What a tough time to be a Bitcoin investor. A steady decline in the cryptocurrency’s value in November means that it’s now trading at a 20% discount to levels that were above $9,000 at the turn of the month.
This fresh weakness has prompted a wave of commentary from long-time sceptics of the digital currency space, including from so-called ‘Doctor Doom’ Nouriel Roubini who has branded this new downleg as “total crypto-apocalypse!”
Crypto-Carnage: BTC down 65% from peak; other top 10 crypto-currencies down 80% from peak. 1000s of other shitcoins down 95% to 99% from peak. Total crypto-apocalypse!
— Nouriel Roubini (@Nouriel) November 26, 2019
Far be it from me to discredit the opinion of such a respected economist and his view that the Four Horsemen have waded into the crypto arena. But it’s not the first time we’ve seen Bitcoin and other digital currencies (or “shitcoins” as Roubini succinctly puts it) sink, and so another price spike can’t be ruled out some time in the future.
A better way to invest
That’s not to say that I don’t share his scepticism over the likes of Bitcoin as a wise investment choice. This recent volatility is part-and-parcel of the crypto space, and a reason why I’m not tempted to go dip buying at current levels around $7,000. Huge questions over the legitimacy of these digital assets remain unanswered and it’s still possible that prices will eventually fall to zero.
Why take the risk on such an unstable asset class when there’s an opportunity to make a fortune on stock markets? Like all financial markets, equities of course aren’t immune from extreme bouts of volatility, but time again they’ve been proven an effective way to make solid returns.
Indeed, studies have shown that over a long-term horizon share investors can expect to make a return of between 8% and 10% per annum. Based on these rates someone drip feeding £300 into a Stocks and Shares ISA over 20 years can expect to make between £171,000 and £216,000 when everything is done and dusted.
By comparision, I for one wouldn’t like to predict what a Bitcoin investor’s portfolio will be worth in a month’s time, let alone many years into the future.
Safe as houses!
If I had a spare few thousand in my pocket waiting to be invested I’d much rather use it to buy shares in Safestore Holdings (LSE: SAFE).
Now there’s not much scintillating about the self-storage specialist from a value point of view. At current prices the FTSE 250 stock trades on a forward price-to-earnings ratio of 24.6 times, one which soars above the widely accepted value benchmark of 15 times. Meanwhile, a corresponding dividend yield of 2.5% sits almost a full percentage point below the broader UK mid-cap average of 3.3%.
There’s a reason why Safestore commands such a premium rating, though. Demand for storage space continues to outpace the rate at which it is being supplied, and this particular business is maximising returns from this favourable market by aggressively expanding. This prompted revenues to rise 5.9% in the three months to October, a period in which like-for-like sales to jumped 3.8%.
One final thing: Safestore has proved its mettle as a terrific dividend hiker in recent years, with annual payouts rising more than 200% in the past half decade. And the business is in great shape to keep turbocharging shareholder rewards well into the 2020s.
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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
Motley Fool UK 2019