Bitcoin Funds Are Here. But You Probably Dont Need Them. – The New York Times

Exchange-traded funds come in many shapes and sizes. Some are plain vanilla, diversified index funds that let you invest in the entire stock and bond markets, and are excellent core holdings for the great majority of people.

Then there are the quirky, narrowly focused E.T.F.s like the Inverse Cramer Tracker, which enables you to bet against the stock picks of the CNBC television host Jim Cramer. The fund is legal, approved by the Securities and Exchange Commission and a money-loser since its inception last year. Betting against Jim Cramer just isnt a great investing strategy.

Neither is fear of missing out. Yet FOMO is the main reason for putting money into Bitcoin, which remains highly speculative, difficult to categorize and without an immediately identifiable economic function.

The S.E.C. this month approved 11 new E.T.F.s that track the price of Bitcoin, and the decision has been heralded by promoters of Bitcoin and of the new funds as an important event, legitimizing Bitcoin as an asset class.

I dont think so.

The S.E.C.s action, in itself, doesnt give Bitcoin any new stature. It merely adds Bitcoin funds to a long list of E.T.F.s that are perfectly legal and simple to buy, but that dont belong in anybodys core portfolio. Id put the Inverse Cramer Tracker in this category, as well as E.T.F.s that track a single stock like Tesla, PayPal or Nvidia, or that use leverage to triple a bet on energy prices or quadruple one on the S&P 500. I could go on and on.

Simply being legal doesnt make a strategy sensible for most investors. In fact, while approving the Bitcoin E.T.F.s, the agency also issued an explicit warning against FOMO investing in so-called digital assets as it has done many times before.

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Bitcoin Funds Are Here. But You Probably Dont Need Them. - The New York Times