03-11-2018, 02:25 AM
When investors buy alternative assets, they typically look for two things.
First, they want to know how the asset will perform as a safe-haven asset during times of market volatility.
In this case, it should be clear that during the volatile month of October gold was a far superior safe-haven asset than was Bitcoin.
The second thing that investors usually want from an alternative asset is diversification.
That is to say, when they choose assets for a portfolio, they typically want to make sure that the returns on the different assets don't all move up and down in the same direction.
In other words, they want assets that are diversified. When one asset price zigs, the hope is that another asset price will zag.
Gold performed that function admirably during October. While stocks slid, gold rallied, albeit it a little. There was a zig for the zag.
That didn't happen with Bitcoin. While stocks zagged, so did Bitcoin.
Put simply, Bitcoin wouldn't have acted as a diversifier for a portfolio that had a significant weighting of stocks. As a result, there would be no risk reduction for such a portfolio, at least over the past month.
So far, at least, Bitcoin isn't really doing much of a job as an alternative asset when compared to gold.
This was an extract from
https://www.forbes.com/sites/simonconsta...58cc961660
First, they want to know how the asset will perform as a safe-haven asset during times of market volatility.
In this case, it should be clear that during the volatile month of October gold was a far superior safe-haven asset than was Bitcoin.
The second thing that investors usually want from an alternative asset is diversification.
That is to say, when they choose assets for a portfolio, they typically want to make sure that the returns on the different assets don't all move up and down in the same direction.
In other words, they want assets that are diversified. When one asset price zigs, the hope is that another asset price will zag.
Gold performed that function admirably during October. While stocks slid, gold rallied, albeit it a little. There was a zig for the zag.
That didn't happen with Bitcoin. While stocks zagged, so did Bitcoin.
Put simply, Bitcoin wouldn't have acted as a diversifier for a portfolio that had a significant weighting of stocks. As a result, there would be no risk reduction for such a portfolio, at least over the past month.
So far, at least, Bitcoin isn't really doing much of a job as an alternative asset when compared to gold.
This was an extract from
https://www.forbes.com/sites/simonconsta...58cc961660