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
The specs
Engine: 4.0-litre V8 twin-turbocharged and three electric motors
Power: Combined output 920hp
Torque: 730Nm at 4,000-7,000rpm
Transmission: 8-speed dual-clutch automatic
Fuel consumption: 11.2L/100km
On sale: Now, deliveries expected later in 2025
Price: expected to start at Dh1,432,000
What the law says
Micro-retirement is not a recognised concept or employment status under Federal Decree Law No. 33 of 2021 on the Regulation of Labour Relations (as amended) (UAE Labour Law). As such, it reflects a voluntary work-life balance practice, rather than a recognised legal employment category, according to Dilini Loku, senior associate for law firm Gateley Middle East.
“Some companies may offer formal sabbatical policies or career break programmes; however, beyond such arrangements, there is no automatic right or statutory entitlement to extended breaks,” she explains.
“Any leave taken beyond statutory entitlements, such as annual leave, is typically regarded as unpaid leave in accordance with Article 33 of the UAE Labour Law. While employees may legally take unpaid leave, such requests are subject to the employer’s discretion and require approval.”
If an employee resigns to pursue micro-retirement, the employment contract is terminated, and the employer is under no legal obligation to rehire the employee in the future unless specific contractual agreements are in place (such as return-to-work arrangements), which are generally uncommon, Ms Loku adds.
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UAE currency: the story behind the money in your pockets
The specs: 2018 BMW X2 and X3
Price, as tested: Dh255,150 (X2); Dh383,250 (X3)
Engine: 2.0-litre turbocharged inline four-cylinder (X2); 3.0-litre twin-turbo inline six-cylinder (X3)
Power 192hp @ 5,000rpm (X2); 355hp @ 5,500rpm (X3)
Torque: 280Nm @ 1,350rpm (X2); 500Nm @ 1,520rpm (X3)
Transmission: Seven-speed automatic (X2); Eight-speed automatic (X3)
Fuel consumption, combined: 5.7L / 100km (X2); 8.3L / 100km (X3)
The specs
Engine: 1.5-litre turbo
Power: 181hp
Torque: 230Nm
Transmission: 6-speed automatic
Starting price: Dh79,000
On sale: Now
Syria squad
Goalkeepers: Ibrahim Alma, Mahmoud Al Youssef, Ahmad Madania.
Defenders: Ahmad Al Salih, Moayad Ajan, Jehad Al Baour, Omar Midani, Amro Jenyat, Hussein Jwayed, Nadim Sabagh, Abdul Malek Anezan.
Midfielders: Mahmoud Al Mawas, Mohammed Osman, Osama Omari, Tamer Haj Mohamad, Ahmad Ashkar, Youssef Kalfa, Zaher Midani, Khaled Al Mobayed, Fahd Youssef.
Forwards: Omar Khribin, Omar Al Somah, Mardik Mardikian.
What is type-1 diabetes
Type 1 diabetes is a genetic and unavoidable condition, rather than the lifestyle-related type 2 diabetes.
It occurs mostly in people under 40 and a result of the pancreas failing to produce enough insulin to regulate blood sugars.
Too much or too little blood sugar can result in an attack where sufferers lose consciousness in serious cases.
Being overweight or obese increases the chances of developing the more common type 2 diabetes.
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Company profile
Company name: Nestrom
Started: 2017
Co-founders: Yousef Wadi, Kanaan Manasrah and Shadi Shalabi
Based: Jordan
Sector: Technology
Initial investment: Close to $100,000
Investors: Propeller, 500 Startups, Wamda Capital, Agrimatico, Techstars and some angel investors
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Milestones on the road to union
1970
October 26: Bahrain withdraws from a proposal to create a federation of nine with the seven Trucial States and Qatar.
December: Ahmed Al Suwaidi visits New York to discuss potential UN membership.
1971
March 1: Alex Douglas Hume, Conservative foreign secretary confirms that Britain will leave the Gulf and “strongly supports” the creation of a Union of Arab Emirates.
July 12: Historic meeting at which Sheikh Zayed and Sheikh Rashid make a binding agreement to create what will become the UAE.
July 18: It is announced that the UAE will be formed from six emirates, with a proposed constitution signed. RAK is not yet part of the agreement.
August 6: The fifth anniversary of Sheikh Zayed becoming Ruler of Abu Dhabi, with official celebrations deferred until later in the year.
August 15: Bahrain becomes independent.
September 3: Qatar becomes independent.
November 23-25: Meeting with Sheikh Zayed and Sheikh Rashid and senior British officials to fix December 2 as date of creation of the UAE.
November 29: At 5.30pm Iranian forces seize the Greater and Lesser Tunbs by force.
November 30: Despite a power sharing agreement, Tehran takes full control of Abu Musa.
November 31: UK officials visit all six participating Emirates to formally end the Trucial States treaties
December 2: 11am, Dubai. New Supreme Council formally elects Sheikh Zayed as President. Treaty of Friendship signed with the UK. 11.30am. Flag raising ceremony at Union House and Al Manhal Palace in Abu Dhabi witnessed by Sheikh Khalifa, then Crown Prince of Abu Dhabi.
December 6: Arab League formally admits the UAE. The first British Ambassador presents his credentials to Sheikh Zayed.
December 9: UAE joins the United Nations.
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Titanium Escrow profile
Started: December 2016
Founder: Ibrahim Kamalmaz
Based: UAE
Sector: Finance / legal
Size: 3 employees, pre-revenue
Stage: Early stage
Investors: Founder's friends and Family
Tips for taking the metro
- set out well ahead of time
- make sure you have at least Dh15 on you Nol card, as there could be big queues for top-up machines
- enter the right cabin. The train may be too busy to move between carriages once you're on
- don't carry too much luggage and tuck it under a seat to make room for fellow passengers
UAE currency: the story behind the money in your pockets
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The specs: 2018 Nissan 370Z Nismo
The specs: 2018 Nissan 370Z Nismo
Price, base / as tested: Dh182,178
Engine: 3.7-litre V6
Power: 350hp @ 7,400rpm
Torque: 374Nm @ 5,200rpm
Transmission: Seven-speed automatic
Fuel consumption, combined: 10.5L / 100km
The specs
Engine: 6.2-litre V8
Transmission: ten-speed
Power: 420bhp
Torque: 624Nm
Price: Dh325,125
On sale: Now
The specs: Lamborghini Aventador SVJ
Price, base: Dh1,731,672
Engine: 6.5-litre V12
Gearbox: Seven-speed automatic
Power: 770hp @ 8,500rpm
Torque: 720Nm @ 6,750rpm
Fuel economy: 19.6L / 100km
WHAT ARE NFTs?
Non-fungible tokens (NFTs) are tokens that represent ownership of unique items. They allow the tokenisation of things such as art, collectibles and even real estate.
An NFT can have only one official owner at one time. And since they're minted and secured on the Ethereum blockchain, no one can modify the record of ownership, not even copy-paste it into a new one.
This means NFTs are not interchangeable and cannot be exchanged with other items. In contrast, fungible items, such as fiat currencies, can be exchanged because their value defines them rather than their unique properties.
UAE currency: the story behind the money in your pockets
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