Greed is starting to return and fear of missing out (FOMO) is becoming one of the driving forces influencing investors, according to BlueBay Asset Management’s Mark Dowding.
‘It could be that markets start to quieten down as we head towards Christmas. Yet, larger moves can often happen at this time of year and so it will be interesting to monitor price action to see if any trends start to appear’, he said.
Dowding, who runs several funds at the firm, including the BlueBay Investment Grade Global Aggregate fund, said it will also be interesting to see if benign bond yields give equities and other risk assets a boost into the year-end.
‘One of the striking aspects to us in recent weeks has been to observe greed starting to return and FOMO becoming one of the driving forces influencing investor behaviour. Clearly, this is seen most pertinently in Bitcoin, or ‘jail futures’, as one US policymaker we recently met, referred to the cryptocurrency.
‘We are inclined to think of Bitcoin as a gold rush for the millennial generation as with other bubbles such as the dot-com phenomena of the late 90s.’
Dowding, pictured below, said the team is interested to see how this may start to influence other unrelated markets, as the desire to get rich quick sees the conservatism which has characterised risk-taking since the global financial crisis, starts to evaporate.
‘As for Bitcoin itself, who knows where it will go – but with latecomers now rushing to invest, it strikes us that we may be entering a new more risky phase in a bubble where price action to the upside can be explosive.
‘It is nearly impossible to be short, yet highly likely that the bust is going to follow in the next 12 months when the supply of new buyers prepared to chase prices has finally been exhausted.’
With the price of Bitcoin changing on a daily basis, it’s no wonder fund managers and investment professionals are sceptical about the craze. Last month boutique founder Davide Serra was hit with a Twitter tirade following his tweets on the cryptocurrency.
However, the previous backlash did not stop him from taking to the social network once again this weekend, as he reiterated his view that Bitcoin is mainly used by ‘criminals’ in various emerging market countries.
Bitcoin miners consume electricity mainly made with coal by more than 159 individual nations. A disaster for the environment for something has zero intrinsic value, is mainly used by Crimnals/ Venezuela / Zimbabwe / North Korea— Davide Serra(@davidealgebris) December 16, 2017
Once again, the comments evoked outrage from many Twitter users, with one user asking Serra to ‘stop spreading lies that serve no good’. Click here to see the whole Twitter thread.