Hopefully this will be obvious.
Any sort of long term study involving Bitcoin is built on a growth rate that can't be repeated. Over the last ten years, Yahoo Finance has Bitcoin is up 32,000%. That unrepeatable gain is built into the impact cited of 1% added to the portfolio.
It has been awhile since we included Bitcoin in one of our studies but I typically didn't go back further than 2021, where I have the yellow line because of the unrepeatable nature of the some of the earlier returns.
Backtesting is useful but not infallible. I try to point out flaws that I see in some of the backtests we do but this one with Bitcoin is especially easy to observe.
A quick follow up to yesterday when we looked at the MKTN ETF which hasn't been around that long. It turns out there is a mutual fund version with the Federated Hermes MDT Market Neutral Fund (QQMNX). Hat tip to reader Max for finding this fund. For some reason, Testfol.io only goes back about five years with that fund but it is quite a bit older. Portfoliovisualizer lets you go further back.
The information, analysis and opinions expressed herein reflect our judgment and opinions as of the date of writing and are subject to change at any time without notice. They are not intended to constitute legal, tax, securities or investment advice or a recommended course of action in any given situation.
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