Next Investors logo grey

The cryptocurrency risk

Published 24-JAN-2020 11:20 A.M.


3 minute read

Hey! Looks like you have stumbled on the section of our website where we have archived articles from our old business model.

In 2019 the original founding team returned to run Next Investors, we changed our business model to only write about stocks we carefully research and are invested in for the long term.

The below articles were written under our previous business model. We have kept these articles online here for your reference.

Our new mission is to build a high performing ASX micro cap investment portfolio and share our research, analysis and investment strategy with our readers.

Click Here to View Latest Articles

Earlier this week I was reading a newsletter produced by a business in the financial services industry and was shocked to see the results of a survey completed by financial advisers in the USA in regards to cryptocurrency. The results from the survey indicated that 6 per cent of advisors had an allocation of crypto assets in their client’s portfolio. What was even more staggering is that 45 per cent of the advisers were open to the idea of placing cryptocurrencies in their client’s portfolio in the next year.

While these statistics are from the USA, it is very common for Australia to follow the trends unfolding in the States. Call me old fashioned, but these figures really concern me because cryptocurrencies are largely unregulated and are certainly not an investment grade asset. Given this, it surprises me to hear that financial advisers are recommending these products when they are supposed to be the voice of reason by ensuring clients invest wisely and safely.

In my experience, those who invest in cryptocurrencies are chasing potential high returns that may eventuate with this type of product. However, as we all know, with high returns comes high risk, and the majority do not do well managing this risk. That’s because those who do invest are largely unaware of the risks they are taking and, therefore, tend to make emotional decisions, which results in poor outcomes. If you decide you want to delve into the world of cryptocurrencies, it pays to be well researched and educated.

While some of you will disagree with me about investing in cryptocurrencies, right now there are not enough safeguards to protect consumers if they do invest, which is why advisers should be steering clients into safe traditional assets rather than bowing down to client demands.

What were the best and worst performing sectors this week?

It has been a week of indecision on the market, however Consumer Staples has been the standout performer as it is up over 3 per cent so far. Healthcare is not too far behind, given that several stocks in the sector have been doing well. Materials and Information Technology are also up, rising nearly 1 per cent. As for the worst performers, Industrials is down nearly 2.5 per cent while Energy and Utilities are both down over 1 per cent so far this week.

Looking at the top 100 stocks, the best performers include Fortescue up nearly 10 per cent, Mirvac up over 5 per cent followed by Woolworths, which is up nearly 5 per cent. The worst performers so far include CIMIC, which is down over 20 per cent on news of a $1.8 billion write off, however, forecasts are in line with expectations. Downer EDI was also hit heavily down over 18 per cent so far with Qantas and Star Entertainment down over 6 per cent.

So what's next for the Australian share market?

Last week I was indicating that the market would rise up over the next two to three weeks, and while it is still possible that it will rise another one or two weeks, there is a possibility that the market is making its next short term high. Given that it is bullish right now, I expect it will remain bullish for the next few weeks unless it tells me otherwise. That said, investors should exercise caution in buying any stocks in the short term.

Given the market has reached the bottom end of my target of 7,200 points in the current rise, it is likely that the peak will happen any time soon although if it continues to rise over the next one to two weeks, then the peak is likely to occur at around 7,600 points.

As I have been saying lately, I believe the market will be bullish in 2020 and anyone willing to put in a bit of effort will find some very good opportunities to buy during the year, which is why I am encouraging investors take advantage of the strong market conditions.

Dale Gillham is Chief Analyst at Wealth Within and international bestselling author of How to Beat the Managed Funds by 20%. He is also the author of Accelerate Your Wealth—It’s Your Money, Your Choice, which is available in bookstores and online at

General Information Only

S3 Consortium Pty Ltd (S3, ‘we’, ‘us’, ‘our’) (CAR No. 433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information and is for informational purposes only. Any advice is general advice only. Any advice contained in this article does not constitute personal advice and S3 has not taken into consideration your personal objectives, financial situation or needs. Please seek your own independent professional advice before making any financial investment decision. Those persons acting upon information contained in this article do so entirely at their own risk.

Conflicts of Interest Notice

S3 and its associated entities may hold investments in companies featured in its articles, including through being paid in the securities of the companies we provide commentary on. We disclose the securities held in relation to a particular company that we provide commentary on. Refer to our Disclosure Policy for information on our self-imposed trading blackouts, hold conditions and de-risking (sell conditions) which seek to mitigate against any potential conflicts of interest.

Publication Notice and Disclaimer

The information contained in this article is current as at the publication date. At the time of publishing, the information contained in this article is based on sources which are available in the public domain that we consider to be reliable, and our own analysis of those sources. The views of the author may not reflect the views of the AFSL holder. Any decision by you to purchase securities in the companies featured in this article should be done so after you have sought your own independent professional advice regarding this information and made your own inquiries as to the validity of any information in this article.

Any forward-looking statements contained in this article are not guarantees or predictions of future performance, and involve known and unknown risks, uncertainties and other factors, many of which are beyond our control, and which may cause actual results or performance of companies featured to differ materially from those expressed in the statements contained in this article. S3 cannot and does not give any assurance that the results or performance expressed or implied by any forward-looking statements contained in this article will actually occur and readers are cautioned not to put undue reliance on forward-looking statements.

This article may include references to our past investing performance. Past performance is not a reliable indicator of our future investing performance.