Sunday 31 December 2017

QVM Traders And Crypto Currencies

It may surprise some observers to learn that a number of QVM Market Traders also engage in global financial markets particularly through the ASX. We thought it might be useful to look at the latest buzzword - crypto currencies.

There are some legends amongst our ranks who have been very successful in trading shares over the years including the matriarch of one family business and one trader who came to the market straight from high school. It may just be in my circle of market neighbours but no Saturday discussion is complete without exchanging tips on the latest ASX market moves.

The connection between trading goods and trading shares is not so distant. Both involve ways of making money, both include an element of gambling, and both need astute judgement. Market trading (QVM style) involves fluctuating levels of cash as we work through seasons and buying cycles. When you have waiting cash you like it to earn well and there are more profitable ways than storing it in a standard bank account. There is another element right now and that is that retailing is going through difficult times. Looking for other ways to earn income has become a necessity.

Share trading can be profitable, but has its risks, and as we have already identified that is part of the buzz. Crypto currencies are a whole new thing in financial markets. They are described as digital currencies, alternative currencies, or virtual currencies, and Bitcoin is probably the best known. Bitcoin is described as a way of conducting transactions without a central bank. Transactions take place between users directly with a register called a blockchain keeping track of things. The wikipedia entry for bitcoin includes the warning that the description may be too technical for most readers to understand.

Right at the moment, Saturday discussions under the sheds usually include the question –“What do you think of investing in Crypto currencies?” My stock answer is I don’t understand how it works so I don’t trade in them. Understanding exactly how crypto currencies operate is quite challenging so when financial guru, Michael Pascoe, wrote an article in the Sydney Morning Herald this week I took notice. He describes crypto currencies in layman’s terms and includes some useful analogies. Here is the link -

Spoiler alert – the article includes the line – “They represent a pure mania – the price rising in the belief that other people will continue to bet on the price continuing to rise.

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