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When I’m 64: the year traditional investing looked old

“If you are not a little confused by what's going on, you don't understand it.”

Charlie Munger, Vice Chairman of Berkshire Hathaway, at the 2021 Annual General Meeting.


I turned 64 yesterday. A few years ago, at an amazing Paul McCartney concert in Sydney, the then 76-year-old explained that he was 19 when he wrote the lyrics to ‘When I’m 64’, and the age seemed very old at the time. Now, if he were writing the song again, he’d go for ‘When I’m 84’. McCartney looked spritely enough to live well beyond 84 in his three hours on stage without a break.

Here’s the 2009 remastered version from Sgt. Pepper’s Lonely Hearts Club Band.

When I get older losing my hair
Many years from now
Will you still be sending me a Valentine
Birthday greetings bottle of wine

If I'd been out till quarter to three
Would you lock the door
Will you still need me, will you still feed me
When I'm sixty-four

A new era when fungible became non-fungible

In my 40+ years of investing, I have never experienced a year like 2021 with so many aspects of ‘investing’ that I cannot fathom. It feels like many of the techniques of traditional investing, such as discounting the expected future earnings to a present value, have become old, and younger generations are inventing new ways to build wealth.

NFTs, crypto, Bitcoin, memes, BNPL, eSports and don't start me on social media stonks and finfluencers.

I could be handy, mending a fuse
When your lights have gone

In my younger years, I had strong claims to working at the leading edge of financial markets innovation. They were pioneering days in Australian dollar Eurobonds, and it was great fun arranging the first zero coupon bond, the first bond with warrants attached, the first subordinated bond for an Australian borrower, and in the ultimate irony, the first fungible issue.

Yes, in a new world where ‘non-fungible’ tokens are the hottest properties in art, our Eurobonds were deliberately ‘fungible’ (interchangeable) with previous issues to build liquidity in a sector notorious for its lack of liquidity. It was a great success, bringing more investors to Australian dollar Eurobonds, but non-fungible is now the way to riches.

I even developed a term deposit product at the Commonwealth Bank, called Excel-A-Rate, where the rate increased the longer the investor left the money in the bank. Incredible to recall it was offered in a thousand bank branches on the back of a proposal written by a young kid.

I split the investments that puzzle me into two camps:

First, those I generally understand, such as the hysteria and FOMO of a Rivian IPO that makes it the second-most valuable car maker in the world when it's barely made a car. There are enough punters willing to believe the dream or hope there’s a higher buyer. This type of mania has come and gone for hundreds of years. 

But second, new technologies are creating investments where I have neither the time nor patience to fully appreciate the opportunity, such as NFTs and cryptocurrencies, which sell for crazy numbers. They are either scams or opportunities, with plenty of people in both camps.

History is full of tulip manias but what is different this time around is an interconnected world of billions of people, and technology can deliver leverage and long-term success in a way we have never seen before.

Doing the garden, digging the weeds
Who could ask for more

1. Bitcoin and cryptocurrencies

There's a difference between the potential of blockchain as an emerging technology and an investment in a cryptocurrency like Bitcoin and thousands of other coins. Satoshi Nakamoto wrote his original paper:

“A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution ... We propose a solution to the double-spending problem using a peer-to-peer network. The network timestamps transactions by hashing them into an ongoing chain of hash-based proof-of-work, forming a record that cannot be changed without redoing the proof-of-work.”

Fair enough. A new payments system will develop.

But there are now over 6,000 cryptocurrencies available, and while they can be used for speculation and trading, there is nothing fundamental to their value as a long-term investment. Coin prices can move rapidly based on no more than a Tweet from Elon Musk. When he announced recently that “Tesla will make some merch buyable with Doge & see how it goes”, Dogecoin’s price jumped 20%. Most commerce cannot be based on such volatility.

Yet cryptocurrencies are already valued at about $3 trillion, with Bitcoin at $1.2 trillion and Ethereum at $700 billion. That’s serious coin. As shown below, a single Bitcoin, worth less than US$4,000 a couple of years ago, has a high of US$68,789, although it has dropped to about US$48,000 now.

Hamish Douglass wrote this article in Firstlinks where he gave a detailed analysis and concluded:

“In our opinion, it is virtually certain that, in time, cryptocurrencies that are not backed by assets or by a central bank will become worthless.”

The chart below shows Venture Capital funds have invested about US$30 billion into crypto in 2021, according to PitchBook Data, more than in all previous years combined (the technology is about 10 years old).

How can this be justified? Spencer Bogart of Blockchain Capital, one of the largest investors in the crypto industry, explained:

“We’ve moved beyond just digital gold. We’ve got financial services, art, gaming as a subcategory of NFTs, Web 3.0, decentralised social media, play-to-earn … all of that made investors think, `We don’t have enough exposure.’”

2. Meme stocks

Remember all the fuss a few months ago about the impact of Robinhood? Recall how the media was full of stories about GameStop? In the US in particular, although we had minor versions in Australia, meme stocks backed by social media trading on sites such as Reddit and TikTok delivered massive returns and losses with little based on the merits of the underlying businesses.

Here is a chart showing four leading US meme stocks and their current value versus their highs. 

3. Buy Now Pay Later (BNPL) copycats

Afterpay hit on a great idea and redefined the way millions of people pay for goods. Their execution of a strategy was almost flawless, reinvesting capital in the business and not caring about profit while expanding globally. The business was sold at the peak for the sector in another piece of exemplary business. I wrote about my modest profits but I’ve been out of it since the Square offer.

What was harder to understand was the expectation that all the companies that jumped on the BNPL bandwagon would find enough market share and margins to make viable businesses. Investors bought into each new offer like crazy and have paid a severe price in most cases. The chart below shows the market highs and lows for Australia’s BNPL companies, in some cases down 90%. This week, Afterpay hit a 52-week low.

4. Non-Fungible Tokens (NFTs)

This one is an absolute cracker. At the start of 2021, the global NFT value was about $400 million, and it is forecast to reach $15 billion by the end of 2021. An NFT is an electronic image that exists in a digital form.

The craze really started in March 2021 when an NFT called Everydays: The First 5000 Days sold for US$69 million at Christie’s. Much of the NFT universe is linked to popular culture and US sport, and there are now hundreds of millions of dollars of NFT sales each week via public marketplaces.

It’s a new asset class, and the reason I do not fully appreciate the possibilities is that they are opening markets and businesses that I simply don’t recognise or use.

Here’s a rough explanation of why it works. Previously, the owner of a digital image had no clear property rights. NFT owners now have a way to prove ownership rights. The NFT is stored in a public domain on a blockchain, and because they are programmable, they can function in innovative ways. They might become tickets to events, memberships, merchandise, cards, or give access to discounts or special games. A community can be created around a popular image. NFTs create potential for royalty payments, as the owners of songs have received for decades (Bruce Springsteen just sold the rights to his catalogue for US$550 million).

But for the ultimate putdown of NFTs, check this fantastic South Park tweet, already viewed over two million times.

How far can this go? The Australian Financial Review reported this week that an Australian has earned almost $100,000 in six months operating a car repair shop online in a virtual city. The shop sits on:

"a multi-blockchain metaverse gaming platform that launched this year. Players can buy non-fungible tokens that represent virtual taxis, petrol stations, billboards and even motorcycles."

5. eSports and gaming

Yes, we played board games a lot in my family, and Monopoly, Cluedo, Scrabble, Trivia Pursuit and dozens more now sound so cute and innocent. More recently with my kids, a wide range of new games continued the family fun (I love Codenames).

But younger generations are big time into online gaming and stadium events. Online gaming is any video game using internet interaction with other players, who could be anywhere in the world. The eSports ecosystem will exceed US$1 billion in revenue in 2021 and it is expected to double next year.

This is a massive business that makes serious profits with genuine future earnings potential (and sales of baseball caps). Frank Gibeau, the CEO of Zynga, a global leader in interactive entertainment, claimed recently:

"Now it's (the gaming industry) bigger than movies and music combined. It's the largest entertainment form in the world. It's growing and proliferating across the world, across so many different devices and new markets."

So while it's a parallel universe for me, Australian ETF providers are in on the game. For example, VanEck has launched its Video Gaming and Esports ETF (ASX:ESPO) based on:

"The MVIS Global Video Gaming and eSports Index is designed to track the overall performance of companies involved in video game development, eSports and related hardware and software globally." 

6. Finfluencers

The influencer economy is worth an estimated US$22 billion a year, although a small part of it relates to investing and advice. But it's the same principle. Someone builds an audience and they are paid to influence their audience.

I’m too old and grumpy to listen to a twenty-something talk about how to invest my first $1,000, and most readers of Firstlinks are not in the target audience for #finfuencers having a giggle about investing while admitting they don’t know much. Some of them have more followers than Firstlinks, as we don't play the clickbait game or 'prime our pump'.

Some financial advice comes from beautiful people on Instagram with beginner guides to investing, YouTube videos on asset management, Facebook groups discussing company share prices or TikTok on anything with dances, makeup and, yes … let’s throw in investing.

They bring in the advertising dollars, which is the main game, and a social media endorsement from one of these bright young things might cost thousands of dollars, depending on the audience. Why a fund manager wants to reach someone with $1,000 and a credit card debt is a mystery. And yes, they reach clients that qualified financial advisers are not interested in, so where are young people supposed to turn? I blame the educational system for not making financial literacy as important as other subjects.

The Australian Securities and Investments Commission (ASIC) is watching social media influencers who are offering financial advice without a licence. The ASIC Chairman, Joe Longo, calls it an ‘area of big concern’. ASIC reports on its website that it is:

  • We are engaging with social media platforms, forum moderators and financial influencers or ‘finfluencers’ to consider market practices, the application of financial services laws and drive behavioural change.
  • We are embedding tools and undertaking reviews of social media to detect unlicensed advice to retail investors.
  • We are enhancing our social media monitoring and network analytics capability to identify more connections, as well as coordinated activity that may harm market integrity or contribute to market manipulation.

If you can’t beat ‘em, join ‘em. Peter Warnes and I will be back in 2022 with more seasons of the 'Wealth of Experience' podcast.

We shall scrimp and save
Grandchildren on your knee

A Day in the Life and signs of the times

There are many more examples. Companies with little potential to justify their IPO prices are listed on exchanges and soon crash (Robinhood is 74% down on its IPO price, Didi is down 63%, Rivian is off 35%). A lot of wealth has been destroyed in 2021 jumping on these bandwagons.

'When I’m 64' was the first song written for Sgt. Pepper’s Lonely Hearts Club Band. The album's final track is the classic 'A Day in the Life' which includes the phrase "I'd love to turn you on". The BBC banned the song because this line could "encourage a permissive attitude toward drug-taking".

Can you imagine that happening today? Society, popular culture and entertainment have moved on. So, too, it seems, has investing, although over the long term, I expect traditional techniques will win.

BTW, what’s a postcard?

Send me a postcard, drop me a line
Stating point of view
Indicate precisely what you mean to say
Yours sincerely, wasting away

Give me your answer, fill in a form
Mine for evermore
Will you still need me, will you still feed me
When I'm sixty-four


Graham Hand is Managing Editor of Firstlinks, and his 64-year-old right knee is telling him to stop playing football.


December 26, 2021

Investing in bitcoin is ok. I’ve been in and out on several occasions, but gambling is probably a better description than investing. Playing chicken is fun !

Turning 64, 74 etc is what happens to the lucky ones. I often have patients say they are “80, unfortunately “ & they smile when reminded that that the alternative is unthinkable
Best wishes.

D Ramsay
December 26, 2021

Thanks - great article.
Reading the NFT part I despair somewhat because when you think of all the great things that NFT (thanks to block chain) can be used for , and then you see the dross it is used for ( e.g. The virtual car repair) I have to remind myself that people are free to spend their money on whatever they want , but I just wonder at the herd mentality.
As Spike Milligan said "If a fool and his money are soon parted, how the hell did they get it in the first place ?"

Peter J
December 24, 2021

Nothing new in the older generation not understanding what the younger set are in to. I remember my parents complaining about and being critical of the music and social mores of the sixties and seventies. I am sure some of what is mentioned will become the new normal; but good luck in picking the winners.

December 23, 2021

Funny you should mention the right knee Graham, because my late mother-in-law who was Irish had trouble with hers also. She went to see her doctor and he told her it was just old age to which she reportedly replied "rubbish - it can't be, it's the same age as my left knee and there's absolutely nothing wrong with that one!" BTW I'm not making this up!

Andrew Booth
December 23, 2021

Happy birthday Graham. Very wise investment insights.. Unfortunately the young investors are impatient and want to make a quick buck. I am 75 and I can remember the Nickle Boom in the early 1970s when I hoped to make a quick buck but I didn't. Every 15 years or so we get another "boom" based on pure speculation but little or zero valuation analysis. We never learn!

Andrew Varlamos
December 23, 2021

Agree 100%, Graham. And why anyone would prefer to watch a bunch of kids playing Pong instead of proper sport...e.g. Chelsea v Man Utd, is beyond me (I'm not yet 64 but clearly also old and grumpy).
A very Happy Birthday to you!!
Best wishes,

David Long
December 23, 2021

Graham I think it is easy to dismiss cryptocurrency and NFTs for people like us that work in traditional finance. However, you have to dig deeper to understand why they command multi billion dollar valuations. Buffett, Munger and Douglass have been proven wrong on cryptocurrencies period. Yes some coins are worthless but have you looked at the real world applications of some of the protocols? You will need to speak to the crypto community and do way more research than what you have done to form an unbiased conclusion.

Graham Hand
December 23, 2021

Thanks for all the kind birthday wishes and encouraging feedback, everyone, really appreciate them. Makes me feel not quite so old ...

Vyril V
December 23, 2021

Happy Birthday Graham.I was also at the same Paul McCartney Concert at Homebush.Absolutely fantastic performance from someone his age with expectations at the time he might even come back for another in a few years.I always enjoy reading your sensible balanced insights.I think for me, 2021, apart from the obvious challenges,has continued the neverending increase in options as to where you should you invest your funds, so your bulletins helps the focus.

Choo-Lee Khor
December 23, 2021

Birthday greetings Graham …when you are 64 above all else you only want …??grandchildren on my knees ??
Merry Xmas & happy new year!

December 23, 2021

Graham - a very happy birthday, celebrated with another thoughtful article. But apropos your article's focus you are quoting the wrong Beatles song. Surely the line for this article should be "money don't get everything it's true, what it don't get I can't use, now give me money (that's what I want)" ? Or is that statement too finfluential for the new generation of budding zillionaire capitalists (that are all awesome) or ASIC ? Merry Xmas to you and your readers / Ebineezer

Peter Latham
December 23, 2021

Many Happy Returns Graham. The Stockmarket has similarities with aging. Like our lives we would hope that the market keeps advancing and getting “better”; but we would be foolish to “expect” it.

Graham W
December 23, 2021

Happy Birthday Graham, yes indeed a year so far removed from once was what we knew as a normal investing scenario. For me and my family's financial security my focus is on security. Buying gold and silver coins and bullion is a security purchase, not an investment. Attractive security to me as I believe gold and silver will be the least likely
" investment" to fail when other markets turn down. The other big word is debt. Interestingly the US Debt Clock measuring the dollar to gold ratio with a value of $US of 20,470 an ounce and silver at 2,931 per ounce.

Peter W
December 23, 2021

Happy birthday you are in good company with my Aunt Betty turning 100 on the same day
The last McCartney concert we saw was at the old demolished Parramata stadium in seat G64
Let’s hope the writing and insights continue to mature with age

Peter Turnbull
December 23, 2021

Hi Graham I am 79 years old and have never seen anything like 2020/21 Not even the Western Mining Poseidon boom bust surpassed this Like Charlie Munger i wish bitcoin , crypto , BNPL had never been thought of They will no doubt come to grief and bring down a lot of punters in time Peter Turnbull

December 23, 2021

Happy Returns Graham. Im reminded of a saying that Chris Caton plagiarised…… There are those who don’t know what’s going on…. and those who don’t know they don’t know what’s going on.

December 23, 2021

Good article Graham. Everyone wants to make a quick buck. My eldest son (who’s 43) loves to stir me about investing in cryptocurrency. I’ve advised against it but he’s had a small go. At least he’ll get a real life lesson in volatility!

December 23, 2021

Happy Birthday Graham. Intelligent, common sense and musically enjoyable. Keep fit and continue the good words into the future.

Craig W
December 23, 2021

Great stuff this year from you Graham all much appreciated some sage advise in there. Have a good birthday come back next year recharged!!

Alan Peacock
December 23, 2021

Quoting you " technologies are creating investments where I have neither the time nor patience to fully appreciate the opportunity"
So why write the article about those investments, then?

December 23, 2021

Brilliant, entertaining, and most importantly, passing on a better understanding of the value (?) of cryptocurrencies and NFTs. My challenge is to pass on Graham's insights to two grandsons, aged 11 and 8.

December 23, 2021

Just fabulous, Graham. A brilliant read and so creative with the song theme and insights. Happy Birthday. I hear 64 is the ‘new’ 34!

Warren Bird
December 23, 2021

Happy birthday Graham, from someone who got to 64 only a few weeks before you!
Paul McCartney may change it to 84, but someone closer to his age when he wrote the song has upped it to 70. Ed Sheeran sings in "Thinking Out Loud" that he'll still be loving his girl "when we're 70".
The 6 year increase isn't too far off the increase in life expectancy between the Beatles' heyday and Ed Sheeran's ascent. 64 seemed old to a young person back then; now it's 70.
Of course, once we get to this age, our life expectancy is closer to 84 so you and Paul are also right!


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