The Bitcoin myth continues.
Ric Edelman, whom we have profiled in the past, is at it again. Now he is recommending that “investors” allocate up to 40% of their portfolio to Bitcoin.
This is advice that won’t age well and it’s not because Bitcoin’s price may go down. Maybe it goes to $1 million, who knows. Maybe even $13 million.
Rather, it won’t age well because Bitcoin is not an investment at any price; it’s pure speculation. As long as a portfolio continues to be a place where we collect our investments, Bitcoin does not belong.
Ric Edelman clearly has a different view:
Owning crypto is no longer a speculative position; failing to do so is. In this white paper, Ric shares what he feels is the correct crypto allocation for investors.
Owning crypto is a speculative position. It always will be. Speculative does not necessarily mean that you don’t believe the asset won’t do well. Speculative means that you are either: i) buying a cash-flow-generating asset, but you do so not because the price is cheap relative to value but rather because you think its price will increase; or ii) buying a non-cash-flow-generating asset because you think its price will increase. We call these Type 1 and Type 2 speculation, respectively.
We are not taking a position on whether or not you should buy Bitcoin. We are saying that you shouldn’t buy it as an investment, because it isn’t. If you want to speculate on it, by all means.
That subtle difference will be appreciated more one day and the world of finance will be a much better place because of that nuance.
