Crypto funds have arrived. But who needs them?
Exchange-traded funds come in many shapes and sizes. Some are plain vanilla, diversified index funds that let you invest in the entire stock and bond markets, and are excellent core holdings for the great majority of people.
Then there are the quirky, narrowly focused ETFs like the Inverse Cramer Tracker, which enables you to bet against the stock picks of CNBC television host Jim Cramer. The fund is legal, approved by the Securities and Exchange Commission — and a money-loser since its inception last year. Betting against Jim Cramer just isn’t a great investing strategy.
Neither is fear of missing out. Yet FOMO is the main reason for putting money into bitcoin, which remains highly speculative, difficult to categorize and without an immediately identifiable economic function.
The SEC this month approved 11 new ETFs that track the price of bitcoin, and the decision has been heralded by promoters of bitcoin — and of the new funds — as an important event, legitimizing bitcoin as an asset class.
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The world of cryptocurrencies is very dynamic. Prices can go up or down in a matter of seconds. Thus, having reliable answers to such questions is crucial for investors.
View Details»I don’t think so.
The SEC’s action, in itself, doesn’t give bitcoin any new stature. It merely adds bitcoin funds to a long list of ETFs that are perfectly legal and simple to buy, but that don’t belong in anybody’s core portfolio. I’d put the Inverse Cramer Tracker in this category, as well as ETFs that track a single stock like Tesla, PayPal or Nvidia, or that use leverage to triple a bet on energy prices or quadruple one on the S&P 500. I could go on and on.
Simply being legal doesn’t make a strategy sensible for most investors. In
