Wednesday, January 10, 2018

I've added MGT Capital Investments (MGTI) shares to the quarter of my self-directed 401(k) that I have dedicated to Bitcoin. This is a portfolio I keep in basic accordance with the structuring prescribed by Harry Browne's "Permanent Portfolio" concept, modified slightly to seek higher income from the equity exposure portion of it, and swapping Bitcoin for gold in the allocations.

I found MGTI after listening to an episode of the Invest Like A Boss podcast in which the hosts interviewed Steve Schaeffer, the President of MGTI. During the interview he detailed how his company has been building itself up as the #1 North American Bitcoin mining operation, and how they've recently begun to HODL a portion of the Bitcoin that they're mining.

That got my attention because one of the issues I've run into with holding Bitcoin in my 401(k) is that I can only use the Bitcoin Investment Trust (GBTC), which trades for a few thousand dollars per share. It makes it difficult to keep a 25% allocation in it in my admittedly small 401(k). It worked fine prior to the great 2017 run-up, but despite the obvious benefit of doubling the value of my 401(k) in three months (not kidding), I ran into a slight liquidity problem later for lack of equity market Bitcoin options.

Enter MGTI.

What I've done now is merge the value of my GBTC holdings with the value of MGTI shares in the spreadsheet I use to track my portfolio, and then track their total worth for determining how much they make up of my portfolio. This takes that portion of my portfolio away from being a pure crypto play, but the far lower price per share of MGTI, which is crypto-focused, gives me a greater ability to reallocate value among the four portfolio categories as needed and keep each around the target allocation of 25%.

Harry Browne's Permanent Portfolio, explained.

MGTI

GBTC

The Invest Like a Boss podcast

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