No pictures or graphs this week, but I will try and make it a good read!
Jamie Dimon, chairman and CEO of JP Morgan and he of the “where there is one cockroach there will usually be more”, one of the best quotes of 2025, was warning on risks again this week.
Specifically, he warned that despite a relatively resilient US economy, investment markets were underestimating risks from: geopolitics, persistent inflation, interest rates that may not fall as much as investors expect, a bubble in AI, elevated asset prices and the size of the US debt pile. It’s quite a list and as the northern hemisphere survives winter some of these risks are in plain sight and destroying investor capital at alarming rates.
Here are my top wealth destroyers, some well under way, some still to develop.
Bitcoin and all things crypto
There was a gleeful atmosphere in the office yesterday as we watched Bitcoin in freefall. We have all had an ear battering from someone in the last few years as to why we were stupid not to be embracing crypto. Yesterday, sensible investment professionals around the world were smiling. Bitcoin is off almost 50% from its peak value in October last year and has fallen 20% in the last 7 days.
True believers will argue it’s just a pull back on the way to $1m a coin, but this pull back feels a little different to the last. Firstly, the amount of money involved is much bigger. According to IMF Connect, crypto assets peaked at $4.2 trillion in Q3 2025, around double the value in 2021’s rally and more than half of this will have been lost already. All the gains since Trump’s election have gone and full capitulation of the biggest leveraged players, the so-called Bitcoin ‘treasurers’ or ‘hoarders’ like Michael Saylor’s Strategy which owns c4% of all Bitcoins and whose shares are down c75% since last summer, is still to happen.
Secondly, the ‘vibe’ for Bitcoin has diminished. It has not worked as a risk averse asset like gold, in fact recently it seems highly correlated to the Nasdaq, leveraging rises and falls in US tech stocks. It isn’t working as a hedge against dollar debasement and has largely failed as an actual currency you can buy stuff with. It is still heavily associated with criminality. Worst of all, the FT reports it hardly got a mention at Davos!
As well as the coins themselves, companies related to crypto are also cratering. Exchanges like Coinbase down over 60% in the last 12 months and the Winklevoss twins’ Gemini down over 80% since its flotation last year. So sad.
The Big Short’s Michael Burry predicted on Substack this week that a cascade effect from the bitcoin hoarders would lead to a black hole of value starting at around $50,000 a bitcoin. It reached as low as $60,000 yesterday evening, losing more than $10,000 in a few hours, fingers crossed we get to witness the cascade and never have our ears battered again.
Gold and Silver
These are also assets like Bitcoin with little or no intrinsic value. The main investment thesis is around dollar debasement, and also as a risk averse asset. Both saw huge price gains in 2025 but have shown the damage they can do in the last week.
Gold fell around 13% in one day but has subsequently recovered a bit. Silver’s drop from peak value was almost 40% in one day, it recovered and then has fallen back again. In both cases the falls were in correlation with falls in the Nasdaq and US tech stocks. These assets failed to insulate investors from ‘risk off’ sentiment.
Unlike Gold, the Silver market also suffers from lack of liquidity, rumours abound around the impact of one or two big traders on the day of the falls. These traders will go short in huge volumes in falling markets exacerbating volatility.
Gold’s allure is probably intact for now, but it was an interesting dress rehearsal for a big sell off, noting the Nasdaq has only fallen around 6% from its peak value.
Private Equity and Credit
On the 26th of January, BlackRock announced a 19% write down in the value of its c$1.7bn of private credit held by its TCP Capital Corp. This is more of Jamie Dimon’s cockroaches emerging in private credit markets. JP Morgan are also increasing reserves against credit write downs.
All is not well it seems in private equity markets. Private equity and credit losses take a long time to work through as without the rigour of daily listed prices investors can bury their heads around valuation write downs for months and years. Flagship private equity business Blackstone’s share price is down around 40% from its peak value at the end of 2024 and more than 15% so far in 2026.
To further test private equity markets, step up Elon Musk who this week merged what was Twitter, now Xai with his rocket business SpaceX to create (according to Elon) the most valuable private company ever.
As controlling shareholder of both, Elon got to push through the deal unopposed and set the price. Of course the man’s a genius so all will be good. Elon put a $1trn valuation on SpaceX (valued in December 2024 at $350bn) and $250bn on Xai (he famously bought Twitter for $44bn in 2022) now an AI business (makes sense), total value $1.25 trillion. His co investors must be delighted. The plan now is to float the business this year and raise c$40bn in cash for both businesses to enable them to put data centres into space. Elon is thinking bigger than ever before.
SpaceX made c$8bn earnings in 2025 from $16bn of revenue, whilst Xai has estimated revenue of $500m in 2025 and is currently losing about $1 bn a month. So, Musk will be asking the US public stock market to invest in his private company at about 75X revenues and into a loss-making business. Not for me, what could possibly go wrong?
AI Bubble
My prediction is that in 2026 the mist will start to clear on AI, the winners, the losers, the bubbles and the real opportunities.
Two things are starting to emerge:
- Less confidence in the hyperscalers return on investment capital
The hyperscalers are the likes of Microsoft, Meta, Amazon and Google all investing like crazy to keep ahead in AI. Recent results from Microsoft, Amazon and Google have all shown the same pattern. Pretty good results with revenues and earnings increasing above analysts’ estimates but with forward investment plans way ahead of estimates and colossal.Google expects to invest around $180bn in 2026 and Amazon $200bn. The contracts for how this money is spent will likely make some companies very rich. When business executives are encouraged to spend other people’s money at this rate, they will surely waste a good deal.
Post the earnings announcements and revelation of these planned spends, shares have fallen in all three companies. Microsoft is effectively in a bear market with shares off c25% from last year’s highs. Amazon looks set to open today at a price wiping out all of 2025’s gains. Google is doing the best, its Gemini AI catching up and overtaking rival ChatGPT in capturing eyeballs online, but its shares did not rise on pretty good results.
One thing eating confidence here is the threat of newer technology and obsolescence. Will stuff that’s being invested in today and being written down over say 5 years in their accounts be worth anything in 2 years’ time? Accelerated obsolescence will have a massive impact on profits if it turns out all this money is being spent to stand still.
- The first casualties of AI
In 2025 AI was the magic spice that dangled greater efficiency and ever greater profits for companies who got on the bandwagon. But what if there isn’t more new business to be done and AI just enables current businesses to push the price down on stuff we have got used to paying a premium price for.Think software for accounting, customer relationship management (CRM), web design, along with research analysts and legal document producers.
The software companies are the first group to suffer the AI write down. CRM giant Salesforce, data base king Oracle, account software providers Xero and Sage and analytics providers RELX and Thomson Reuters have all seen big down turns in their share prices.
The intelligent analysis of what’s going on here is not that these businesses are going out of business, but rather that on the elixir of AI the value of these businesses has just risen way to far too fast, when actually AI is likely to be a headwind for them not an assist.The common themes here are that over valuations in assets always create the biggest losses when things don’t go the way of expectations. When greed turns to fear. Lack of liquidity always makes things worse and of course most of the declines described are in the US and on assets valued in US $’s. As sterling investors and spenders we must add almost 9% to losses and take 9% from gains on US $ investments for the last 12 months.
The good news is that Tideway investors are largely insulated from all the losses described, we have not liked the look of the risks involved in these investments for some time and have been able to generate great returns ahead of inflation elsewhere from significantly lower risk investments. Additionally, most economic forecasters see relatively strong economies around the world to underpin sensibly priced investment assets going forwards.
Some of these price falls have the propensity to spread out and create volatility in wider markets, and whilst portfolios have been on the rise this week, we can expect modest falls in tomorrow’s valuations.Given such strong returns in the last three years and everything that’s going on as described above, we agreed to bank some profits and de risk portfolios a bit.
Below Nick highlights the main moves we completed last week.
