Bitcoin Bravado?

Last week regulators gave the go-ahead for financial institutions, including Fidelity and Blackrock, to offer exchange-traded funds (ETFs) that directly hold bitcoin.

While it makes it easier for investors to buy bitcoin in their portfolios, not all financial institutions, including Vanguard, are offering it on their trading platforms. Is there a place in your portfolio for a bitcoin ETF?

Here is my take on it, and why you won’t find this ETF in my portfolio.

First, I don’t own currencies because currencies are a medium of exchange, not an income producing asset like bonds, stocks, or real estate. You won’t find the U.S. dollar, British pound, or Mexican peso in my portfolio.

What makes bitcoin any different or special? It is still a (digital) currency. I make a clear distinction in my life between gambling and investing. You might find me sitting down at a blackjack table once or twice a year, but you won’t find me owning something in my portfolio that has no productive value other than serving as a unit of exchange.

Second, outside of CDs and bonds, I don’t buy individual securities – never have, and never will. Markets have proven to be efficient over time, and the dismal record of Wall Street at outperforming a benchmark is a stark reminder that my energy is better spent in more meaningful endeavors.  

If I am completely wrong, and by chance bitcoin and other cryptocurrencies create a dynamic impact on the global economy in the decades ahead, my portfolio will participate, because I will own the companies that are participating in this newfangled currency. 

Finally, I loathe novelty items and get-rich-quick schemes generated by Wall Street. Owning a novelty item would entice me to follow its price movement, distracting me from focusing on what matters most in building wealth – a solid financial plan that matches my diversified portfolio. 

Are you looking to build wealth at a faster pace than that offered by your current Coffeehouse Investor portfolio?  

Consider embracing Warren Buffet’s suggestion offered at Berkshire Hathaway’s annual shareholder meeting:

Invest in yourself.  

I’ll let you take it from there.

Capture Your Fair Share of the Market

Build an investment plan with a diversified portfolio that maximizes your returns and allows you to focus on essential financial planning issues. If you have $1 million or more of investible assets and are in or close to retirement, connect with me in a complimentary strategy session.