Question: What are your thoughts on cryptocurrency, like Bitcoin? Is it a worthwhile investment?
My idea was to invest $500,000 in Bitcoin and just sit on it, and see what happens, just for something different. I don’t know how Bitcoin works but I have heard about Bitcoin for a while now.
Answer (by Paul Rickard):To be honest, I don’t really have a good handle on what is driving the demand for Bitcoin (and hence the rapid appreciation in price), so I choose not to invest. I subscribe to the view that I don’t invest in things that I don’t understand.
Interestingly, at our Listed Investment Conference in Sydney last Thursday, both Hamish Douglas (from Magellan) and Charlie Aitken were asked about investing in Bitcoin. Both said they hadn’t and wouldn’t invest – with Charlie in particular seeing it as a “bubble” and the current investor behavior as frenetic.
There are potentially hundreds of crypto currencies. My advice? Be careful.
Question: Paul Rickard said in an article recently that, “I continue to maintain that Telstra will do quite a lot of work either side of $4.00, but because a 5.6% fully franked yield is interesting but not compelling, my sense is that you can afford to be patient. There is no rush to buy.”
What if you hold them already, T1, T2 and T3?
Answer (By Paul Rickard): Legally, I can’t provide you with personal advice unless I have a thorough understanding of your investment objectives, financial situation and particular needs.
So, with your investments in T1, T2, and T3, what are your investment objectives? How does Telstra fit in with the rest of your portfolio? Also, while it is very hard to ignore and relevant to tax considerations, what you paid for a stock is not really relevant to whether you keep or sell a stock.
My view is that Telstra isn’t going to go anywhere fast. This means that it will lag the market if the market rallies – and probably stay quite well bid if the market falls. In some way, it’s a classic defensive stock. This means that if you are happy now with a circa 6% fully franked yield, not much upside, probably not too much downside – then hang on. If you think the market is going to rally and want stocks that will perform, then consider selling some Telstra and re-investing in other stocks.
Important: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. Consider the appropriateness of the information in regards to your circumstances.
