Arguably, the middle class can get indirect exposure to these kinds of elite investments. Instead of being a private equity investor, one could buy the shares of Blackstone Group Inc., or Apollo Global Management Inc. Similarly, those of us who are not tech-savvy enough to trade on crypto exchanges can buy stocks that act like a leveraged Bitcoin ETF, such as MicroStrategy Inc., a software maker that issued bonds to buy Bitcoin. For their retirement accounts, many investors also went for Grayscale Bitcoin Trust, a private trust with $29 billion in net asset value.
But why do retail investors have to pursue indirect, less-efficient ways to access private markets, when the ultra rich can buy everything they want? For instance, because of the structure of the Grayscale trust, it can’t behave like an ETF, creating and redeeming shares to adjust to demand and keep its price in line with its net asset value. On May 12, its investors were able to sell their holdings only at the equivalent of $43,272 per Bitcoin, when the market price was $54,430, data compiled by Bloomberg Intelligence show. The ultra rich can tell their crypto fund managers to sell at market price.
We may not all have the same tolerance for some of these risky investments but we should not be prevented from putting our money in them. That’s undemocratic.
This year, we witnessed quite a few bit of market anomalies beyond the meteoric rise and fall of cryptocurrencies, such as the meme stock mania that empowered retail investors. It’s easy to blame the tech-savvy millennials and Generation Z for the latest crazes. But why shouldn’t the young and ambitious not try to keep up with the rich? Especially when they see the wealthy earn double-digit portfolio returns and super yacht sales are hitting record highs. The rest of us can only hope to host yard sales now and then—and to retire much later. We’re living longer anyhow. It’ll give us time to labor away.
This article was provided by Bloomberg News.