I published those 10 views in no particular order, except that I started with BitCoin which is de facto my strongest conviction call.
However, I did feel the need to rank them - partly because I wanted to take positions based on the views and to scale the size according to the strength of my view where feasible.
So - here goes:
Rank1 -- Short BitCoin
Rank2 -- Short Euro
Rank3 -- Short Russia
Rank4 -- Short Government bonds
Rank5 -- Euro Crisis
Rank6 -- Credit widening
Rank7 -- Short stocks
Rank8 -- Short Gold
Rank9 -- Short London Property
Rank10 -- Wide ranges in Oil
Monday, 19 January 2015
Saturday, 17 January 2015
#10 - Credit overdue
I find the current price of credit assets to be untenable. The extent of recovery from the 2007/09 crisis is remarkable and although I understand the reasons why everyone is chasing yield, of course I think it will end in tears.
Call - Credit crisis
Prediction - Widening, increase in downgrades and defaults. ITX Europe to widen above 100
Trade - Difficult to execute
Conviction - Medium
Feasibility - Low
Friday, 16 January 2015
#9 - Russia Default
#9 - Russia Default
When the pressure started to ratchet up on Russia during 2104 -- Oil, sanctions, conflict risk etc. I was surprised at how resilient the markets were.
Then - in December - the Rouble cracked and I fully expected that move to intensify into a 1998-style crisis. Somehow, the momentum was halted but my view is that this was a temporary reprieve.
I would expect to see renewed pressure on Russia show up in the currency, bonds, equities and the sovereign rating. I also expect real difficulties for the nearby states.
Call - Russian crisis
Prediction - Russia downgrade below Investment Grade; 2028 12.75% Eurobond below par; Rouble to fall to $=RUB100
Trade -Sell Rouble vs USD
Conviction - High
Feasibility - High
When the pressure started to ratchet up on Russia during 2104 -- Oil, sanctions, conflict risk etc. I was surprised at how resilient the markets were.
Then - in December - the Rouble cracked and I fully expected that move to intensify into a 1998-style crisis. Somehow, the momentum was halted but my view is that this was a temporary reprieve.
I would expect to see renewed pressure on Russia show up in the currency, bonds, equities and the sovereign rating. I also expect real difficulties for the nearby states.
Call - Russian crisis
Prediction - Russia downgrade below Investment Grade; 2028 12.75% Eurobond below par; Rouble to fall to $=RUB100
Trade -Sell Rouble vs USD
Conviction - High
Feasibility - High
Thursday, 15 January 2015
#8 - EUREXIT
#8 - Euro Crisis to Re-emerge
In the previous 2011 iteration of the Euro crisis, I firmly believed there would be at least one Euro exit. I did not think it was possible for a solution to be found. I underestimated the political will to save the Euro. I was clearly wrong.
This year, although I cannot point to a specific catalyst, I do expect the problem to re-emerge and I will continue to expect an exit or a breakup of some kind. It is just a matter of time in my view, and I'll make the bold call that it could happen in 2015.
Again, I don't really accept that political will and "all it takes" devices are ultimately enough to make the Euro work.
Call - Euro Crisis
Prediction - GREXIT, with severe pressure on Italy etc and European banks
Trade - Sell Italy (e.g.) although best target is hard to pick
Conviction - Medium
Feasibility - Medium
In the previous 2011 iteration of the Euro crisis, I firmly believed there would be at least one Euro exit. I did not think it was possible for a solution to be found. I underestimated the political will to save the Euro. I was clearly wrong.
This year, although I cannot point to a specific catalyst, I do expect the problem to re-emerge and I will continue to expect an exit or a breakup of some kind. It is just a matter of time in my view, and I'll make the bold call that it could happen in 2015.
Again, I don't really accept that political will and "all it takes" devices are ultimately enough to make the Euro work.
Call - Euro Crisis
Prediction - GREXIT, with severe pressure on Italy etc and European banks
Trade - Sell Italy (e.g.) although best target is hard to pick
Conviction - Medium
Feasibility - Medium
Wednesday, 14 January 2015
#7 - Oil to stay on the boil
#7 - Wide Trading Ranges to Persist
I was surprised by the extent of the move in Oil in 2014. Admittedly, once the slide got underway I was not surprised to see it continue: I always expect large moves to overshoot.
I wanted to express a view on oil for 2015 but I found myself conflicted. On the one hand, I see no real reason why the pain couldn't continue and Oil could continue down to $25 (say). After all, it has been at $10 in the not too distant past.
On the other hand, it has had a proper correction and I could see a strong rally.
I just don't have a fundamental view at all. I have historically been of the view that oil is ultimately a 1-way bet upwards as supply eventually does go into terminal decline. I am now doubting myself on this one : I am starting to believe that alternatives could emerge in a timeframe that allows oil not to ever run out.
So, the only thing I am willing to forecast is that really large trading ranges will persist.
Call - Volatile trading for oil
Prediction - High-Low range for Crude to exceed 50% (~$25)
Trade - difficult without use of options
Conviction - Medium
Feasibility - Low
I was surprised by the extent of the move in Oil in 2014. Admittedly, once the slide got underway I was not surprised to see it continue: I always expect large moves to overshoot.
I wanted to express a view on oil for 2015 but I found myself conflicted. On the one hand, I see no real reason why the pain couldn't continue and Oil could continue down to $25 (say). After all, it has been at $10 in the not too distant past.
On the other hand, it has had a proper correction and I could see a strong rally.
I just don't have a fundamental view at all. I have historically been of the view that oil is ultimately a 1-way bet upwards as supply eventually does go into terminal decline. I am now doubting myself on this one : I am starting to believe that alternatives could emerge in a timeframe that allows oil not to ever run out.
So, the only thing I am willing to forecast is that really large trading ranges will persist.
Call - Volatile trading for oil
Prediction - High-Low range for Crude to exceed 50% (~$25)
Trade - difficult without use of options
Conviction - Medium
Feasibility - Low
Tuesday, 13 January 2015
#6 - Bond Bubble --> Pop !
#6 - Bond Bubble to Burst
I am clearly not alone in thinking that rates must rise ... soon. I do, however, expect a more dramatic decline that the common expectation. It seems to me that most forecasters believe that "it is different this time" and that the rise in rates can be carefully managed with minimal disruption.
Admittedly, not everyone think that: there are plenty of gloomy predictions of a messy unwind in the bond markets. I would side with the most gloomy of those forecasts.
Essentially, echoing my concerns about central banks, I think it will be hard to keep controlling the bond markets and that at some point there will be a precipice moment.
Call - Major bond markets to sell off sharply
Prediction - US10 Year > 3%
Trade - Sell US10 or US30 or Bunds, Gilts etc
Conviction - High
Feasibility - High
I am clearly not alone in thinking that rates must rise ... soon. I do, however, expect a more dramatic decline that the common expectation. It seems to me that most forecasters believe that "it is different this time" and that the rise in rates can be carefully managed with minimal disruption.
Admittedly, not everyone think that: there are plenty of gloomy predictions of a messy unwind in the bond markets. I would side with the most gloomy of those forecasts.
Essentially, echoing my concerns about central banks, I think it will be hard to keep controlling the bond markets and that at some point there will be a precipice moment.
Call - Major bond markets to sell off sharply
Prediction - US10 Year > 3%
Trade - Sell US10 or US30 or Bunds, Gilts etc
Conviction - High
Feasibility - High
Monday, 12 January 2015
#5 - Prime London Property Vulnerable
#5 - Prime central London property bubble to burst
I accept the case for property (indeed, for real assets in general) to some degree. The same reasons that offer support for equities are valid for real estate.
I also can see the point about limited supply, and in the case of London I am very happy to go along with the case for the unique appeal of London. I am not sure this view holds on a centuries-long perspective, and I do have qualms about leasehold ownership despite apparently being in a minority of one on this point.
But I am simply not comfortable with the rate of accelerated price growth that we have experienced, and I can't share the 1-way thinking that prevails. Admittedly, I have been notably under-invested for a long, long time and I can justifiably be criticised for simply "talking my book".
Even so, I can't leave this one out of my list. In terms of timing, I do think there is over-supply in the prime market which at the very least must take some time to absorb, and that must surely be facilitated by some price weakness. Even prime central London can't defy all commercial logic all the time.
Call - Prime Central London property to fall in 2015
Prediction - Prices down 15%
Trade - problematic: no clear way to set up the short
Conviction - Medium
Feasibility - Low
I accept the case for property (indeed, for real assets in general) to some degree. The same reasons that offer support for equities are valid for real estate.
I also can see the point about limited supply, and in the case of London I am very happy to go along with the case for the unique appeal of London. I am not sure this view holds on a centuries-long perspective, and I do have qualms about leasehold ownership despite apparently being in a minority of one on this point.
But I am simply not comfortable with the rate of accelerated price growth that we have experienced, and I can't share the 1-way thinking that prevails. Admittedly, I have been notably under-invested for a long, long time and I can justifiably be criticised for simply "talking my book".
Even so, I can't leave this one out of my list. In terms of timing, I do think there is over-supply in the prime market which at the very least must take some time to absorb, and that must surely be facilitated by some price weakness. Even prime central London can't defy all commercial logic all the time.
Call - Prime Central London property to fall in 2015
Prediction - Prices down 15%
Trade - problematic: no clear way to set up the short
Conviction - Medium
Feasibility - Low
Sunday, 11 January 2015
#4 - Stocks overvalued
#4 - Stocks Overvalued
I always think that the stock market is overvalued, and due a correction.
The current position is no different: I am concerned that the markets are discounting "perfection". Now, I accept that zero interest rates logically increase the current value of stocks on a dividend-discount approach (which, in turn, I find to be sound).
I also think there is a good deal of logic in the case for investing in dividend-yielding stocks instead of corporate or government bonds which look like accidents waiting to happen.
I also will allow that, in general terms, major economies are recovering. All of these factors add to the appeal of stocks and do support valuations.
I am still, however, uncomfortable that there seems to be little allowance for all the things that can go awry - whether that is geo-political risks, problems from the increasing conflict levels, contagion from emerging market risks, central bank mis-steps ... and, of course, the inevitable rates-up shock that will arrive sooner or later.
Also, volatility has been at unsustainable low levels, and we are simply over-due for a proper knock in equitiesy
Admittedly, a catalyst for this fall is not easy to spot and I can fully expect that a short-stocks position could be a painful bleed and may well end in capitulation ! Still, it would simply be wrong of me not to make this call.
Call - major equity indices to correct in 2015
Prediction -Dow to fall to 15,000
Trade - short one or more indices
Conviction - High
Feasibility - High
I always think that the stock market is overvalued, and due a correction.
The current position is no different: I am concerned that the markets are discounting "perfection". Now, I accept that zero interest rates logically increase the current value of stocks on a dividend-discount approach (which, in turn, I find to be sound).
I also think there is a good deal of logic in the case for investing in dividend-yielding stocks instead of corporate or government bonds which look like accidents waiting to happen.
I also will allow that, in general terms, major economies are recovering. All of these factors add to the appeal of stocks and do support valuations.
I am still, however, uncomfortable that there seems to be little allowance for all the things that can go awry - whether that is geo-political risks, problems from the increasing conflict levels, contagion from emerging market risks, central bank mis-steps ... and, of course, the inevitable rates-up shock that will arrive sooner or later.
Also, volatility has been at unsustainable low levels, and we are simply over-due for a proper knock in equitiesy
Admittedly, a catalyst for this fall is not easy to spot and I can fully expect that a short-stocks position could be a painful bleed and may well end in capitulation ! Still, it would simply be wrong of me not to make this call.
Call - major equity indices to correct in 2015
Prediction -Dow to fall to 15,000
Trade - short one or more indices
Conviction - High
Feasibility - High
Saturday, 10 January 2015
#3 - Euro 1-way bet
Sticking with the currency theme, I have a very strong view that the Euro will fall sharply this year.
Of course, the currency had already fallen a decent amount towards the end of 2014, but I think it's almost a sure thing to continue and my own call is for the decline to be more severe than most are forecasting.
It's a "heads you lose, tails I win" scenario as far as I can tell. I have long been bearish on the Euro since I think we will see a serious re-escalation of a Euro crisis and I think that should logically see the Euro fall (admittedly the one thing does not guarantee the other). I have never really been "pro" the single currency although I have to concede it has been dramatically more successful than I thought possible.
One of the reasons I think the Euro will run into crisis mode is that I simply cannot see how QE is supposed to work. And I revert to my theme that central banks are out of options.
However, if it DOES work, then the very aim of the policy is to weaken the Euro.
Meanwhile, the dollar is rampant, and the momentum in markets favours a further weakening.
All-around, the only problem is that most people agree the Euro is likely to fall and of course markets love to confound the consensus. However, that reservation is not nearly enough to put me off from forecasting a severe move lower.
EUR = USD 1.15 seems to be a popular prediction. I think that is far too cautious. I said 1.05 in a straw poll conducted by a broker pre-Xmas. Even then, I was pulling my punches slightly - I would think parity is within reach.
I am mainly thinking of the Euro vs the US Dollar, but of course I expect declines against all currencies. I especially feel the existing decline in the Yen is overdone, so I would expect a double-whammy in EUR/JPY
Call - the Euro currency to fall sharply against other major currencies in 2015
Prediction - EUR/USD to fall to 1.05
Trade - short EUR/USD or EUR/JPY
Conviction - Very high
Feasibility - High
Friday, 9 January 2015
#2 - Gold to decline
#2 - Gold to decline
Since I am so skeptical of the new currencies, one might expect that I would be very positive about that most traditional store of value -- Gold.
However, although I do accept that gold has intrinsic value through its commercial uses (including jewellery), I do not readily agree that it has a genuine place as a banking reserve etc.
I do not think it is plausible, even in principle, for modern economies to base their currencies on gold and I don't even think that in an Armageddon scenario there would be a great demand for gold.
I know that there are strong opinions on gold - in both directions. I count myself amongst the non-believers. As to what is a sound price for gold, this is not clearcut.
I don't have any explicit valuation method to offer, and I certainly have no difficulty with the idea that a useful commodity in limited (albeit sufficient) supply has a significant value. But as to what dollar price this means, I can't say, but I observe that the price has risen substantially from some earlier reference points and I assume that some of this rally has been caused by what I consider to be unsupported cases for the Gold bulls.
So, my view simply has to be that the price is due to fall.
Call - Gold price to decline in 2015
Prediction - Gold to fall to US$ 1,100/oz
Trade - short Gold
Conviction - Medium
Feasibility - High
Since I am so skeptical of the new currencies, one might expect that I would be very positive about that most traditional store of value -- Gold.
However, although I do accept that gold has intrinsic value through its commercial uses (including jewellery), I do not readily agree that it has a genuine place as a banking reserve etc.
I do not think it is plausible, even in principle, for modern economies to base their currencies on gold and I don't even think that in an Armageddon scenario there would be a great demand for gold.
I know that there are strong opinions on gold - in both directions. I count myself amongst the non-believers. As to what is a sound price for gold, this is not clearcut.
I don't have any explicit valuation method to offer, and I certainly have no difficulty with the idea that a useful commodity in limited (albeit sufficient) supply has a significant value. But as to what dollar price this means, I can't say, but I observe that the price has risen substantially from some earlier reference points and I assume that some of this rally has been caused by what I consider to be unsupported cases for the Gold bulls.
So, my view simply has to be that the price is due to fall.
Call - Gold price to decline in 2015
Prediction - Gold to fall to US$ 1,100/oz
Trade - short Gold
Conviction - Medium
Feasibility - High
Thursday, 8 January 2015
#1 - BitCoin crash
#1 - BitCoin Crash
Clearly, given the provenance of the blog, my call for a collapse in the value of BTC has to be the first pick. My conviction is very high on this outlook.
Of course, the value had already fallen dramatically in 2014 - to around $250, say. Of course it would have been nice to have established a short at $1,000, although it may be no bad thing to wait to sell until the down-draft is clearly visible.
In any case, since I think the real target is $0, that is simply 100% down from any entry level.
Of course, even assuming I am correct, it is reasonable to expect it will be a very uneven path from $250 to $0. We can anticipate fierce rallies even if a bear trend is firmly underway.
The other thing on my mind is ... what would be the catalyst for a really major price crash ? That might come from another scandal or a killer blow from regulation, or some kind of dramatic undermining of the principles of the blockchain. I would think it's at least equally likely to simply be a terminal decline that sets in and then becomes self-fulfilling.
In any case, I want to make clear predictions that I can refer back to at the end of 2015.
I expect to see BTC below $50 this year, on its way to $0. An 80% fall seems a bold enough call for now (for a 1 year view), even though I will certainly be expecting a further 100% decline once the level breaks $50.
I do intend to put this trading view into practice. As I mentioned in the first blog post, I'm very interested in the facility to position BitCoin on a financial spread-betting basis.
Call - BitCoin to crash in value vs USD in 2015
Prediction - BitCoin price to fall to US$50
Trade - short BitCoin on a spread-bet basis
Conviction - High
Feasibility - High
Clearly, given the provenance of the blog, my call for a collapse in the value of BTC has to be the first pick. My conviction is very high on this outlook.
Of course, the value had already fallen dramatically in 2014 - to around $250, say. Of course it would have been nice to have established a short at $1,000, although it may be no bad thing to wait to sell until the down-draft is clearly visible.
In any case, since I think the real target is $0, that is simply 100% down from any entry level.
Of course, even assuming I am correct, it is reasonable to expect it will be a very uneven path from $250 to $0. We can anticipate fierce rallies even if a bear trend is firmly underway.
The other thing on my mind is ... what would be the catalyst for a really major price crash ? That might come from another scandal or a killer blow from regulation, or some kind of dramatic undermining of the principles of the blockchain. I would think it's at least equally likely to simply be a terminal decline that sets in and then becomes self-fulfilling.
In any case, I want to make clear predictions that I can refer back to at the end of 2015.
I expect to see BTC below $50 this year, on its way to $0. An 80% fall seems a bold enough call for now (for a 1 year view), even though I will certainly be expecting a further 100% decline once the level breaks $50.
I do intend to put this trading view into practice. As I mentioned in the first blog post, I'm very interested in the facility to position BitCoin on a financial spread-betting basis.
Call - BitCoin to crash in value vs USD in 2015
Prediction - BitCoin price to fall to US$50
Trade - short BitCoin on a spread-bet basis
Conviction - High
Feasibility - High
Wednesday, 7 January 2015
Top 10 Calls
The New Year is always a time for lists, and I may as well put my strongest "calls" into such a list. A "Top 10" seems as good a format as any.
I will set out the thinking (and - where possible - specific levels and trades) behind each of these in individual posts, but here are the headlines:
1. BitCoin crash
2. Short Gold
3. The Euro to fall sharply
4. Bear market for equities
5. Significant falls in prime London property
6. Government bond bubble to burst
7. Oil to trade in a very wide range
8. A new Eurozone crisis
9. Russian default
10. A difficult credit market
I will set out the thinking (and - where possible - specific levels and trades) behind each of these in individual posts, but here are the headlines:
1. BitCoin crash
2. Short Gold
3. The Euro to fall sharply
4. Bear market for equities
5. Significant falls in prime London property
6. Government bond bubble to burst
7. Oil to trade in a very wide range
8. A new Eurozone crisis
9. Russian default
10. A difficult credit market
Tuesday, 6 January 2015
The Year Ahead - Sell Everything !
Finding out that I can indeed put my short BitCoin view into practice was a prompt for me to actually write down a number of views on the financial markets.
In the spirit of forecasting, as is customary for this time of year, I have concentrated on the more dramatic elements of my opinions. These views are not as eye-catching as the Saxo Bank "Outrageous Predictions" (which I really enjoyed reading); indeed, some of my views are very mainstream.
Actually, "consensus" is one of the things I worry about in markets right now; this view itself is far from contrarian, of course !
If I consider the themes that concern me, I would pick out:
- Central banks ... are running out of policy tools. I also believe that Central Banks have been intervening far too much in the capital markets, and that these large-scale actions will have unpredictable consequences, which are likely to be very messy.
- Currency markets ... will be a major source of instability. This is a related point. My view is that over-managing the economies will eventually lead to big problems, and that currency prices are the pure-play on those instabilities, whether in emerging or developed markets.
- Complacency ... will prove to be have been problematic in hindsight. I have of course seen many plausible explanations for the high valuations in markets. I think many asset classes are "priced for perfection" and for the reasons above, I think those valuations are fanciful. Volatility has been far too low, for too long,
- Credit ... we are overdue for a correction / crisis. Credit is certainly not the only over-priced asset class, but I do expect to see some large shocks ahead.
- Consensus ... I agree with those who have pointed out that changes in market structure will mean it's going to be very chaotic when the consensus view on credit, equities, bonds etc breaks down. In the worst case, if I am right to be concerned about Central Banks, then I suppose the collapse in prices could be more extreme that in the previous 2007/09 crisis.
I can clearly count myself among the doom-sayers. I can easily imagine that at the end of 2015, I may look daft. But I prefer that to NOT saying what I think and resorting to "I thought so ...".
In the spirit of forecasting, as is customary for this time of year, I have concentrated on the more dramatic elements of my opinions. These views are not as eye-catching as the Saxo Bank "Outrageous Predictions" (which I really enjoyed reading); indeed, some of my views are very mainstream.
Actually, "consensus" is one of the things I worry about in markets right now; this view itself is far from contrarian, of course !
If I consider the themes that concern me, I would pick out:
- Central banks ... are running out of policy tools. I also believe that Central Banks have been intervening far too much in the capital markets, and that these large-scale actions will have unpredictable consequences, which are likely to be very messy.
- Currency markets ... will be a major source of instability. This is a related point. My view is that over-managing the economies will eventually lead to big problems, and that currency prices are the pure-play on those instabilities, whether in emerging or developed markets.
- Complacency ... will prove to be have been problematic in hindsight. I have of course seen many plausible explanations for the high valuations in markets. I think many asset classes are "priced for perfection" and for the reasons above, I think those valuations are fanciful. Volatility has been far too low, for too long,
- Credit ... we are overdue for a correction / crisis. Credit is certainly not the only over-priced asset class, but I do expect to see some large shocks ahead.
- Consensus ... I agree with those who have pointed out that changes in market structure will mean it's going to be very chaotic when the consensus view on credit, equities, bonds etc breaks down. In the worst case, if I am right to be concerned about Central Banks, then I suppose the collapse in prices could be more extreme that in the previous 2007/09 crisis.
I can clearly count myself among the doom-sayers. I can easily imagine that at the end of 2015, I may look daft. But I prefer that to NOT saying what I think and resorting to "I thought so ...".
Monday, 5 January 2015
BitCoin Skeptic
This blog is titled "BitCoin Skeptic". I registered the URL well over a year ago (I am checking my records to see if I can identify the exact date) presumably at a moment when I was feeling especially bearish about that much-discussed crypto-currency.
I may resort to referring to BitCoin as a "so-called currency", which is inelegant language, but whose negative connotation is in line with my views.
"Skeptic" should suggest a reasoned position on the matter. Naturally, I consider that my views are reasonable, although I not have carried out in-depth research. My stance is therefore partly intuitive ("gut feel").
In principle, it would be appropriate for me to put forward a strong opinion only after I had tried out the technology first-hand. I have some appetite to do that in the spirit of discovery, and consistent with my practice of "learning by doing". However, one of the problems that I see with BitCoin is the apparent complexity involved in handling it, as well as the absence of reliable service providers.
These difficulties (real or perceived) have been enough to prevent me from becoming a participant in any BitCoin transactions so far.
Of course, I haven't really been interested in buying BitCoins. My objective has been to find a way to take a short position. Until now, this has not seemed viable.
I was beginning to think that I would be stuck, unable to "put my money where my mouth is".
However, I recently visited the website of IG Index (an established provider of financial spread betting markets). I was interested in markets on conventional products like equities, currencies and commodities. I was surprised to find out that they are now offering spread bets on the BitCoin price.
This changes the situation considerably! Using IG Index would eliminate my concerns over counterparty risk, and my operational and security concerns about most BitCoin providers. It would also mean that any gains I made in taking a short position would be paid out in GBP ("real money", as I like to call it.)
That last point is quite important, philosophically. As far as I could tell, other products that I had seen before that might have allowed me to take a short (BitCoin derivatives) were to be settled in BitCoin. Since I believe that BitCoins are really worth $0, and are at least due for a dramatic decline, it would of course be sub-optimal to be paid my gains in that form.
In the most extreme case, I suppose, I could be "completely" correct and see the BTC fall to zero and my puts would actually be worthless.
My initial due diligence on the IG Index product was very encouraging. I was very impressed with their spread betting platform, and the BitCoin contracts is quoted with a very respectable bid-offer spread and a reasonable cost of carry. I know that IG Index does use the markets to hedge its net client exposure but I would assume that in this case they are relying on genuine 2-way flow.
They probably also judge that offering this product is good marketing. They have converted at least one interested party into an active client on other contracts !
More on that in future posts. For now, the key point is that it looks like I'm now able to express my strongly-held views on the BitCoin price if I wish to. It's likely that I will go ahead and do that. I will post the outcome here. But I'm also motivated to express some other views on financial markets, and to put those into practice as well.
My other views are not as strident as my ultra-negative outlook for BTC, but admittedly most of them are "negative". I do have a strong bias in my predictions.
The New Year is a good time for "Top 10s" and so on, so I will pick out ten predictions that I am willing to put my name to and post them here.
I may resort to referring to BitCoin as a "so-called currency", which is inelegant language, but whose negative connotation is in line with my views.
"Skeptic" should suggest a reasoned position on the matter. Naturally, I consider that my views are reasonable, although I not have carried out in-depth research. My stance is therefore partly intuitive ("gut feel").
In principle, it would be appropriate for me to put forward a strong opinion only after I had tried out the technology first-hand. I have some appetite to do that in the spirit of discovery, and consistent with my practice of "learning by doing". However, one of the problems that I see with BitCoin is the apparent complexity involved in handling it, as well as the absence of reliable service providers.
These difficulties (real or perceived) have been enough to prevent me from becoming a participant in any BitCoin transactions so far.
Of course, I haven't really been interested in buying BitCoins. My objective has been to find a way to take a short position. Until now, this has not seemed viable.
I was beginning to think that I would be stuck, unable to "put my money where my mouth is".
However, I recently visited the website of IG Index (an established provider of financial spread betting markets). I was interested in markets on conventional products like equities, currencies and commodities. I was surprised to find out that they are now offering spread bets on the BitCoin price.
This changes the situation considerably! Using IG Index would eliminate my concerns over counterparty risk, and my operational and security concerns about most BitCoin providers. It would also mean that any gains I made in taking a short position would be paid out in GBP ("real money", as I like to call it.)
That last point is quite important, philosophically. As far as I could tell, other products that I had seen before that might have allowed me to take a short (BitCoin derivatives) were to be settled in BitCoin. Since I believe that BitCoins are really worth $0, and are at least due for a dramatic decline, it would of course be sub-optimal to be paid my gains in that form.
In the most extreme case, I suppose, I could be "completely" correct and see the BTC fall to zero and my puts would actually be worthless.
My initial due diligence on the IG Index product was very encouraging. I was very impressed with their spread betting platform, and the BitCoin contracts is quoted with a very respectable bid-offer spread and a reasonable cost of carry. I know that IG Index does use the markets to hedge its net client exposure but I would assume that in this case they are relying on genuine 2-way flow.
They probably also judge that offering this product is good marketing. They have converted at least one interested party into an active client on other contracts !
More on that in future posts. For now, the key point is that it looks like I'm now able to express my strongly-held views on the BitCoin price if I wish to. It's likely that I will go ahead and do that. I will post the outcome here. But I'm also motivated to express some other views on financial markets, and to put those into practice as well.
My other views are not as strident as my ultra-negative outlook for BTC, but admittedly most of them are "negative". I do have a strong bias in my predictions.
The New Year is a good time for "Top 10s" and so on, so I will pick out ten predictions that I am willing to put my name to and post them here.
Subscribe to:
Posts (Atom)