Price, Not Intrinsic Value, Is the True Measure of Bitcoin’s Success
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Loading... - Aya Marina
- 09 Mar 2023
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Market efficiency, the hypothesis that states asset prices reflect all available information, has split the advisor community.
Most advisors say the market is efficient and that you should just own the market. As a result, they suggest investing in diversified portfolios or passive index funds rather than attempting to pick individual stocks. They believe the price of an asset reflects its value and, therefore, the price is true.
Others say the market is inefficient. They tend to think all employer retirement accounts have participants pigeonholed without any choice other than some mixtures of stocks and bonds. They point to a variety of areas in the market that have been inefficient – take energy in 2022 as a great example, because it currently makes up so little of the massive indexes. And they argue the price of assets often don’t reflect their value and that prices can be inaccurate.However, the dominant consensus tends to be that while the market is not perfectly efficient, it’s getting closer each year.
So why, then, do so many financial advisors struggle to view bitcoin through the same market efficient lens? They often cite it as a scam, bubble or tulip mania, yet the market value of bitcoin has steadily increased since 2009 and has been the best-performing asset for years. Read More..
