Financial Planning Association: Investors can benefit from small portion of bitcoins in portfolio
The Financial Planning Association has published a report assessing the characteristics of Bitcoin and its risk-reward profile as an investment.
The Financial Planning Association has published a report assessing the characteristics of Bitcoin and its risk-reward profile as an investment. It concludes that “individual investors can benefit from holding a small amount of bitcoins in a diversified portfolio.”
The Financial Planning Association was formed when the Certified Financial Planners (CFP) and the International Association for Financial Planners merged in 2000. The body serves the interests of the financial planning industry and its practitioners.
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The report is authored by Chen Y. Wu, Ph.D.; and Vivek K. Pandey, DBA, CFA, FRM.
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After introducing Bitcoin, the report’s main component delves into a statistical analysis of random trials to show that Bitcoin is beneficial for a portfolio. The data shows that returns are higher, and risk lower, in a portfolio including bitcoins.
Central to the argument were Bitcoin’s past and forecast performance. Significantly, the trials were conducted during the period from July 2010 to December 2013. Bitcoin’s actual returns were, on average, overwhelmingly positive (even relative to other appreciating asset classes) between any arbitrarily chosen start and end dates during this period.
It follows that had the simulations taken place between January and September of 2014, or based on a random simulation of performance after today, that the conclusions would have been different.
FPA got right to the point. Bitcoin is extremely unstable. Early adopters period is already behind, but rate is still seesawing. Indeed, investing large sums into Bitcoin might lead to great losses. There many altcoins now. Some of them have no future, but there is a small number of developing currencies which are now in the position of Bitcoin-2012. The trick is selecting the right currency. I have invested in Bitcoin, but mainly I invest in developing currencies, e.g. NXT or Bytecoin. Both currencies are in existence for quite a long period: NXT has been running for a year, Bytecoin… Read more »
FPA got right to the point. Bitcoin is extremely unstable. Early adopters period is already behind, but rate is still seesawing. Indeed, investing large sums into Bitcoin might lead to great losses. There many altcoins now. Some of them have no future, but there is a small number of developing currencies which are now in the position of Bitcoin-2012. The trick is selecting the right currency. I have invested in Bitcoin, but mainly I invest in developing currencies, e.g. NXT or Bytecoin. Both currencies are in existence for quite a long period: NXT has been running for a year, Bytecoin… Read more »