the cryptocurrency market seems to be the cool hotspot to be at but we all know there are
a ton of risks involved and the volatility in the cryptocurrency market is real not to mention all
those cryptocurrency scams that have been able to even fool the best of us now while in my book
cryptocurrency investing for dummies right here i've explained the exact steps you need to take to
navigate the cryptocurrency market and bank on this revolutionizing industry
my guest today prefers an even lower risk approach i will say that for someone who hasn't invested
in crypto already uh here are the things that you need to keep in mind it's important to understand
the asset class as a whole is volatile and so like in any investing approach you want
to make sure you understand your personal risk tolerance first before entering but we don't know
exactly where it's going and so you want to diversify in all the other coins in the top 10
um have similar profiles and you know we read about articles that a coin will come out and
it's not even real because it's talked about by important powerful people james
mcdonald is back on the show and he's the founder and chief executive officer
of hercules investments llc let's go pick his brain about crypto
welcome back to the show james mcdonald in the previous episode we talked about the potential
risk of a medium-term storm coming our way and today i wanted to ask you about your views
on the cryptocurrency market because you mentioned before that the stock market
buyers are going to find a new home so they're going to go from s p 500 to russell to dow to
small cap where do you see cryptocurrency market playing out and a potential upcoming
storm right it's a great question and it's a fascinating topic it's a topic that triggers
political and religious like emotion from people because crypto is such effusive market it's such
a confusing market and it's such an important market i wrote a book on how to invest in bitcoin
three or four years ago when crypto was around it wasn't as powerful as it is today i think bitcoin
was trading about six thousand dollars when i wrote the book and i wrote the book because having
had 20 years of experience and investing many investors asked me what i thought of crypto and i
kept repeating and kept repeating and said i'll write a book on it when i wrote the book i
interviewed several top bitcoin investors folks that had invested when it was less than a dollar
multi-millionaires and i explained how to invest in bitcoin at that time like i said
bitcoin was around seven thousand bucks it ran up to twenty thousand came back down
and here we are in the fifty thousand dollar level crypto is not going anywhere crypto has
created so much wealth and so much intrigue in investors that the mainstream investing public
has had to take notice and a big ecosystem is built around it i will say that for someone who
hasn't invested in crypto already here are the things that you need to keep in mind like any
big market like any important market there are good bad and ugly you can't lump all crypto into
one category there are some wonderful wonderful digital assets and there are some 100 illegal
schemes behind digital assets it's important to get expertise and it's important to segment
what might be right for you it's important to understand the asset class as a whole is volatile
and so like in any investing approach you want to make sure you understand your
personal risk tolerance first before entering now having said all that with my now 26 years
of investing experience i've encountered dozens and dozens and dozens of brilliant
investment minds i would say that the smartest guy or woman i've ever met in the investing space is
a guy named matt hogan and i met matt hogan when he was running etf.com brilliant brilliant mind
matt hogan is now the chief investment officer of bitwise and i say this because bitwise is a
cryptocurrency index fund it's the first index fund for crypto in the world publicly traded
the ticker is bitw i lead with bitw because of all the things i've said about crypto
it's fast growing it's important it's powerful but there are a lot of bad actors in the space
that we as individual investors may not be able to detect i like what matt hogan is doing it bitwise
bitw because that de-risks the process for us investors just like with stocks they're
good there's bad there's ugly stock picking is hard and being successful at stock picking
is harder and being successful at stock picking over a period of time is the hardest most people
can't do it in fact many mutual fund managers can't generate three and five-year track records
for that reason my investing approach has always been an index approach rather than trying to pick
the best stock with constantly changing information i like to pick baskets and
invest in sectors or invest in indexes that have a tendency to remove some of the idiosyncratic risks
is that how you invest to actually invest more in index funds rather than actually stock picking
well i do index options and so i like the aggressive risk but i like to de-risk it by not
picking on stocks and so we're the largest index options committee in the united states we did over
six billion dollars in index options trades last year but back to crypto i might remember that
people take an index approach that way if the winners change on a day-to-day basis you don't
get caught and left behind and what bitw does is they take the top 10 largest coins and they pool
them together in a basket that's diversified that allows you to benefit from the overall crypto eco
system rising but also allows you to be diversified and in a single fund you can kind
of own not kind of you can own the best and avoid problems and so we saw you know a major major
crypto i think that's one of the top four cryptos go belly up from a federal indictment uh about
four months ago bitwise remove them from portfolio immediately and replace them with the best
one i think that bitw i think bit wise eliminates a lot of the guesswork that investors have to do
obviously bitcoin itself is the leader of the pack and bitcoin has garnered support from elon musk to
michael saylor and facebook and paypal and so many others and so we think it's here to stay
but we don't know exactly where it's going and so you want to diversify and all the other coins
in the top 10 um have similar profiles and you know we read about articles that a coin will
come out and it's not even real but because it's talked about by important and powerful people
you see its prices rally in that option absolutely so i mean it's important to know what you're
investing and doing the actual research about it you're absolutely right that there are winners in
both cryptocurrency and stocks and there are ugly ones absolutely 100 one thing that i would want
to bring up here is that if you're investing in cryptocurrencies just for position trading then
yes maybe an index fund would be the way to go but at the same time kind of the idea behind
bitcoin and investing in cryptocurrency for me is more position actually holding your coins without
having the bank involved having them in your own wallet so for me is a little more about as opposed
to position trading is actually holding the asset as a value asset so there are different strategies
that can be suitable for uh different people but yeah i actually do know matt hogan as well and
he's an amazing person and i was contributing to utf.com for a brief time and so etfs are a
great place as you mentioned if you don't have the time or don't know how to go pick the value
assets that suit your risk tolerance i love the fact that you pointed that out as well because
risk tolerance is the basically end all be all and if whatever that you choose doesn't match your
risk tolerance you're easy either losing money or leaving money on the table so if your resellers is
higher and you know how to pay assets then that could be the way to go thank you so much james
this was an amazing uh insight and thank you for bringing up matt hogan's like oh my god memories
that's a beast i know uh it's amazing and you guys watching at home leave us a comment
which one do you prefer this is going to be controversial do you prefer to invest in a
bitcoin or a cryptocurrency index fund or do you prefer actually holding your crypto and crowing
your kryptos cryptocurrency and why i would love to hear from you in the comment section and we'll
see you in the next episode of the invest diva movement i forgot to ask you oh my gosh we asked
this from all of our guests and you're the first guest that i did not ask you to we asked them to
make a silly face a silly face yes i love it okay thank you so much james that was awesome