I’m the guy who pioneered the concept, a few years ago, of a one percent asset allocation model. In traditional asset management activities, if you’re not going to put three percent or five percent of assets into an asset class then why bother doing it? It’s not going to have a material impact on the portfolio. However, with Bitcoin, you don’t need five, 10 or 20 percent, which you would likely do with stocks or bonds. Bitcoin has a lot of unknowns technologically and regulatory.
My position is that you don’t need to do 10 or 20 to have a meaningful exposure. One percent allocation is plenty and the reason for that is Bitcoin’s incredible volatility.
A one percent allocation won’t hurt you. If you’re wrong, it’ll be annoying, but not devastating. And if you’re right, that one percent allocation can have a material impact on the improvement of your client’s returns.
Therefore, it is very much worthwhile to learn about Bitcoin. I’m not saying you have to like it. I’m saying as an advisor you have an obligation to learn about it.
Ric responded, December 15, 2020