Nice lil caption image
I used to read Jason Zweig a lot back in the days... then he got boring and repetitive ("DCA into cheap index funds, repeat") and I got progressively more psychopathic Bitcoin-y.
"Snacking on junk food is occasionally acceptable. Frequent indulgence is potentially addictive—and hazardous to your wealth.""Snacking on junk food is occasionally acceptable. Frequent indulgence is potentially addictive—and hazardous to your wealth."
This piece was pretty neat, going through some insanely stupid ETFs launched this year, including (for our purposes) a midnight bitcoin ETF: formally: "the Nicholas Bitcoin and Treasuries AfterDark ETF"
What's the idea? Well, bitcoin outperforms, ostensibly, when US markets are closed (=weekends and evenings), so you should own only that exposure. The fund shifts from bitcoin to treasuries every trading day at opening, shifts back at closing. All for a neat little 0.97% a year fee. My god, what a silly instrument... just buy bitcoin, I dunno?
Fine, I guess some tradfi hedge funds want to play in this market, using this ETF as a component in an overall, short-term play... but still. Ugh.
Another unorthodox fund is the Nicholas Bitcoin and Treasuries AfterDark ETF, which began trading in April. With $30 million in assets, it charges 0.97% annually. For that, you get exposure to bitcoin’s returns—but only when the stock market is closed.
Each day from Monday through Friday, the fund starts out exposed to bitcoin, flips to Treasury bills or cash at 9:30 a.m. Eastern time, then darts back into bitcoin at 4 p.m. (It stays in bitcoin over the weekends and on holidays.)
The ETF’s strategy, says David Nicholas, one of the portfolio managers, is based on data indicating that bitcoin earns higher returns outside the U.S. stock market’s trading hours.
Hasn't gone so well (yet?!):
In the six weeks since its inception, the AfterDark fund’s return is nearly 11 percentage points lower than what you would have earned by just buying and holding the iShares bitcoin fund around the clock.
There's a UFO one as well. uh-hu
"flips" is the word for sells all their bitcoin right? Or is it something like they buy a contract on bitcoin that says they only own it during the nighttime hours (when the market is closed)?
Seems like they'd get devoured in whatever fees they accumulate with this constant buying and selling? Or am I misunderstanding how this works?
probably a contract -> or the ETF shifts its holdings into IBIT, quite possibly. And yes, Zweig makes a sly remark about the transaction fees too, easily eating up whatever alpha may or may not exist there
that's usually the case with most "overperformance" found in models, theory, or backtesting... perhaps there's a bit to gain, but trading on it a) obliterates it by shifting prices around (e.g., January effect; publishing effect), and b) costs enough in fees/slippage/taxes to kill the entire trade
UFO is an actual stock ticker. I think it's just a generic space and aerospace ETF though
yeah, the interviewed guy's quote was fab... I guess I forgot to include it!