Thank a Producer

It’s nearly Thanksgiving, and for most Americans, the occasion marks a pause from riding out the day’s events of a normal Thursday, and instead, diving headlong into a celebratory feast complete with all the culinary delights of the season.

Thanksgiving is also an occasion where many of us rightly express gratitude for all the bounty we enjoy. We are thankful for family, friends and the freedom to enjoy that abundance. And indeed, we should be grateful and thankful for these things.

Yet, all too often, there is one group of individuals that doesn’t get enough gratitude and thanks for all they do to make that feast possible. And in an interesting twist here, you are most likely one of those individuals.

Here, I am talking about being thankful for the producers.

By producers, I am referring to anyone who works hard to create wealth. Anyone who has made the noblest of choices, the choice to cast their mind, body and spirit into the world in pursuit of productive achievement of the sort that creates the goods and services we need to survive and thrive in a hostile environment.

Make no mistake about it, the world is a hostile environment. Before there were any dinner tables, grocery stores, electrified homes, televisions, internet, etc., there was the cold, harsh and unforgiving state of nature. Yet in the face of this adversity, a producer chose to forage ahead and mold reality into all the comforts we enjoy today, and that we all-too-often take for granted.

Now, you might argue that Americans have been blessed with incredible natural resources, and that we should thank the heavens for this blessing. But I see it differently.

In my view, natural resources are neither natural nor resources. It takes man’s mind to create resources from nature.

Think about it. Nearly every value you hold as a human — safety, security, shelter, clean water, ample food supply, the ability to traverse the globe — indeed, modern civilization itself, is made possible by a thinking human’s efforts to produce such things.

It’s man’s mind; his reason, ingenuity, science, hard work and capital, put in the service of his attempt to achieve values, that is responsible for your Thanksgiving bounty. And this bounty is the virtuous result of man’s ability to shape nature into the byproducts of his will.

As the great novelist/philosopher Ayn Rand puts it, “The power to rearrange the combinations of natural elements is the only creative power man possesses. It is an enormous and glorious power — and it is the only meaning of the concept ‘creative’.”

So, tomorrow, as you sit down to celebrate the day of thanks, thank a producer.

Even better, if you also are a producer (and if you are reading this, I am nearly 100% certain that you are), then take a moment to thank yourself.

You’ve earned it.

ETF Talk: The Flipside of the Bitcoin

With bullish sentiment for cryptocurrency settled in for the time being, I want to examine an opportunity that could lead to profits if Bitcoin pulls back again.

While the Bitcoin market has seen a substantial upswing this year, the cryptocurrency is still in its early stages, with influencing factors such as supply and demand, government regulation and popular media and investor sentiment contributing to its characteristic volatility. Let me introduce you to ProShares Short Bitcoin Strategy ETF (BITI), offering investors a way to profit if Bitcoin retreats.

For investors wanting exposure to Bitcoin’s fortunes without having to invest directly, the current offering of exchange-traded funds (ETFs) provides an easy entry point. Traditional ETFs don’t require cryptocurrency exchange accounts or “wallets,” allowing investors to bypass crypto exchange restrictions and costs, as well as to use traditional brokerage accounts for exposure to the digital asset.

And for investors anticipating the other side of Bitcoin’s upswing, there are inverse, or short strategy ETFs, such as ProShares Short Bitcoin Strategy ETF (BITI). Consider this ETF another investing tool to use in just the right circumstances when Bitcoin falters.

As a sibling fund to ProShares Bitcoin Strategy ETF (BITO), BITI does not short Bitcoin directly. It gains short exposure to Bitcoin through cash-settled, front-month and back-month bitcoin futures contracts traded on commodity exchanges registered with the Commodity Futures Trading Commission (CFTC). The fund’s goal is to achieve the inverse of the daily performance of the S&P CME Bitcoin Futures Index.

In other words, the fund’s investing strategy is to bet on a decline in bitcoin futures — since a drop in bitcoin futures contracts should cause BITI to rise. The fund rebalances its portfolio each day.

BITI is the first short bitcoin strategy ETF in the United States, and currently the only ETF approved by the Securities and Exchange Commission (SEC) that trades the inverse of Bitcoin’s daily performance. BITI is significantly smaller than its sibling BITO, with $75.39 million in assets under management and an expense ratio of 0.95%.

Like BITO’s introduction just before the peak of Bitcoin in 2021, BITI was introduced by ProShares in June 2022, after Bitcoin dropped from the year’s high at $46,820 in March 2022 to $21,027 in June. The fund had a strong reception, with over 870,000 shares traded on its second day.

But given that it trades the inverse of Bitcoin, BITI is now just barely up from its lowest point since the fund’s launch.

With the sudden recovery of Bitcoin after its steep fall in 2022, the upcoming Bitcoin “halving” expected in April 2024 and the possible SEC approval of spot bitcoin ETFs early next year, BITI may be useful for investors who believe bitcoin is now overbought.

As excitement in the market surrounding Bitcoin has driven the price significantly up in recent months, BITI is down 20.77% over the past month, 30.81% in the past three months and 61.35% for the year to date.

Source: StockCharts.com

Despite what some have called a mistimed launch with BITI now near a record low, the fund may still prove a useful tool for investors who believe Bitcoin’s rally to be a short squeeze. BITI also may appeal to those who want to hedge their risk. Whether Bitcoin will continue to push higher as some experts anticipate, and some investors hope, or see another plunge, time will tell.

As always, investors should do their due diligence before adding any stock, fund or ETF to their portfolio. Inverse ETFs compound losses in volatile, upward-trending markets, posing risks if the market turns unfavorably.

I am always happy to answer any of your questions about ETFs, so do not hesitate to send me an email. You may just see your question answered in a future ETF Talk.

Be the Skylark

“You can muffle the drum, and you can loosen the strings of the lyre, but who shall command the skylark not to sing?”

— Kahlil Gibran, “The Prophet”

The celebrated poet offers us a beautiful insight into the nature of freedom, and the unquenchable thirst all creatures have to survive and to thrive as themselves. This Thanksgiving, also be grateful for your nature as “the rational animal,” by allowing yourself to be a human skylark that sings your thoughts out to the world. And most importantly, do not allow anyone to muffle your drum.

Wisdom about money, investing and life can be found anywhere. If you have a good quote that you’d like me to share with your fellow readers, send it to me, along with any comments, questions and suggestions you have about my newsletters, seminars or anything else. Click here to ask Jim.

In the name of the best within us,

Jim Woods