Thoughts from Saltydog Investor

Firstly, thank you for all your feedback about cryptocurrency and blockchain, and to those who also came forward with their own ideas on which funds could be used to invest into these areas – writes Douglas Chadwick of Saltydog Investor

Some clearly believe these are the creation of the devil, used only by those lacking grey matter or with a death wish; others feel it is the way forward, reducing the influence of the banks and institutions.

I keep a watchful eye on the wider investment environment and it’s been impossible not to notice the rise of cryptocurrencies and blockchain technology and note the similarity to the dot.com bubble.

Started by the military and academics in the late 60s the Internet remained obscure for many years until PCs became affordable when it changed mass communication and commerce; new businesses sprung up overnight and, despite never having made any money, were given astronomical valuations – sound familiar?

It didn’t end well. NASDAQ, which included a large number of newly floated ‘tech’ companies, peaked in 2000 at around 5000; by September 2002 it had shed 70% to less than 1200.

Companies went bust and people lost fortunes; however, the technology was good, and those companies with good products and services that weathered the storm are now some of the world’s largest companies.

I don’t understand how the blockchain works, but some of the younger people that I work with believe it has technical merit and potential commercial applications.

Bitcoin made fantastic gains, then fell dramatically; I wonder if this, or another blockchain based token will end up being the next Facebook, Google, Amazon or Apple?

Some of the funds that people have told me about I have struggled to find, but they include:

• LEGR (First Trust Indxx Innovative Transaction & Process ETF)
• BIT-XBT (XBT Provider AB Bitcoin tracker ETF)
• ETH.XBTE (XBT Provider AB Ethereum tracker ETF)
• GBTC (Bitcoin Investment Trust)
• Not a trust or ETF, but kr1 invests in pre icos and is listed on the Next crypocurrency trading platform
• Crytpto20 – a cryptocurrency fund that tracks the top 20 coins with an index like approach, available from Invictus Capital (who also run the Hyperion cryptocurrency venture capital fund).

I haven’t been brave enough to invest yet and if I do, then it will only be a small amount, in my ‘Blue Sky’ portfolio, where I tend to give funds that are of special interest to me a bit more leeway than I do my core investments.

Here are some of the funds that I have mentioned previously – some I hold, some I don’t; some have performed spectacularly well, and some have not!

Vietnam

I went there 50 years ago with the Merchant Navy, and my youngest brother is a doctor in Ho Chi Min City which has shaped my view of the country. It is self-sufficient in oil and rice, selling the surplus into the rest of Asia; it’s now the world’s largest producer of coffee.

China, America and Japan have off-shored manufacturing here for a number of years due to the low wages and the ‘can do’ attitude of a young population; when these countries do well, then so do the Vietnamese.

Over the years I have invested in both of these funds.

• VinaCapital Opportunity Fund
• db x-tracker FTSE Vietnam

Africa

I’ve had an interest in the continent since I owned a pine furniture factory near Durban 20 years ago.

There has been political turmoil for many years and corruption has been rife; however recent changes in government could see things finally start to improve, and with large mineral resources it may one day prove to be a profitable place to invest.

Two funds which occasionally turn up in the Saltydog numbers are:

• African Opportunity Investment Trust
• HSBC MSCI South Africa ETF

Old Technology

These funds invest in companies that emerged from the dot.com crash as well as some of the newer internet retailers in emerging markets and biotech companies which have done well in recent years

• Scottish Mortgage Investment Trust
• Pictet-Digital
• Polar Capital Global Technology

New Technology

These subjects really fascinate me; nanotechnology, graphene, quantum computing, DNA data storage, artificial intelligence, etc. I’m not sure which funds are really investing in this technology, but these are the closest that I’ve found so far.

• Smith & Williamson Artificial Intelligence
• Polar Capital Automation & Artificial Intelligence

Marijuana

I have no real interest in marijuana, but I do like reading about influential world leaders and especially early entrepreneurs and money makers – J.P. Morgan, J.D. Rockefeller, Mayer Rothschild and of course Jesse Livermore.

I read a book about the Kennedy clan and a great deal of its wealth came from a liquor distribution business, which straddled the ending of prohibition in America; the consumption of alcohol simply exploded with the change of the law creating a vast fortune for Joseph Kennedy.

In a similar situation, the law is changing in the US so that the production and use of Marijuana will no longer be illegal; used both medically and personally there could be a similar explosion in demand as liquor experienced at the end of prohibition.

This requirement will be met by legal farming and conversion companies, in which it should be possible to invest.

There are already a couple of ETFs already investing in this area, although not that easy to get hold of:

• Horizon Marijuana Life Sciences Index
• Marijuana Opportunities Fund
• MG Alternative Harvest

I remind you of these funds only because they look into investing into geographical and technology areas of the future and are perhaps worth watching from an interest point of view. I am not suggesting that you should invest.

None of these funds feature in our two Saltydog portfolios, although I do hold a small investment in some of the Technology, Vietnam and Marijuana funds, but I do mean small.

Best wishes and Good investing,

Douglas.