Tag: ETF Investing Strategy

Bitcoin ETFs Aren't Going To Produce Same Returns As Bitcoin

Posted on by Matt Thalman

Bitcoin and other cryptocurrencies have once again hit new all-time highs over the past few weeks; many believe this was largely due to the hype surrounding the inception of the first Bitcoin Exchange Traded Funds in the United States.

The hype around the Bitcoin ETFs, like the ProShares Bitcoin Strategy ETF (BITO), was largely due to the idea that now the average investor or fund manager can easily garner access to Bitcoin through their standard investment platforms. The ETF would allow them to invest in Bitcoin without relying on the Coinbase's of the world or setting up a digital wallet and transferring funds into those accounts. It may sound like a small thing, but most investors prefer all their investments in one clean place.

The Grayscale Bitcoin Trust (GBTC), which many considered the first fund that gave the average investor access to Bitcoin in an easily tradable way and is a fund that actually holds bitcoins. BITO and the other newer Bitcoin ETFs, hold ‘futures’ contracts on Bitcoin, not the actual asset itself and this causes some issues with these new ETFs accurately tracking the price movements of Bitcoin. That is not to say that BGTC tracks Bitcoin price movements perfectly either, but it doesn’t have to deal with the same issues the newer ETFs will be facing. *(see footnote)

This type of investing is different from actually holding the asset itself because, in order to gain exposure to the asset through futures contracts, you spend more money to gain that exposure. Plus, you spend it each and every month when you'll roll' from one month's futures contracts into the next. Continue reading "Bitcoin ETFs Aren't Going To Produce Same Returns As Bitcoin" →

Truly Out Of This World Investing: Space ETFs

Posted on by Matt Thalman

In the 1960s, the so-called 'Space Race' was between the United States and Russia. Today we are once again in the midst of another space race. However, this time around, it's not two superpower countries battling it out; it's businessmen. In the 60's the battle for space was in most ways geared around bragging rights, military power, and nationalism. Today, it still is in many ways about bragging rights and as a way to make money. And let's be honest, the billionaires shouldn't be the only ones getting weather from this battle.

To many people, the current battle for space is still seen as a lot of science fiction. But, what a lot of these companies are doing today, could pave the way for the next generation's technological advancements. So, what is taking place just outside our atmosphere is really going to change the way we live, not in 20 or 30 years from now, but just a few years from now.

For example, Elon Musk's SpaceX company offers satellite internet service through its "Starlink" program. The Starlink program is an internet provider that uses satellites floating around Earth to make an internet connection. This is very similar to satellite radio from SiriusXM or satellite TV service through someone like DISH Network. At the time, Starlink is not a huge success, but some predict that it will become more and more popular in the coming years due to the worldwide availability of the internet that Starlink offers. Continue reading "Truly Out Of This World Investing: Space ETFs" →

U.S. Default Could Be A Disaster

Posted on by Matt Thalman

On September 30th, the United States Congress sent a bill to President Biden's desk to avoid a government shutdown, at least until December 3rd. In the past, when the government has shut down or come close to a shutdown, similar to what just happened, we have seen market turmoil caused by the uncertainty surrounding the situation. However, even with that uncertainty removed temporarily until December 3rd, the markets may not have much breathing room since lawmakers still need to raise or suspend the debt ceiling before October 18th.

If the politicians in Washington can't agree on the debt ceiling, the U.S. could default on U.S. debt, something that most market participants believe would be "disastrous." However, the United States has never in its history defaulted on government debt. So, we honestly do not know what would happen if it were to happen. But, since U.S. Treasury bonds are widely considered "zero" risk and used as a benchmark or starting point to determine the risk of other alternative investment options if the government did indeed default, it would send shock waves throughout the market as other assets would need to be repriced based on their risk level when compared to U.S. Treasury bonds.

The uncertainty which would follow and potentially dramatic rise in interest rates across the board could and very likely would send the U.S. economy into a tailspin with the stock market falling and potentially a rise in unemployment. Some even believe that government spending in the forms of social security payments and bills owed to contractors would be suspended for a period of time while the U.S. Treasury determines what to pay and what not to pay. This would obviously hurt the overall economy as potentially millions of Americans would not receive social security checks and or paychecks if they work for a government contractor. Continue reading "U.S. Default Could Be A Disaster" →

New ETF To Play Bitcoin And Cryptocurrency Market

Posted on by Matt Thalman

Just as Bitcoin and the cryptocurrency markets are once again heating up and hitting new highs, a new ETF opened up, which offers investors another way to play the industry. The Viridi Cleaner Energy Crypto-Mining & Semiconductor ETF (RIGZ) is a very interesting ETF that just launched on July 20th, 2021 and offers investors a sort of backdoor play into the cryptocurrency world, without fully relying on cryptocurrencies increasing in value in order to realize a decent return.

RIGZ offers investors the ability to invest in cryptocurrency and semiconductor firms located in developed countries that focus on clean energy and environmental sustainability. The cryptocurrency firms that RIGZ invests in are crypto-miners.

These crypto-miners also are the ones that have reportedly switched to "cleaner" energy sources than what other miners or miners in the past have been accused of using. As you may know, mining for cryptocurrency is, in most cases, a very energy-demanding operation. The amount of electricity the mining rigs (The main components of any crypto-mining rig are power supply, a motherboard, an operating system to run on your motherboard, computer memory, and a graphics processing unit) need has been estimated by the Bitcoin Energy Consumption Index at one Bitcoin transaction takes 1,544 kWh to complete, or the equivalent of roughly 53 days of power for the average US household.

So, if a miner is using clean energy, that is advantageous to the environment and potentially could even make the company more profitable, especially if the company is producing some of the energy themselves with the use of solar panels or small wind-powered turbines. Continue reading "New ETF To Play Bitcoin And Cryptocurrency Market" →

Using ETFs To Help You Cherry Pick Stocks

Posted on by Matt Thalman

Cathie Woods and her ARK Invest group of funds are changing the way investors look at Exchange Traded Funds in a number of ways. Whether it's from the standpoint of high-performing funds or innovative investment strategies that are looking years or even decades down the road, what Cathie and her team are doing is extraordinary. But what may be the biggest and most important innovation ARK is bringing to the investment community is the transparency her funds have shown investors.

ARK Invest gives investors the stocks they are buying. Well, every fund does that. But what ARK does, is they give you their stock buys and sells on a daily basis. Yes daily.

Furthermore, they tell you the exact amount of shares they bought or sold, the amount of money they spent (which allows you to determine the average cost), and which one of the ARK funds the shares were bought or sold in.

This is a big change from the way most funds operate, in which they post quarterly or monthly their holding list, number of shares, and percent that the company makes up in the fund based on assets under management.

While what Cathie and ARK are doing is ideal, investors can still use the information other funds provide in order to ‘cherry pick’ stocks in certain industry’s that they believe will do better than others. While this idea may not be for all investors, it is something that investors who prefer to buy individual equities, as opposed to going down the ‘fund’ route, can still use ETFs and other funds to their advantage, without ever owning them. Continue reading "Using ETFs To Help You Cherry Pick Stocks" →