General
The Cryptocurrency You May Not Even Know You Own
Many funds hold stakes in MicroStrategy, which behaves like Bitcoin’s wilder cousin. This may not be what you want in your retirement portfolio, our columnist says.
Bitcoin has had a phenomenal year. But its rich returns are paltry compared with those of MicroStrategy, a company dedicated to a risky business: buying Bitcoin with money provided by you and other shareholders.
By “you,” I’m not speaking loosely. There’s a good chance that MicroStrategy, which trades like Bitcoin’s wilder cousin, is hiding in your retirement account.
I own the stock indirectly, as a holder of Vanguard index funds through my workplace retirement plan. And it is a holding in all manner of diversified stock funds that include small and midsize publicly traded companies, run by Vanguard, Fidelity, BlackRock, Morgan Stanley or, really, just about any large asset manager.
As far as MicroStrategy’s stock performance goes, there’s little to complain about — with one glaring exception, 2022. That was a catastrophic year for nearly everyone and everything associated with cryptocurrency because of the fraud and bankruptcy at the FTX exchange, run by Sam Bankman-Fried.
MicroStrategy’s investors lost more than 74 percent in 2022. It’s hard to bounce back from losses like that. Yet MicroStrategy has. Over all, it has turned in an otherworldly performance, with a 3,000 percent gain, since Aug. 10, 2020. That was when the company shifted its core strategy from being a so-so provider of business software to a supercharged financial engine powered by debt, stock sales and Bitcoin.
Is MicroStrategy risky? Is the sky blue? You can’t get colossal returns like these without taking on outsize risks — exposing investors to hazards that they may never have dreamed of taking in their retirement accounts. The company didn’t comment for this column. But in its annual report, MicroStrategy reveals these hazards frankly, in a voluminous section packed with useful details. We’ll come back to that.
