It's usually not a good sign for an investment when a large brokerage firm runs an ad in the Wall Street Journal begging for more regulatory oversight and warning investors that the investment category is so volatile that futures contracts could create devastating losses.
This is exactly what has happened after the Chicago Mercantile Exchange announced plans to start trading Bitcoin futures contracts.
Seems like everywhere you turn these days, you're hearing about the huge increases in Bitcoin prices as well as seeing tons of ads telling you how you, too, can get in on the action.
This is a red-flag warning. This is what usually happens at the peak of a market. In case you haven't heard, Bitcoins are up more than 700 percent year-to-date compared with a measly 15 per cent for the S&P 500 Index.
But there are serious questions and concerns, despite the come-ons and ads, about whether Bitcoins should even be considered an investment in the first place, or is it a currency? Today, some Bitcoin owners are now wondering what exactly they should do with this digital currency that is nothing more than blips on a computer database.
So far, this digital currency has been popular with buyers and sellers of illegal drugs and illegal weapons.
We think the wise move if you own Bitcoins would be to cash out now before what we think will be the inevitable collapse.
If you are invested in Bitcoins, please make sure it's money you're willing to risk — as in lose everything — because this most certainly could happen. You don't want to be investing any money that you're going to be relying on to provide for your lifestyle, especially in retirement.
Investments like this tend to either be the proverbial home run or a strike out at the plate.