A week ago, I spoke with Clem Chambers, entrepreneur and CEO of ADVFN, Europe's number one stock and shares website. It was one of the most thoughtful interviews in a series dedicated to investment/trading topics. Chambers gave me detailed answers to questions regarding his investment strategy, the crypto market, the coins in his own wallet and his view on the Bitcoin price’s future movements. If you want to know more about the tulip bubble, the differences between stock market trading and crypto trading and what is so special about DeFi, don’t miss this piece!
U.Today: Mr. Chambers, I am happy to have you here. Can you tell me what first brought you into the world of crypto? Is there a story behind it?
Clem Chambers: I have been running ADVFN for 20 years. It's a site that's about private investors, traders and financial information. When Bitcoin came out, there was a lot of interest in it. Pretty soon thereafter, we put Bitcoin up on the site. We found it very hard to sustain the feed because everything was pretty primitive back then. So, we backed out of it.
But around 2015, it was obvious that things were going to be pretty amazing. I had that Damascene moment, that “holy cow” moment, when I went, “Oh, this is gonna be…just wow.” And I personally started working in the Bitcoin arena. Later on, Online Blockchain (OBC), which was the original listed company behind ADVFN, became involved because it has always been a technology incubator. So, we have a very strong crypto offering, and OBC has Umbria and various other properties that are extremely exciting.
That's the history of how we go into it. In 2016, funny enough, I was saying that Bitcoin is a bubble. Of course, I was absolutely right. It's a boom-bubble-bust, boom-bubble-bubble-bust, boom-bubble-bust financial instrument. That's its cycle. That doesn’t stop it from being important because bubbles can be real. It can be a real bubble, but what is bubbling? What survives a bust is normally incredibly important.
If you go back to the history of financial markets, to the original bubble that people talk about—the tulip bubble back in the 18th century—it was caused by Turkish interest in tulip bulbs. They used to lock their princes up when the sultan died. He had so many sons that one would become king, and they murdered the others. They decided that that's a bit brutal. So, then, they would imprison them. They had little prisons, and they had gardens, and all the princes got interested in tulip bulbs. They were competing with each other to have the craziest, most marvelous tulip bulbs. That drove the whole tulip bulb mania in Holland. Then came the tulip bulb crash. But tulips are still a multi-billion-dollar industry in Holland.
People forget that bubbles also create massive companies. The dotcom bubble created Amazon, the biggest company in the world! Microsoft, the biggest company in the world, and Google, one of the biggest companies in the world, and Facebook and so on. The fact that Bitcoin was a bubble about four times now, and a bust about four times now, does not stop Bitcoin as a whole from being a massive, hairy deal and crypto being a massive, change-the-world event. Once I'd had the epiphany that this was world-changing, we then pivoted quite heavily at Online Blockchain and also pivoted at ADVFN, and investors helped to provide crypto information. That's a long answer to your short question.
U.Today: For you, what are the main differences between stock market trading and crypto trading?
Clem Chambers: Crypto trading is not an efficient market, whereas stock trading has historically been, and commodities and bonds markets. Because the market is so young and the participants so inexperienced, the market is less than efficient, which means that it can swing much more wildly than stocks can. Having said that, if you look at Apple and Amazon’s stock prices, you would be forgiven for thinking that the stock market is wildly crazy, too. But if you look beyond a few interesting stocks to the bulk of the about $60 trillion equity markets of the world, most of them trade with nowhere near as much volatility as crypto, but crypto trading remains a very small market.
U.Today: Okay. What are your own investment principles?
Clem Chambers: When I was very young, my father was a very successful commodities trader. All of the other dads at my school were just not in the same league in terms of money and the crazy excitement that you get into as a commodities trader. I said, “Dad, how do you make money trading commodites?”
And he said, “Well, you've only got to know one thing, son—whether the market's going up or down.” I was about 10, and I thought, “That can't be right. That's gotta be wrong. How can that be clever enough to be the secret to making these sums of money?” I dispensed with that, and I didn’t know what to think.
When I was about 40, I remembered that moment. And I thought, he was absolutely right. You've got to know whether the market's going up or down. If you want to trade crypto, you want to know which way the market's going, whether up or down—if you're trading in the short-term.
If you're investing, you've got to know whether the market's going up or down in the medium and long term. If you look at crypto right now, which way is the market going? People are still singing, “Oh, it's going to go to a milllion, or to $200,000.” They are singing it a lot less now. I was singing that song for about two years on Forbes and backing it with my reasonable sums. Of course, it exploded. When it peaked, I said, “It's gone up a lot, it’s probably going to go down now. But actually, it might not go down, and you want to switch out of Bitcoin and go into DeFi because that's where the punch is.” Then, DeFi exploded. And I said, “Well, I think I've had enough, I'm out.” That was around $60,000. You don't want to be long when it’s going down.
It doesn't mean that crypto isn't going to go up a heck of a long way in the next four or five years. When it has gone up before, it's gone up a long way. When it goes up a long way, you want to be selling. Then when it starts to come down, if you want to go short, that's not a game that I play. That’s a trade anyway.
As a long-term believer in crypto, you get out and sit on your pile of money, like the dragon in The Lord of the Rings. You wait for the market to go down to a point where you think it is near the bottom, and then you slowly but surely buy in over an extended period. You need to think about where the market is going. Long term, Bitcoin's going up a long, long, long way, and crypto too, but it's going to come down a long way first. When it comes down, you want to start buying again. Then, you want to keep buying. When it explodes again, you want to sell, and then it will crash again because it keeps doing that. It has crashed four times.
Every boom-bubble-bust looks exactly the same as the last. You can look that up. It's the same wave. Every time, it's a four-year cycle. Here it is again, coming down, and it's going to come down to well under $20,000, maybe even under $10,000. When it does, I'm going to start buying again.
What is the trend on the market that affects the way you are trading or investing? That's the first thing. The second thing is, what is it that you're putting your money into?
I’m a fan of fiat. I like fiat. It buys me bottles of wine. It buys me airplane tickets. It buys me whatever I want. I like to have a lot of it. I enjoy fiat, but I love crypto too. When crypto is going to go off, I want to swap my fiat into crypto. Then, when crypto has gone up, I'm going to swap it back into fiat again. But what crypto do I want to put it into? Well, I want to put it into a crypto that I feel I can trust. That's the number one thing in crypto: trust. You've got to have trust. If you can't trust it, don't touch it.
U.Today: Which cryptocurrencies do you trust and invest in and why?
Clem Chambers: Trading and investing are all about risk management. It's about having the maximum upside for the minimum risk or the minimum downside for the maximum upside—however you want to see it. It is also about how big your positions are. You can trust Bitcoin, because there's no one to trust. It is just a crypto anarchy. It's anarcho-capitalism, which is meant to be powerful and useful and interesting. Bitcoin shows that it is, and it also has its drawbacks and limitations. I trust Bitcoin.
I trust Ethereum probably less, but I trust it because I believe it's got an incredibly talented team, and over time they’ve shown that the people behind it behave in a trustworthy way. Now, I have my questions about Ethereum because they are going through major changes.
With all the good will in the world, they could absolutely mess the whole thing up. That's a risk factor that makes me nervous about Ethereum, but I don't care. When it comes down, I will move into Bitcoin and Ethereum, depending on how London and the other forks go.
Then, I will be looking at DeFi. At some point, DeFi will bottom out too. It’s going to be a really low bottom. Then, which ones do I trust? Well, I trust Compound. They're a bit mad, but I trust them. They haven’t been hacked yet. I mean, trust is not just about people. It's also about whether they have been hacked. What's the security like, what are their communications like? Do you know who they are? Who's funding them? With the best will in the world, people can be as honest as the day is long and their business collapses because they make mistakes.
DeFi is basically businesses. I trust a host of DeFi projects. Then, I move on to how likely they are to succeed.
You can't make good money working with bad people. You just can't.
If there was a fabulous, fabulous crypto, and I didn't trust the people, I wouldn't touch it. Underneath the wonderful idea, there's a bunch of untrustworthy people. It starts with criminals, but then if you wind it back, pretty soon, you get into people who are immoral and who don't have any ethics.
You have to wind it back quite a long way to get to a group of people that are not tempted to make things go their way when the money gets big. To be involved in a project, you've got to be involved with people who are generally honest, and when they start seeing the money involved, don’t go, “Oh my God, how do I get some of that? How do I redirect all that money to me?” Well, that's quite a high barrier. There are not that many projects out there that pass that barrier. As soon as any of them show any signs of redirecting the money flow towards themselves, I don't want to know. That restricts my universe.
The other thing to look for is just great projects that are dirt cheap, and that shouldn't be that cheap, but will at some point be in vogue. There are some that are just the wrong price, like Curve. I can't think that they are not too cheap. Curve would be the sort of token that I would be staking out. I would always be looking for good, honest people, with a great business model, well backed, who have behaved over the last end period in a token holder-benign way.
U.Today: Initially, what made you interested in DeFi, and why did you choose to become Umbria’s advisor?
Clem Chambers: DeFi is a revolutionary technology. If you look at the history of crypto, there are really two revolutionary projects that have come together. You have blockchain, which is not really that useful. Then you glue on cryptography which, again, is not a very useful technology. It's like a padlock. Sure, it’s useful. It has a very defined use, but in the world, you're not often dealing with padlocks. Actually, you probably deal with them more than you think, but it isn't really in the mainstream of your life. It is a detail. But put the two together and you've got something that has a world-shattering effect. You've got this ability to make money that is trustless, and organizations that are the next generation on from joint stock companies.
It opens up lots of activities in the next generation of that activity. It is an enabling technology, not just a form of money. That enabling technology affects so much stuff that it is creating and will continue to create a huge spewing of new wealth. It is like inventing the silicon chip or discovering electricity. It is going to add a whole new level of high-value economic activity that was not possible before. Once we got what blockchain plus crypto equals, it’s like inviting the silicon chip or the first computer.
It's the next level of economic activity. If you get in on the ground floor of that, you are going to do exceptionally well—as long as you don't do anything stupid. You obviously start to think about how you can get in on it. The best way to get in on any game is to run the game. You've got to do it yourself. You've got to learn it. You've got to put your money into it.
You’ve got to put your money where your mouth is. You've got to skill up as much as possible. At some stage you've got to engage, and that's what OBC has done. It's worked with its developers to develop a number of crypto projects. Out of that has come Umbria. It is just a wonderland of opportunity, so why wouldn’t you join it? Once you've had that thought, it is almost negligent not to jump in. Once you've had that moment of clarity, the next logical thing is to become involved and make projects and help projects get made.
U.Today: What are your thoughts on Peter Schiff? He seems to be a very anti-crypto propagandist. Why, in your opinion?
Clem Chambers: I don't like to personify things because the media said a couple of years ago that I made the Bitcoin price crash. By writing a piece in Forbes, people blamed me for making the price go down. Of course, I didn’t make the price go down. People only rarely make the price go up or down. I wrote an article saying Dogecoin would be a big deal years before Musk even became involved. Is it the brand, or is it Elon Musk? Is it the market, or is it Elon Musk? Is it the fact that crypto is a revolutionary technology, or is it Elon Musk? I would say it is not Elon Musk.
Why? The analogy I use when it comes to personification is an avalanche. You go into the Alps and there's a huge mountain covered in snow and a sign that says, “Don't make a noise and start an avalanche.” You might have even seen those signs: “Don't fire a gun, don't ski on it. You'll start an avalanche.” So, someone goes up there and yodels, and bang, down comes the snow. Then, everyone goes, “That Elon Musk yodeled and caused an avalanche.” You could look at it that way. Or you could say that it has been snowing for five months, and the whole mountain is absolutely full of snow. Whether it's Elon Musk yodeling, or whether it's a bird that jumps in the wrong spot, or whether it's a clap of thunder, or whether it's a car backfiring, or whether it's a hunter shooting at a deer, at some point that snow is going to come down the mountain. You can either blame it on the yodeler or you can say, “Well, the mountain was full of snow and it was going to happen anyway.” I prefer to watch the snow than predict what somebody says.
People are going to think that crypto is rubbish, and they could be right. Or, they could be wrong. And I could be right and I could be wrong. There's a joke that I tell, which is: Opinions are like navels (belly buttons). Everyone's got one, and most of them are fluffy. Everyone's got an opinion. What matters is, how much money did you make? Or, how much money did the thing that you believed in make?
I mean, if he's been big-time shorting Bitcoin, he's probably nursing a bit of a loss. Opinions, I think, are secondary to saying whether something is good or bad. I think all debate is good, and all attention on things is good. If you're a market professional, it's not about being right or wrong, it's about making money. I've got some interesting equity positions right now, and I'm going, “I think I'm wrong here. I think there's a fairly large chance that there will be a stock market crash in the next four weeks. And maybe I shouldn’t be in.” Now, I'm probably going to be wrong, and I’m probably gonna change my mind tomorrow. It's not whether I'm right today or whether I'm wrong tomorrow; the question is, how much money do I make? That's the important thing that people need to take away from this.
If you've got an opinion and you're losing money, you're probably wrong. If you've got an opinion and you’re making money, you’re probably right. Right now, crypto is coming down, and it's going to come down a lot more. When it goes to $100,000 in four years’ time, or up to $200,000, he’s going to be wrong, or maybe I’m going to be wrong. Once you forget propaganda, it's a financial instrument. It's no different from rubber. Rubber, by the way, is probably on a big run at the moment because they're having difficulty taking the rubber crop from the rubber trees. It’s no different from rubber, no different from yen, no different from Apple, no different from Tesla, no different from all those thousands of stocks you have never heard of. You make an investment by applying your skill and diligence and hard work in investing, and you'll do all right.
U.Today: Who in the crypto space do you respect the most?
Clem Chambers: Mr. Satoshi Nakamoto. Not only did he invent it, he's still got millions of them, and no one knows who the heck he is. You probably want a spicier answer than that. But seriously, what could be more amazing than that guy? He’s still got a million of them! That's $32 billion. He's one of the richest men in the world. Maybe.
Who else is impressive? Vitalik is pretty impressive, to say the least. That’s probably about it. I mean, everybody's feet are clay. Being impressed by a person today, respecting them today, is about today.
I'll stick to my first choice: Mr. Nakamoto. He's got $32 billion in Bitcoin, he invented it and nobody knows who he is. I mean, that really is the ultimate.
U.Today: That’s true. I have one more question: What will the Bitcoin price be at the end of 2021, in your opinion? What about, let's say, three to five years from now?
Clem Chambers: $13,000 and $120,000. You can go onto ADVFN and pull out the Bitcoin chart from 2017 and compare it to today’s chart. They’re doing exactly the same thing. Or look at 2013 and 2011; you’ll see the same chart, and you'll be able to draw that line yourself. There's no magic to it. The only thing you can say is that Bitcoin is now different. It is not the same Bitcoin as it was in 2017. It is not the same Bitcoin as in the past when it went from nothing to tenfold and then came back most of the way. It's not that thing at all anymore.
But I think that's a very hard argument to make. I’d been making the same argument all the way up and all the way down. That’s quite a consistent set of predictions that all panned out, and anybody that followed that advice would have made a ton of money. You can read it all on Forbes. It's all there on the forum. You can just go and read it and see that I said it. You can see the charts I get; they're all there.
The actual beginning of this run on Bitcoin is exactly the same as the run on Bitcoin in 2017. It's exactly the same form, in fact.
The very beginning, the very takeoff point is exactly the same shape. It's because it's the same audience behaving in the same manner. It's going to do exactly the same again, I believe.
U.Today: Thank you, Mr. Chambers, for your time. It was a pleasure to speak with you.