Despite recovering this past week, Bitcoin has lost over 40% of its value in the past two months. Alex Hofford / EPA
Despite recovering this past week, Bitcoin has lost over 40% of its value in the past two months. Alex Hofford / EPA
Despite recovering this past week, Bitcoin has lost over 40% of its value in the past two months. Alex Hofford / EPA
Despite recovering this past week, Bitcoin has lost over 40% of its value in the past two months. Alex Hofford / EPA

What Bitcoin can teach us about meaningful investing


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Bitcoin has recovered a bit this past week, but has still lost over 40 per cent of its value in the past two months. This isn’t going to be an “I told you so” column; it is simply heart breaking watching so many people who invested in the cryptocurrency for fear of missing out, only to lose so much of their savings. What I’d like to do instead is to try to use this shock to look at how to build investment programmes that are more robust.  

Looking at the bitcoin boom, what in the end was really driving it? It didn't generate a yield, at least not one anywhere close to the growth in bitcoin's price. It didn't generate a profit from operations, as it has no operations. And as a currency it hasn't been used for anything major, at least not yet.

The last point reveals bitcoin's initial attraction: people could see how the cryptocurrency might be used on a large scale in the future. They subsequently discounted that demand back to today and invested, with the hope of reaping great future rewards.

But the astonishing rate at which the price of bitcoin appreciated eventually suggested a demand that quite possibly exceeded total global trade, an absurd notion. Investors that came to the party a little later were therefore not rationally discounting future demand anymore; rather they saw an asset going up in price and wanted to jump on the band wagon.

These two ideas can lead us to the basis of a solid investment programme. This is my programme, and it has worked for me. But it does not necessarily mean that it will work for you.

I am simply stimulating discussion and not giving investment advice.

The first point raised above revolves around an investment’s future prospects and expectations. In the end, the price that you pay for an asset today is based (rationally or otherwise) on the cashflows (dividends, sale of shares etc) of the future. Of course, when gazing into the future to see what it holds, one needs to be aware that accurately forecasting what is to come is never a sure bet. This is the basis of risk.

The past can be a guide though. It should in theory be able to more easily predict the future of a profitable company that has existed for 50 years in a mature market, compared with a technology start-up operating in a relatively new market. You could say that the first company is a less risky bet than the second company.

Notice that there are three dimensions here: length of historical data, maturity of market and maturity of product. Nine-year old bitcoin, operating in the new and constantly-changing world of cryptocurrencies – scores low on all three dimensions.

Of course there are plenty of disruptive companies in new markets – Google and Facebook immediately spring to mind – they have come to dominate their sector and the economy at large, and similar claims are made about bitcoin. Arguments made to me by proponents of the cryptocurrency have rested on some combination of anonymity, cryptography and de-centralisation of the trust system.

But what all these proponents seem to forget is that even if their arguments are all correct, it does not logically follow that bitcoin will emerge as top of the cryptocurrency pile.

Google and Facebook perfected rather than pioneered the search engine and social network experience, relegating early stars like Altavista and MySpace to the history books.

It's like saying new boy bands will always have a market because older boy bands stopped being boys, the fans of current boy bands will, within a year or two, stop following boy bands, new fans will therefore want a new boy band. Makes sense to me.

But which boy band out of the dozens, hundreds or possibly thousands will get to the top? How can you tell who the next One Direction will be?

The other issue, making an investment simply because the price is going up, is actually often not that illogical. Often an asset will rise in price lifted less by hype than by an upward change in its fundamental value. Early investors may often have an insight into an asset’s worth. But the problem is when they get out, you’ll have nobody to sell to.

In conclusion, it’s worth remembering that risk and return are asymmetrical, and it’s therefore essential to try and minimise the downside completely. The old adage that a 50 per cent loss requires a 100 per cent gain to offset it is worth remembering.

So while new shiny investments with rocketing values will always be tempting, companies with a history of steady, believable returns will generally come up victorious in the long run.

Sabah al-Binali is an active investor and entrepreneurial leader with a track record of growing companies in the Mena region. You can read more of his thoughts at al-binali.com

Hamilton profile

Age 32

Country United Kingdom

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Points 2,423

World Championships 3

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Paatal Lok season two

Directors: Avinash Arun, Prosit Roy 

Stars: Jaideep Ahlawat, Ishwak Singh, Lc Sekhose, Merenla Imsong

Rating: 4.5/5

Women%E2%80%99s%20Asia%20Cup
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Director: Laxman Utekar

Cast: Vicky Kaushal, Akshaye Khanna, Diana Penty, Vineet Kumar Singh, Rashmika Mandanna

Rating: 1/5

UAE currency: the story behind the money in your pockets
Ferrari 12Cilindri specs

Engine: naturally aspirated 6.5-liter V12

Power: 819hp

Torque: 678Nm at 7,250rpm

Price: From Dh1,700,000

Available: Now

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Gothia Cup 2025

4,872 matches 

1,942 teams

116 pitches

76 nations

26 UAE teams

15 Lebanese teams

2 Kuwaiti teams

ENGLAND SQUAD

Goalkeepers Henderson, Pickford, Pope.

Defenders Alexander-Arnold, Chilwell, Coady, Dier, Gomez, Keane, Maguire, Maitland-Niles, Mings, Saka, Trippier, Walker.

Midfielders Henderson, Mount, Phillips, Rice, Ward-Prowse, Winks.

Forwards Abraham, Barnes, Calvert-Lewin, Grealish, Ings, Kane, Rashford, Sancho, Sterling.

Results:

Women:

1. Rhiannan Iffland (AUS) 322.95 points
2. Lysanne Richard (CAN) 285.75
3. Ellie Smart (USA) 277.70

Men:

1. Gary Hunt (GBR) 431.55
2. Constantin Popovici (ROU) 424.65
3. Oleksiy Prygorov (UKR) 392.30

 

 

Quick%20facts
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What is 'Soft Power'?

Soft power was first mentioned in 1990 by former US Defence Secretary Joseph Nye. 
He believed that there were alternative ways of cultivating support from other countries, instead of achieving goals using military strength. 
Soft power is, at its root, the ability to convince other states to do what you want without force. 
This is traditionally achieved by proving that you share morals and values.

Profile of Hala Insurance

Date Started: September 2018

Founders: Walid and Karim Dib

Based: Abu Dhabi

Employees: Nine

Amount raised: $1.2 million

Funders: Oman Technology Fund, AB Accelerator, 500 Startups, private backers

 

COMPANY PROFILE

Name: Xpanceo

Started: 2018

Founders: Roman Axelrod, Valentyn Volkov

Based: Dubai, UAE

Industry: Smart contact lenses, augmented/virtual reality

Funding: $40 million

Investor: Opportunity Venture (Asia)

F1 The Movie

Starring: Brad Pitt, Damson Idris, Kerry Condon, Javier Bardem

Director: Joseph Kosinski

Rating: 4/5

'Unrivaled: Why America Will Remain the World’s Sole Superpower'
Michael Beckley, Cornell Press

'HIJRAH%3A%20IN%20THE%20FOOTSTEPS%20OF%20THE%20PROPHET'
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While you're here

UAE squad

Rohan Mustafa (captain), Ashfaq Ahmed, Ghulam Shabber, Rameez Shahzad, Mohammed Boota, Mohammed Usman, Adnan Mufti, Shaiman Anwar, Ahmed Raza, Imran Haider, Qadeer Ahmed, Mohammed Naveed, Amir Hayat, Zahoor Khan

ELIO

Starring: Yonas Kibreab, Zoe Saldana, Brad Garrett

Directors: Madeline Sharafian, Domee Shi, Adrian Molina

Rating: 4/5

BACK%20TO%20ALEXANDRIA
%3Cp%3E%3Cstrong%3EDirector%3A%20%3C%2Fstrong%3ETamer%20Ruggli%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EStarring%3A%20%3C%2Fstrong%3ENadine%20Labaki%2C%20Fanny%20Ardant%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3ERating%3A%20%3C%2Fstrong%3E3.5%2F5%3C%2Fp%3E%0A
Key facilities
  • Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
  • Premier League-standard football pitch
  • 400m Olympic running track
  • NBA-spec basketball court with auditorium
  • 600-seat auditorium
  • Spaces for historical and cultural exploration
  • An elevated football field that doubles as a helipad
  • Specialist robotics and science laboratories
  • AR and VR-enabled learning centres
  • Disruption Lab and Research Centre for developing entrepreneurial skills
THREE
%3Cp%3EDirector%3A%20Nayla%20Al%20Khaja%3C%2Fp%3E%0A%3Cp%3EStarring%3A%20Jefferson%20Hall%2C%20Faten%20Ahmed%2C%20Noura%20Alabed%2C%20Saud%20Alzarooni%3C%2Fp%3E%0A%3Cp%3ERating%3A%203.5%2F5%3C%2Fp%3E%0A
Benefits of first-time home buyers' scheme
  • Priority access to new homes from participating developers
  • Discounts on sales price of off-plan units
  • Flexible payment plans from developers
  • Mortgages with better interest rates, faster approval times and reduced fees
  • DLD registration fee can be paid through banks or credit cards at zero interest rates
Results

Stage seven

1. Tadej Pogacar (SLO) UAE Team Emirates, in 3:20:24

2. Adam Yates (GBR) Ineos Grenadiers, at 1s

3. Pello Bilbao (ESP) Bahrain-Victorious, at 5s

General Classification

1. Tadej Pogacar (SLO) UAE Team Emirates, in 25:38:16

2. Adam Yates (GBR) Ineos Grenadiers, at 22s

3. Pello Bilbao (ESP) Bahrain-Victorious, at 48s

T20 WORLD CUP QUALIFIERS

Qualifier A, Muscat

(All matches to be streamed live on icc.tv) 

Fixtures

Friday, February 18: 10am Oman v Nepal, Canada v Philippines; 2pm Ireland v UAE, Germany v Bahrain 

Saturday, February 19: 10am Oman v Canada, Nepal v Philippines; 2pm UAE v Germany, Ireland v Bahrain 

Monday, February 21: 10am Ireland v Germany, UAE v Bahrain; 2pm Nepal v Canada, Oman v Philippines 

Tuesday, February 22: 2pm Semi-finals 

Thursday, February 24: 2pm Final 

UAE squad:Ahmed Raza(captain), Muhammad Waseem, Chirag Suri, Vriitya Aravind, Rohan Mustafa, Kashif Daud, Zahoor Khan, Alishan Sharafu, Raja Akifullah, Karthik Meiyappan, Junaid Siddique, Basil Hameed, Zafar Farid, Mohammed Boota, Mohammed Usman, Rahul Bhatia

The specs
  • Engine: 3.9-litre twin-turbo V8
  • Power: 640hp
  • Torque: 760nm
  • On sale: 2026
  • Price: Not announced yet
Diriyah%20project%20at%20a%20glance
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