go up, It may go down.
But what serious investors would ask would be is it going to go up over the medium to long term and it’s clever investors who can make good informed predictions.
In the short term and there are really only two types of investor, whose who can’t time the market and those who know they can’t on the market. In 2006/2007 there were so many people out there borrowing money and investing in things that they didn’t understand.
And with the pandemic where there are lots of small investors who are day trading and they’ve come into the market very recently and they’re effectively speculating. Residential property for example has been going up a hell of a lot and clearly there’s lots of inflation coming through the system and we’re seeing it with materials and with labour and the supply side has not picked up, you know, there are lots of factories being shut due to transport issues and the cost of transporting goods from Asia to Europe has has gone up and all of this is going in create inflation and these new investors are investing without great knowledge of the markets.
As I said, there has been a lot of the government support and when the furlough scheme and grants come to an end there is going to be a day of truth. So I just think we need to be mindful of that.
Yes, use a little bit of play money in Bitcoin and GameStop but long term, invest in fundamentally good companies that have a good long-term outlook and that are sensibly valued.
So, that’s my opinion on Bitcoin but do your own research and make informed decisions. A good place to start would be by checking out Rob’s blog on his website where he discusses this further.