Picks and Shovels

Hot themes such as crypto are fun to trade…while they are hot. Bitcoin raced up from $77,000 on election night to $110,000 in late January, only to see a panic selloff retracing over 99% of those gains into the end of February. The current selloff may make it seem more attractive to start or add exposure for some of your clients. Bitcoin is showing its value because it is not making a new low relative to its March low, while stocks have broken below their March lows.   However, there are alternatives to being exposed to long-term crypto/blockchain themes without absorbing the volatility of cryptocurrencies.

Enter the Pick-and-Shovel strategy, which refers to those entrepreneurs who got rich selling equipment to gold miners rather than prospect for the gold itself. This approach can offer the benefit of stability and diversification as these companies have varied business strategies and revenue streams. Pave can help advisers implement this strategy by creating a buy list of crypto-related stocks. These stocks are chosen from a broad and growing list that ranges from better-known companies such as NVIDIA to miners like MARA or RIOT.

Pave then uses this crypto-related buy list to generate a custom portfolio strategy that will contain individual stocks that best fit your clients’ equity benchmark return and risk profile. Advisers can now provide clients with the best of both worlds: long-term exposure to the crypto investment without changing their overall risk to their chosen benchmark.

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If your client prefers direct exposure to cryptocurrencies, Pave’s software can incorporate separate holdings, like Bitcoin (or other cryptocurrencies) into an investment portfolio. It can analyze those assets along with that client’s specific equity holdings to generate an optimized portfolio with the objective of matching the risk/return characteristics of the equity benchmark best suited for your client’s risk tolerance. Advisers can even combine direct investments in cryptocurrency with this crypto buy list as yet another approach.

With Pave, offering your client an impressive new array of strategies does not translate to additional work for you. Our software enables you to automate the portfolio construction and management process while maintaining an extremely high service level. This leaves you more time to work with existing clients directly, explore new relationships, and expand your business. 

Start building your firm's future today with Pave.

To learn more, please reach out by emailing sales@pavefinance.com or pressing the button below. We look forward to speaking with you.

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1. Testimonial provided by Dre Griggs in August of 2023. Dre is not a current client of Pave Finance, Inc. (“Pave”) or any of Pave’s affiliated entities. Dre is an Independent investment adviser with $300 million in AUM.  No compensation was provided in exchange for this testimonial.

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information and should not be considered a solicitation for the purchase or sale of any security. There is no guarantee any investment recommendations will be successful and there is a risk of losing money.

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