Trouble lies ahead in the markets

Do you know anyone who has borrowed to buy bitcoin? I asked this question on Twitter earlier this week, rather assuming that the answer would be no. Instead I got several replies from people who do, and another pointing out that IG Index often has bitcoin at “unlongable” – meaning that they are at their capacity for people betting on margin. People are borrowing to bet, and the price of a bitcoin has gone parabolic (up 14 times in the last 12 months).

That should make you feel nervous. However you feel about cryptocurrencies and blockchain technology, there are few historical examples of assets that have risen that much in price in such a short time and not come back down again pretty fast too. But the mini-mania that is bitcoin is just one of many signals knocking around in the markets that should make you nervous. Valuations are high (or as the Bank of International Settlements says “frothy”); Donald Trump’s tax plans could well be about to crash the greatest bond bubble in centuries; there is a high level of complacency about, despite very high political volatility; and the economic growth we need to keep earnings going looks as elusive as ever. You don’t have to be naturally bearish to see that there is almost definitely trouble ahead.

What should you do? Stay simple; stay diversifed; and outside a core defensive portfolio, keep an eye open for sectors with genuine organic growth potential. Look at our update to the MoneyWeek investment trust portfolio (it is going well). And see our cover story for a sector where there is a chance of seeing real growth, regardless of the political noise around us – the drug companies trying to figure out cures for some of our nastiest neurological diseases: Alzheimer’s, Parkinson’s and MS. There is as yet no cure for any of them, but there will be huge rewards for the first to find one. Dr Mike Tubbs runs through the contenders and picks the stocks he reckons will be the winners.

Finally, there is one more thing you can do with any spare cash you might have (perhaps from selling that bitcoin). You can bid to have lunch with me in London (on the Financial Times) at private members’ club George. I can’t promise it will do miracles for your finances, but I can promise that it will be entertaining (we can argue about bitcoin and Brexit) and that it might help with a miracle or two for Alzheimer’s suffers: all proceeds go to Alzheimer’s Research. You can bid using this link. I look forward to meeting one of you at George.

  • Cynic_Rick

    If what is speculated in the following link comes to fruition there certainly will be trouble in the markets, mega trouble:

    http://truepublica.org.uk/contributor-news/how-brexit-was-engineered-by-foreign-billionaires-to-bring-about-economic-chaos-for-profit/

    Included in introduction:

    “By Graham Vanbergen: In this truly alarming story I connect three significant articles to show that Brexit, far from being the result of representative democracy, is in fact a campaign of covert intervention by foreign billionaires to bring about economic chaos in Britain in order create the circumstances for making huge profits. This is not the stuff of mere conspiracy theories.

    “Clear evidence has emerged that Brexit was engineered and is already proving to be a catastrophe, as confirmed by the mainstream media frenzy over Theresa May’s political mis-management of the greatest post-war challenge of our time.

    “In part-one (by left leaning, The Guardian newspaper) we see how Brexit really came about and who influenced it.

    “In part-two (by centre newspaper The Independent) we see how opaque and deceptive think tanks have heavily influenced Brexit and

    “in part-three (by right leaning EUReferendum) we see that economic chaos is being planned in a post-Brexit era, who is involved and why. These articles identify the actors behind the current attack on Britain and what has happened to date so far. At the end, the reader should get a sense of the impending disaster being constructed by the super-rich against the people of Britain purely for profit.

    “Just as oil speculators pushed up global energy prices to $145 a barrel just prior to the financial crash in what was termed the London Loophole, and then profited from short bets on the way down – Britain is being set up for a fall where those with big money will ultimately clean up.”

    And from part-three:

    “… the Legatum Institute seems to be paving the way for its “parent undertakings”, engineering a “disruptive transition” for Brexit, then to reap the profits from chaos. Its task is assisted by useful fools and fellow travellers on the Tory right. What we have often characterised as incompetence, therefore, may be more sinister. There is money to be made out of a hard Brexit.”

    • polidorisghost

      Yeah Rick, of course, it was a conspiracy wasn’t it. I didn’t really want to vote Brexit, but the “man” made me. He corrupted my precious bodily fluids Rick and made me do it.
      https://www.youtube.com/watch?v=X4XhhTF7vRM
      You’re insane, Rick.