Brett Arends’s ROI: This is why bitcoin won’t ‘diversify’ your 401(k)

by | Aug 18, 2022 | Stock Market

Aha! Now we know why bitcoin has collapsed this year. It was because the genius, farseeing crypto market already knew, months and months ago, that President Joe Biden would end up signing the $740 billion “Inflation Reduction Act” on Aug. 16…and that this law would be so powerful it would cause inflation to collapse to “0%” a month before it was even signed!

And if Uncle Sam is poised to pass an anti-inflation bill so amazing it even works retroactively…why would anyone still need bitcoin, which, as we all remember from Finance 101, is a “safe haven” against inflation and monetary debasement? Right? This may sound as hallucinogenic and ridiculous as Lucy in the Sky with Diamonds, but it wasn’t long ago that crypto bros were churning out arguments almost as goofy as this, and possibly more so. One of the less ridiculous, and more persistent, was the argument that bitcoin and other cryptocurrencies would somehow “diversify” your 401(k), IRA or other retirement accounts, because they would perform as asset classes differently from stocks, bonds and the like. Such arguments can be dangerously seductive, because they can be technically true without being helpful. For example, lottery tickets are a “diversifying” asset, because the returns on a fistful of lottery tickets have absolutely no correlation with, or connection to, the stock or bond markets. But that doesn’t change the fact that lottery tickets are terrible investments. So it was timely that not long ago finance professors Luciano …

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