News & Views

Bitcoin & Cryptocurrency – What’s to be Excited About?

By | News & Views, Uncategorised | No Comments

Friday Blog – 22/01/2021

 If you have ever invested money with Wells Gibson, you will almost certainly have heard me talking about the emotional cycle of money – this excellent cartoon by Carl Richards at The Behavior Gap illustrates it beautifully.

Clients that are new to Wells Gibson usually arrive with a portfolio of financial products, pensions and investments – these will have been accumulated over the years, so we’re not surprised when we find a particular product or investment which was bought when it was doing so well, it was ‘flavour of the month’.

As investors, we need to be quite discerning as there will always be a ‘flavour of the month’ and this time it’s bitcoin.

Can you make money with bitcoin?  Yes – some people have made truly vast amounts of money.

However, can you lose money?  Absolutely, in vast amounts, and in more ways than one.  There’s the good old-fashioned way of doing it, by buying the asset when the price is up and selling when it falls (see the above illustration).

Bitcoin is a particularly volatile instrument – just in the first couple of days of 2021, it has fluctuated between a high of £29,981 and a low of £24,901, a drop of 8.5% in a matter of days.  During 2018, it dropped by around 80% of its value at one point.

Furthermore, there are additional fun and creative ways to lose money with bitcoin, because of its nature.  Spare a thought for James Howells, who unintentionally dumped a hard drive containing 7,500 bitcoin in 2013 – an error of judgement that, if he can’t find it, will cost him millions at today’s prices.  Then there’s Stefan Thomas, who has forgotten the password to his bitcoin wallet – he has two guesses left before his 7,002 bitcoin (worth millions as I write) are gone forever.  As memory lapses go, that’s an expensive one.

I must confess that I don’t yet really understand cryptocurrencies, of which bitcoin is just the most well-known.  That, for me, is reason enough not to get involved.

However, there are five features of cryptocurrencies that I definitely can get my head around.



Bitcoin is not an investment, nor is any cryptocurrency.  It produces no income, unlike shares (which produce dividends, paid out of the profits of the companies); bonds (interest payments from the companies or governments to whom the money is loaned); or property (rental income).

The only way anyone can make money from bitcoin is to sell at a higher price than it was purchased.  You make (or lose) money from bitcoin by speculation, not investing.

To be fair, we have, in the past, made exactly the same point about gold, which I also don’t consider to be an investment in the true sense, and for the same reason.



Bitcoin has no intrinsic value – it is not worth anything in and of itself.  It has no use whatsoever other than as a means of exchange and, it’s pretty poor at doing that as it can process fewer than ten transactions per second.  Also, its value fluctuates so wildly that you can’t be sure what is being exchanged.

In fairness, pretty much all of the world’s currencies are what are known as fiat currencies: there is nothing backing them except the economy of the country that issues them.  The value of more usual currencies such as the dollar, euro and pound also fluctuate, but not to the extent of cryptocurrencies, the price of which has no connection with anything tangible at all.


Bad actors 


As they are untraceable, cryptocurrencies have become the currency of choice for criminal activity, including money laundering, and drug and people trafficking.  Ransom demands for computer hacking often come with instructions for payments to be made via cryptocurrency.

Something similar could be said for physical cash, but there are very strict rules about the handling of cash to try and prevent money laundering, which is why many professions, including our own, check our clients’ identity and the source of their wealth very carefully.  Due to the untraceable nature of bitcoin, although the same controls apply, they cannot be policed easily.

That’s even without discussing out-and-out scams, such as One Coin, covered brilliantly in the podcast The Missing Cryptoqueen.  Or pump groups, where people meet with the sole aim of coordinating buying of cryptocurrencies to jack up the price, with a view to offloading to the unsuspecting person who comes along next.  All of these scams operate on the ‘greater fool’ theory – ok, I might be stupid to buy this stuff, but there will always be someone coming behind to take it off my hands at an even higher price.


Ecological disaster 

Bitcoin is shockingly reckless with resources and, as they are generated (or ‘mined’) digitally, and records have to be maintained on servers running 24/7, the energy consumption of the bitcoin platform is staggering.  Yes, in this day and age pretty much all financial records are held digitally, but the effect of this pales into insignificance besides cryptocurrencies.  According to the Bitcoin Energy Consumption Index, it ‘represents close to half of the current global data centre electricity use’.  Its carbon footprint is equivalent to that of New Zealand, and its energy consumption equivalent to that of Chile.

Even once mined, bitcoins are kept on an electronic register and if you want to spend them, that’s electronic too.  The average energy consumption for one bitcoin transaction is estimated at 741 kilowatt hours; by comparison it takes 149 kWh, not for one Visa transaction, but for 100,000 of them!


Investor protection 

There is no investor protection for bitcoin owners!  The Financial Conduct Authority doesn’t even regulate the sale of bitcoin and have gone so far as to ban the sale of derivatives or other instruments that are based on cryptoassets.


Caveat emptor

 Having highlighted all of the above, from what I have read and heard, it seems fairly likely that blockchain, the technology that underlies all cryptocurrencies, may well have widespread use in financial transactions and record-keeping in the future.  It may even be that cryptocurrency, perhaps even bitcoin, will have a part to play.  However, there are a number of technology and regulatory hurdles to be overcome, perhaps taking years, before it becomes mainstream.  To quote The Economist, ‘Bitcoin was originally sold on the promise of upending the global monetary system. Its success now hinges on finding a more modest role within it.’

As ever, we would love to hear from you, if you have any comments about this or any other of our other articles.

If you have any wealth planning questions, we can help you with, or if you just need a chat about what’s going on in your life, we are here to help.


Please note that the sale of bitcoin is not a regulated activity, and therefore Wells Gibson cannot provide advice or assistance on bitcoin or any other cryptoasset activities.  All bitcoin prices sourced at Morningstar. Prices can rise and fall, often dramatically.  If you buy bitcoin, you could get back less than your original stake, and could lose everything you invested. 


Purposeful Wealth

By | News & Views, Uncategorised | No Comments

Purposeful Wealth


Do you want to live a fulfilled and purposeful life?  Are you unsure how to create the fulfilled life that you’re seeking?

When it comes to wealth planning, I feel it’s my responsibility to help my clients live a fulfilled life. Understanding my clients’ lives, especially their purpose and what they want to get out of their lives, is fundamental.

This concept of a fulfilled life is at the heart of my approach to wealth planning.  What I’ve come to realise is that if we approach our money, as well as our time and talents, with a proper perspective and with integrity, we’re more likely to find contentment.  As such, I believe real wealth is a fulfilled and purposeful life, a life that is characterised by contentment.

There are a number of principles that feed into this, and ultimately what it comes down to is that real wealth is about much more than money and possessions.  I’m sure you would agree.

The concept of integrity is dealing fairly with others, and the concept of stewardship means rather than asking yourself, “How do I protect or use my money?” you ask yourself, “How can I make best use of the time, talents and money entrusted to me?”

Within this principle of stewardship, there are seven key areas that we all ought to focus on.  The first is what I like to refer to as, Authentic Investing, which will provide you with the greatest chance of having a successful investment outcome.  The other six areas are what I describe as Wise Financial Strategies:


  • Cashflow – preparing you for life’s many transitions.


  • Borrowing – ensuring debt does not choke your financial future.


  • Risk – providing for you and your family if the unexpected happens.


  • Tax – not paying more tax than you need to.


  • Legacy – providing for those who are important to you.


  • Giving – making a real difference to others.


What’s your purpose?

Defining your purpose and purposeful goals starts by answering life-centred questions such as:


  • What is important about money to you?


  • Who is important to you and who would you like to spend more time with?


  • What activities or skills would you like to spend more time doing or learning?


  • What would do differently if you had more time or money?


How you answer these questions is vital if you want a wealth plan which is aligned with your purpose in life.

Trusted Partnership

As you can appreciate there are many challenges when it comes to addressing the seven key areas highlighted above.  For instance, not putting the tax ‘cart’ before the investment ‘horse’, so to speak; avoiding a consumptive lifestyle and living within your means; or perhaps, it’s deciding on how much to transfer to loved ones…

If you want to bring clarity, contentment, and certainty to your financial life, I believe you need to establish a trusted partnership with a wealth planner, someone who puts your life at the centre of their conversations with you and everything they do for you – they can stop you making the wrong decisions, at the wrong times and for the wrong reasons – they can show you strategies you may not have previously considered – they can take away a lot of the hassle that comes with managing your money, planning your financial future and importantly, ensuring you remain on track.

About Jonathan Gibson

 Jonathan is the author of Purposeful Wealth, available on Amazon.

Jonathan is the Managing Director of Wells Gibson Limited which was founded in 2016 as a boutique, family-owned business and is one of c.70 firms in the UK to be awarded Accredited Financial Planning FirmTM status by the Chartered Institute for Securities & Investment.

Jonathan is a Chartered Fellow of the Chartered Institute for Securities & Investment, and his qualifications include Certified Financial PlannerTM Professional, Chartered Wealth Manager, and Chartered Financial Planner.



Positives for 2021

By | Investments, News & Views, Uncategorised | No Comments

Positives for 2021


If Sleeping Beauty had been woken from her slumbers on New Year’s Day 2021, she would have been pleasantly surprised by the value of her global equity portfolio for however long she had been asleep.


Somewhat remarkably, over the past year, she would have been up for the year and blissfully unaware of the tragic pandemic that has tainted 2020 and caused such market ructions in March and April.  In fact, she would be wondering what the worry with investing was all about.  Take a look at the different outcomes that she might have experienced depending on how long she had been asleep for, in the table below.


Table 1: Sleeping Beauty’s slumbers – cumulative returns, after inflation to 30-12-2020


Time asleep1 year3 yrs5yrs10 yrs20 yrs30 yrs40 yrs50 yrs
Cum. return10%25%68%138%96%525%1,333%867%


Data: MSCI World Index in GBP adjusted for UK RPI. Morningstar Direct © Copyright 2021.  All rights reserved.


As investors, we should take a similar approach to looking at our assets, reminding ourselves that time and compounding are our friends.  Yet it is understandable that many investors still feel a bit nervous about the future, not least in the shorter-term with the recent literal assault on US democracy and the escalating pandemic.  Listening to the news can be depressing as well as somewhat repetitive.  Many of the more positive stories are often lost in the gloom.  Remember that it is always darkest just before dawn.


To redress the balance, here are five positive insights for 2021 and beyond:


First, and most obviously, the scientific community has done a remarkable job delivering the world with a suite of vaccines that provide a way out of the pandemic.  The UK has played a leading role, not only in vaccine development, but also identifying existing drugs that are, and will, have a major impact on treating patients including dexamethasone, tocilizumab and sarilumab (not easy to pronounce!).  A new double-blind trial is also underway in the UK looking at interferon beta, which initial indications show could dramatically reduce the risk of serious disease, which could – alongside the vaccines – be a game changer for managing Covid over time[1].  There is light at the end of the tunnel.


Second, we have learned many valuable lessons and built resilient processes and a logistics infrastructure for coping with any future pandemics, including bringing back or shortening critical supply chains for anti-biotics, PPE, vaccine manufacture, building community testing and delivering vaccine rollouts.  That has to be a good thing.  The pandemic also reveals how much we all need each other and what a powerful sense of community feels like.  How well would we fare without the people working in our local supermarkets or the lorry drivers and couriers keeping us supplied?  Or the hospital cleaners that expose themselves to the virus every day to keep others safe?  We will come out of this better prepared and hopefully more appreciative of the things we value such as family, friends, a round of golf, or a night at the cinema!


Third, with the pending inauguration of Mr Biden as President in the US, perhaps we will see a less bombastic approach to politics and the rebuilding of trust between democratic friends and allies that will help the free world to resolve some of the major issues that we face, not least how to manage relations with authoritarian states such as China and Russia.  Coming together is better than moving apart.

Fourth, perhaps we are at a positive inflection point in terms of social media, where something needs to change[2].  It is evident that those using social media, and the platforms themselves, have responsibilities that for too long have been blurred by the grey areas between free speech and hate speech and between being a technology platform and a publisher.  There is – post the storming of the US Capitol – a far greater sense that something urgently needs to be done.  In ten years’ time, we may well look back in disbelief at the wild west of the first 10 years of social media!


Fifth and finally, there appears to be an ever-increasing urgency to address climate change, with the UK at the forefront, not least with the presidency of COP26 in Glasgow later this year, and the government’s pledge to reduce carbon emissions by 68% of its 1990 levels by 2030.  In the past 10 years, the UK has reduced its carbon emissions by more than any similarly developed country[3].  It has also set a target for net-zero emissions by 2050 and pledged to ban the sale of new petrol and diesel cars by 2030. With the US reengaging, the momentum is shifting toward greater action, which also encompasses green finance and more sustainable investing.  That can only be a good thing.


Does all this mean that markets will rise in 2021?  The truthful answer is that no-one knows, not even the scientists!  But if we take a leaf out of Sleeping Beauty’s book, there is a pretty reasonable chance that the world will be in a better place in the not-too-distant future and when we look back – as an investor participating in the resilience, innovation and dynamism of the world – we will, most likely, be pleased with what we see.


If you have any questions, please don’t hesitate to contact Wells Gibson.


Risk Warnings


This article is distributed for educational purposes and should not be considered investment advice or an offer of any security for sale. This article contains the opinions of the author but not necessarily the Firm and does not represent a recommendation of any particular security, strategy, or investment product.  Information contained herein has been obtained from sources believed to be reliable but is not guaranteed.


Past performance is not indicative of future results and no representation is made that the stated results will be replicated.



[2] For anyone who wants to understand how social media works and the dangers that it poses to individuals and society as a whole, we highly recommend watching ‘Social Dilemma’ which can be found on Netflix.


What a year!

By | News & Views | No Comments

2020 will certainly go down in history as a momentous year, with the tragedy that is Covid-19, the painful global downturn that has ensued, the major curbs on personal freedom and one of the most divisive US elections, carrying the headlines. What will almost certainly be a forgotten as a footnote to the year is the fact that it is looking likely global equities will finish the year slightly up on where they started it.

Yet that is to belie the still raw memory of some of the most severe daily and weekly market falls – and subsequent rapid rises – that investors have ever experienced. Such moments in markets can be disconcerting and, when emotions kick in, can lead to poor decision-making. Being tempted to act on market falls – or the perceived prospect of market falls – is extremely risky and likely to harm your portfolio.

Take a look at the chart below that shows the annual return of developed markets and emerging markets in aggregate (column) and the intra-year fall from that year’s market high (blue dot). 2020 is a good example: the market fell around 25% but is now above its starting point. Likewise, for 2016, which saw an awful start to the year and the Brexit vote, yet the markets ended almost 30% up. Just hanging in there resulted in an annualised return of over 11% over this almost 10-year period, which meant that investors doubled their assets every seven years or so. That is a great outcome.

Figure 1: Responding to market falls is not a good idea

Data source: World equities in GBP 1/2011 to 11/2020. Morningstar Direct © Copyright 2020. All rights reserved.

Actively managed ‘absolute return’ funds, which promise positive returns above cash over two to three-year horizons demonstrate how difficult second-guessing markets is. The recent Financial Times headline ‘Absolute return funds on course for worst ever annual outflows’ says it all. Some funds lost more than 10% this year.

So, when you look back on 2020, just leave your thoughts about the markets in the footnote where it belongs. Many other things were far more important. Let’s hope 2021 brings more joy.

Equity Markets and US Presidents

By | Investments, News & Views | No Comments

When it comes down to the returns of stock markets under different Presidents – Democrat or Republican – does it really matter who is in power?  Should we change our portfolios?  Can we predict what is going to happen?  The quick answers are ‘no’, ‘no’ and ‘no’!

This is perhaps not really very surprising as the price of a company’s shares is based on the future cashflows that it will deliver discounted back to a present value, using a discount rate that reflects the risks associated with that company’s cashflows.  A Presidential term is four years, but a company’s cashflows run into the distant future.  Despite the partisan nature of US politics at this time, Democrats and Republicans are all still capitalists and believe in personal freedom, property rights and, yes – even if it does not feel like it at this moment – democracy.  In a broad political sense, Democrats and Republicans are simply variations on a democratic, capitalist theme.

Active fund managers may try to position portfolios to reflect world events, but predicting the future is very hard to do!  There was much talk of the ‘blue wave trade’ prior to the election to position for a Democrat clean sweep of all parts of government yet look how that seems to be turning out.  A few days ago, the prospect of a vaccine for Covid-19 sent airlines, banks and energy companies soaring and Zoom and other ‘lockdown’ benefiters, such as Ocado, down.

Random events and the release of new information moves the market’s view of cashflows and discount rates resulting in the movement of share prices.  Guessing against randomness is hard but taking on the known risk that equity returns are far less certain than holding cash, rewards investors who ignore this short-term noise and focus on the long-term.

The choice of the US President is important to some, but to the long-term investor it is largely irrelevant from an equity market perspective.