Interest rates. Real estate. Financial stocks. High-yielding dividend-payers. Those are some of the investments and capital markets I specialize in. You’ll see one word is missing:
Bitcoin (BTC).
But I don’t need to be a cryptocurrency expert to see the impact Bitcoin Bonanza is having in the investment markets. Consider: At Weiss Ratings, we analyze and issue grades on more than 2,100 Exchange Traded Funds.
That includes your garden-variety, plain vanilla ETFs, as well as a whole host of esoteric ones. Triple-leveraged funds ... funds that use futures and other derivatives ... even funds that profit from things like this year’s historic collapse in volatility -- they’re all in our database.
But when I recently ran a screen to see which ETF is the single best-performing one, it turned out to be the Bitcoin Investment Trust (GBTC, Rated “B+”). Backed by a firm called Grayscale Investments LLC, which bills itself as the “investment community’s trusted authority on digital currency investment,” the ETF has soared an astounding 1,579% year-to-date!
That leaves all other funds we track in the dust, as you can see from the screener snapshot. It shows the year’s best performers, sorted in descending order by YTD gains, as well as other important details like Weiss Rating and Total Assets.
Data Date: 12/12/2017
How massive of a move is 1,579%? Well, the year’s next-best performers after GBTC are the Direxion Daily Homebuilders & Suppliers Bull 3X Shares (NAIL, Rated “B-”) and the REX VolMAXX Short VIX Weekly Futures Strategy ETF (VMIN, Rated “C+”). They’re up “only” 245% and 187%. So, you’re talking about an ETF that’s up more than six times as much!
That brings up an important question for investors like you: Should I join in? My take is as follows ...
1. When you read articles like these, headlined “Bitcoin Mania: Even Grandma Wants In on the Action,” it doesn’t exactly make me feel warm and fuzzy on the inside.
I saw the housing mania first hand here in South Florida in the mid-2000s. Before that, I experienced the dot-com mania first hand because I worked at an Internet company in the late 1990s and early 2000s. So, if you want to know whether I think it’s a bubble, my answer would be: If it walks like a duck, and quacks like a duck, it’s a duck!
2. Sure, you can make ridiculous amounts of money when any asset is capturing the public imagination and multiplying in value month-in and month-out. But if you aren’t quick, nimble, and extremely sharp, you can lose a boatload of dough, too. Depending on how much leverage you use, and how much exposure you take on, you can even ruin your financial security and credit for years.
3. So I’d much rather you invest your “serious” money in stocks, ETFs, and other investments that pay market-beating, yet reliable, dividends – the key strategy to building lasting wealth that I use in my High Yield Investing service. We’re doing very well on investments I’ve identified in it, including First American Financial (FAF, Rated “A-”) and LyondellBasell Industries (LYB, Rated “B”).
They may not be as sexy as bitcoin. But when the bitcoin boom turns into a bitcoin bust, they will sure as heck hold up better – and let you sleep at night.
Until next time,
Follow Mike Larson and subscribe to Weiss Ratings products here
Related series on trading bitcoin and cryptocurrencies on MoneyShow.com:
Getting your feet wet in cryptocurrency
How to trade cryptos safely
Do fundamentals drive bitcoin?
How to keep your cryptos safe
