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Bitcoin (“BTC”) has received a lot of attention of late, and many suggest that it can play a similar role to gold as a store of value and inflation hedge. In this short note, I’ll take a look at how BTC works in a “toy” portfolio with two other assets often used to protect against inflation: Gold and Treasury Inflation-Protected Securities (“TIPS”). Let’s call this toy portfolio the “Inflation Hedging Portfolio”, or “IHP” for short. We will use an equal-weight combination of the GLD and TIP ETFs as a benchmark.

To begin with, BTC does not have material correlation to…


Active and Passive Approaches

In “Bitcoin Vs. Inflation”, I looked at how a small investment in Bitcoin (“BTC”) would interact with an “inflation hedging portfolio” or “IHP” of Gold and TIPs.

Many investors view broader commodity investments as a way to potentially offset inflation risk. Here we will investigate how an allocation to commodities via a passive index or an active index might contribute to our IHP.

Bias Note: I have been allocating to active commodity strategies and have run dedicated portfolios of commodity trading programs for well over a decade — I tend to think an active approach to…


Portfolio Construction for Hodlers

Introduction

Ray Dalio, the founder of Bridgewater Associates, recently made the following comment on cryptocurrencies:

“…You want a properly diversified portfolio… Question is…

Do you have enough diversity of these alternative currencies?”

This is a big question and merits a lot of research. I have limited space in this short article, but we can take a first step. If you are pressed for time you can skim to the TL;DR at the end of the article.

The Big Four

To begin with, let’s look at daily returns for Bitcoin (BTC), Ether (ETH), Litecoin (LTC) and Ripple (XRP), aka “the Big Four”. …

Rufus Rankin

Full-Time Investor, Part-Time Professor | www.rufusrankin.com

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