20 Second Advisor: Have you been thinking about Bitcoin?

 

I have received numerous questions about Bitcoin over the last several months. Here are my key takeaways:

  • Prices are driven largely by speculation (supply and demand)
  • Impact of future laws and regulations is unclear
  • It gets a lot of media attention, but in actuality, the total value of Bitcoin (as of 12/7/17) in circulation is less than one tenth of 1% of the aggregate value of global stocks and bonds
  • It is extremely challenging to assess the risks and payoffs because it is so new
  • There are no cash flows, so its hard to know whether it makes a good investment
  • They have yet to prove themselves as a means for mass global exchange or as a digital store of value.
  • The promise of this nascent technology is exciting, but also risky.
  • At this time, we do not recommend incorporating cryptocurrencies as a part of a globally diversified portfolio
  • If you do invest, don’t wager more than you are willing to lose

What are your thoughts?

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