Can cryptocurrency be part of a long-term diversified investment portfolio? | Smart Change: Personal Finances


It’s no secret that the crypto market is full of high-risk investment opportunities. So, you might be wondering, can long-term investors find any solid investment choices in this space? In this segment of Backstage pass, recorded on November 10, Fool contributors Rachel Warren and Connor Allen discuss.

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Rachel Warren: The crypto market is hotter than ever. Ethereum recently hit a new all-time high while Bitcoin jumped above $69,000 today on news that inflation was at its highest level in 30 years. Yahoo Finance recently reported that MicroStrategy CEO Michael Saylor compared his early endorsement to Apple to that of Bitcoin, calling the crypto the dominant monetary network that everyone needs.

During an interview at the New York Times DealBook conference, Apple CEO Tim Cook confirmed that he owns the cryptocurrency and that Apple is studying it, although there is no plans for the company to accept crypto as payment or anything like that. .

My question for you guys is: what is your general investment philosophy regarding cryptocurrency, and do you think it can and should be part of a well-diversified long-term investment portfolio ? Connor, what do you think?

Connor Allen: I think crypto can definitely be part of your portfolio, and I think for a lot of people, and obviously it’s on a case-by-case basis, but it should be part of your portfolio. It’s one of mine.

The cool thing about Bitcoin in particular is that it’s the first asset class I’ve seen that gains credibility with a price increase. So you have stocks that usually when they go up people think, overvalued, overvalued, the price to sales ratio is ridiculous, and yadda, yadda, yadda.

But when Bitcoin goes up, everyone is like, “Oh, I gotta buy some,” and that’s kind of the credibility he gets is that people believe in this thing. This is where the value comes from. Which is a completely different and really weird conversation. But that’s something that’s really cool to me about Bitcoin in particular.

Overall, I’m a crypto fanatic, but I also understand my shortcomings as an investor. One of them is not being able to understand everything about crypto. I understand the power of DeFi and the power Bitcoin and other currencies could bring to the world. As I understand that.

I get the sort of mission statement, I guess you could say, of crypto and what it could become. But with all the technicalities and stuff, I leave that to other people because I really don’t understand that.

I just invested in four cryptos, these are Solana, Bitcoin, Ethereum and gimbal. I don’t know which one will succeed or which one will fail. I just threw a little money on four eggs in the basket, and that’s only a small part of my overall wallet.

Connor Allen owns shares of Apple, Bitcoin, Cardano, Ethereum and Solana. Rachel Warren owns shares of Apple. The Motley Fool owns stocks and recommends Apple, Bitcoin and Ethereum. The Motley Fool recommends MicroStrategy and recommends the following options: $120 Long Calls in March 2023 on Apple and $130 Short Calls in March 2023 on Apple. The Motley Fool has a disclosure policy.

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