Why we have never recommended cryptocurrency (and won’t be anytime soon!)

Cryptocurrencies, such as Bitcoin and Ethereum, have seen a meteoric rise in popularity over the past few years. They almost seem to have appeared out of nowhere! However, despite their initial success, there are many who believe that the crypto market is on the brink of collapse. The recent FTX collapse ensures that, at best, cryptocurrency faces an uncertain future.

I think I’ll have to write more another time about the FTX collapse and the carry on from it’s founder Sam Bankman Fried and his pals. Suffice to say, I’m really looking forward to the inevitable Netflix documentary on the demise of FTX – you really couldn’t make up what happened at that company!

But for now, back to cryptocurrency in general.

What the experts think

Charlie Munger is the vice chairman of Berkshire Hathaway and long-time business partner of Warren Buffett. Charlie recently celebrated his 99th birthday, and I guess when you are as experienced as Charlie, you don’t need to dress up your opinions much. Straight talking is Charlie!

Charlie and Warren have been long term sceptics when it comes to crypto. He doesn’t hold back in this clip, along with contributions from Warren Buffet and another very famous business owner, Bill Gates. It’s important to mention that this clip is from 4 years ago – they haven’t jumped on a crypto-hate bandwagon, they built the wagon in the first place. This has always been their opinion.

If you have the time to go down a YouTube rabbit hole, you’ll find lots more clips of Charlie and Warren talking about cryptocurrency in more recent years. They’re consistently scathing and you’ll hear them often talking about greed…

So why aren’t Metis Ireland recommending crypto?

We didn’t decide that we wouldn’t recommend cryptocurrency to our clients because Warren Buffet and Charlie Munger said it was rubbish. Although they’re notable stalwarts in the industry, and their opinion happily supports our own, as ever we were guided by our investment philosophy and our promises to our clients. Nothing more.

Here are some of the values that helped us to form our views on cryptocurrency:
 

1) We couldn’t fully understand it ourselves (and we like to think we are a smart bunch of people!)

 

2) We never jump on the bandwagon and invest in the next big thing

 

3) We will only recommend our clients invest in what has always worked

 

4) We believe in evidence-based investing

 

5) We believe in the great companies of the world adding shareholder value over time

 

6) Your financial plan (Metis LifePlan) always comes first

None of these values are new to our stance on crypto. They underpin every choice we make when we’re advising our clients.

Never, ever invest without a plan!

If you meet a financial adviser (product seller) who recommends a specific investment to you without first undertaking a financial plan for you and your family, run a mile. The salespeople for the “next best thing” are brilliant at what they do. They tell great, compelling stories about why this new “thing” is going to provide incredible returns, change your life, make you ten years younger, grow back your hair, and so on (Bernie Madoff anyone?).

Be sceptical, trust your gut and believe yourself when you hear that voice in your head saying this sounds too good to be true.

You and your plan are all you need to worry about

The only benchmark you need to be worried about is your own financial plan.

Get a qualified financial planning firm to prepare your plan and then make sure you review it at least annually. This is your best chance of building real wealth over time to allow you live the life that you want to live. There are no reliable get-rich-quick schemes – sorry!

We will not be recommending cryptocurrency to any of our clients any time soon. We will continue to recommend globally diversified equity and bond portfolios that have multi-decade track records. It’s the best thing for our clients. And that is the only thing that matters.

Carl Widger
Managing Director