Cryptocurrency in the Market
Transcript:
Katie Nealis:
Have you looked at Coinbase global ticker symbol coin? What are your thoughts?
Tom Vaughan:
Okay, so Coinbase went public not too long ago, and they’re basically an exchange for cryptocurrencies. And they had a phenomenal IPO that came out of the gate really, really hard. They did fall some after that, the valuation for Coinbase as a cryptocurrency exchange, greatly exceeded the valuation for, say, the NASDAQ, which has been around for a really long time. So it was really, really, really hot at one point in time, that would probably concern me a little bit, just from a pure valuation standpoint. You know, when when, when the coin base is worth more than an established index, but the future in the area of cryptocurrency is potentially bright. There’s an awful lot of interest in cryptocurrencies. I’m not, you know, involved in cryptocurrency in terms of as an investor or as a professional money manager, just because I really, I’d rather try to find the next Amazon or something that some some business that had a product that had something that they were trying to do, you know, the cloud servers, you know, whatever it might be.
And because the cryptocurrency arena, you know, there isn’t anything to get my head around in terms of, you know, what’s happening, we do have some, you know, regulations coming in, we have this part of the infrastructure bill, they’re trying to, you know, basically get more taxes out of cryptocurrency, the US is talking about their own digital currency, I don’t know if that will go through crypto to coin base or not as far as that goes. So I think it’s one of those things that is, is I call it a homerun investment. And I don’t have a problem with trying to hit home runs, but it should be fairly small portion of your portfolio. And if it works, it doesn’t take that much. I again, I always talk about I have a client that bought, you know, apple, when it looked like it was going to go out of business with 14,000, that’s now worth 2.4 million. So that was a home run scenario, where you know, just didn’t put a lot in, if it disappeared, they’d lose 14,000, which would hurt. But you know, that, that that’s how I’d probably treat this personally.
Easan Arulanantham:
So when you invest with homerun stocks, do you try and get like one or two and then put out as like a percentage of your portfolio? You know, how much should I be risking way to try to if I’m trying to hit a homerun? Well, I’d say part of that your personality, you know, how, you know, how much risk can you take? Are you willing to have that disappear, or turn in half, you know, those type of things. So you have to look at yourself and figure out, you know, what you can handle, as far as that goes, part of it is your age. So, you know, again, if I have, you know, a longer period of time, theoretically to let that develop, and maybe cryptocurrency does turn into the next NASDAQ, you know, maybe they find a use for these cryptocurrencies, and that really kind of, you know, explodes that market. And so, yeah, I would definitely be thinking something, you know, less than 5% for that whole category, personally, again, you know, just because of the volatility, and but again, because of that volatility that, you know, 1, 2, 3, 4 or 5%, whatever it might be, that you use, could turn into a really big, you know, piece of your puzzle altogether, too. So, yeah, I think I’d keep it somewhat limited, you know, but that’s just the way I do it.