“Until the macro conditions settle down, the fundamentals of crypto can't compete,” said Matt Hougan, chief investment officer of Bitwise Asset Management. “For individuals eyeing a long-term investment, now is an interesting moment to consider the market. If you're looking for a short-term trade, you're jumping into a volatile environment.”
SPACs
A year ago, special-purpose acquisition companies, also known as blank-check companies, were all the rage with retail traders. Rather than following the disclosure-heavy IPO process, SPACs raise money from investors first, then look for a private business to merge with. If investors don’t like the choice of merger partner, they can opt out and get their money back.
SPACs attracted celebrities, who used their name recognition to attract attention (and funds). But in recent weeks, large global banks have been pulling away from such deals after new disclosure guidance from the Securities and Exchange Commission. The De-SPAC Index — which tracks 25 companies that have gone public through a merger with a SPAC — is down more than 50% this year.
Gordon Achtermann, founder and principal of Your Best Path Financial Planning in Fairfax, Virgina, says the lack of disclosure concerns him. He recommends that investors pore over whatever financial documents they receive about the SPAC’s merger target.
“What are the real prospects for return-on-investment for this thing? What’s their cashflow?” he said. “Really turn your B.S. detector up to maximum.”
Mutual Funds And ETFs
Mutual funds and exchange-traded funds are known as some of the safest ways to invest. But what do you do when the entire market is falling?
For Thomas Kopelman, co-founder and financial planner at AllStreet Wealth in Indianapolis, now is the time to buy, especially funds tracking broad indexes like the S&P 500 or Nasdaq 100.
“If you look back in history, all the times the market has gone down it bounced back,” he said.
That assumes you’re investing for the long term, which is generally what advisors recommend. For those approaching retirement, it’s wise to examine your risk tolerance and consider your target retirement date, and adjust your portfolio accordingly.
“Now is not the time to veer away from your financial plan unless a shock like this gives you a wakeup call, and you say, ‘Maybe my risk tolerance was inaccurate,’” said Chris Diodato, founder of WELLth Financial Planning in Palm Beach Gardens, Florida.
--With assistance from Misyrlena Egkolfopoulou.
This article was provided by Bloomberg News.