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Why My 1% Allocation Still Stands
Why it’s time to look beyond the US market
Ric Edelman: It's Tuesday, July 11th. You know, back in May, there was a big tech investor who's been a big fan of bitcoin who said crypto is dead in America. Now, this is a guy who has said bitcoin is going to hit $200,000 in price. And he's now been saying that the government is trying to kill crypto. He's noted that the SEC has been suing crypto companies for selling unregistered securities, that the OCC and the FDIC have been shutting down banks for letting crypto companies open checking accounts with them.
Remember Signature Bank and Silicon Valley Bank and First Republic Bank? Well, you have to ask yourself a question: Are you willing to invest in something that might be dead in America?
Well, there are two responses that you need to regard. First, whenever you're dealing with an innovative, emerging new technology, you need to recognize there are massive investment risks. You shouldn't invest anything that you're not preparing to lose 100% of your investment in. That's the first premise. This is why I largely say to folks that if you're going to invest in crypto, you should only invest 1% of your portfolio. 1% is not going to destroy you if it goes broke. But if it performs as people are hoping that 1% could have a material impact in your total return of your portfolio. So the upside reward is pretty good. The downside risk, well, it'd be annoying, but not devastating. So that's the first premise. Recognize the incredible high level of risk associated with this.
Number two, when it comes to crypto in particular, who cares if crypto is dead in America? Crypto has been dead in China, for example, and the only people who have cared are the Chinese. In other words, crypto is a global asset trading 24/7.
It's kind of like gold and oil. They trade 24/7 around the world as well. If one market gets shut out, like if the US somehow some way were to say crypto is dead in America, that wouldn't have any adverse impact on bitcoin itself because out of the 8 billion people in the world, only 4% of the global population lives here in the US, 96% of the population are still able to buy crypto.
So we need to recognize the importance of putting things into proper context. And then finally there's the contrarian theory, the attitude basically saying, as Warren Buffett famously said, “Be fearful when others are greedy, be greedy when others are fearful.” If there are a lot of folks walking around saying crypto is dead in America, boy, that's a buying signal if I ever heard one.
Coming up tomorrow at 2 p.m. eastern, I'm going to be hosting a one hour webinar on crypto SMAs. What's an SMA? A separately managed account. These are increasingly popular with financial advisors. They offer substantial benefits and advantages you don't get from ETFs, and you'll discover why a lot of financial advisors really like them. And now if you are a financial advisor, you'll discover that there's a crypto SMA. So come to this webinar, you'll discover how crypto SMAs work, how to gain access to them, and how you, as a financial advisor, can use them to serve your clients better. I'll be interviewing Matt Hogan, the Chief Investment Officer at Bitwise Asset Management and Chris King, the CEO of Eaglebrook Advisors. This webinar is designed for financial advisors, but everyone is allowed to attend you too. You can register for the webinar at DACFP.com.
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