At What Price?
Franklin J. Parker, CFA, the author of Goals-Based Portfolio Theory, published by Wiley, recalls a lunchtime conversation with fellow investment professionals on the shores of Lake Maggiore in Italy. At his side was a former CIO of a family office who had ventured into cryptocurrency projects. When Parker shared his trepidation over the elusive value of bitcoin, the response he received was not as illuminating as he had hoped it would be.
Parker yearned for a reasonable approach to investing in cryptocurrency. Using bitcoin as an example, he questioned the sustainability of prices at $25,000, $60,000, or $1,500,000 per coin. Afterward, he contemplated the recourse to convert bitcoin into goods and services and the need for a pricing model to guide him in making buy/sell decisions, especially as a professional investor subject to a fiduciary standard.
From a presentation he attended in Dallas to encounters with cryptocurrency enthusiasts, Parker lamented the lack of a coherent model for professional investors to embrace the asset class. He boldly issued a call for crypto experts to create a pricing model that would provide a foundation for sell discipline and eradicate the speculative dynamics of crypto investing.
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Written by Franklin J. Parker, CFA. These opinions don’t represent investment advice and do not necessarily reflect CFA Institute or the writer’s employer’s views.
