Is The Launch Of A New Fund A Sell Signal For An Asset? Examples From Health Care, Commodities, And Now Bitcoin.

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A Sell Signal For An Asset Class?

In the video below, I note that Bitcoin (CRYTO:BTC) has dropped by more than a third since the ProShares Bitcoin Strategy ETF (NYSE:BITO) launched, and discuss a couple of other examples of similar phenomena that came to mind. The first was when Alliance Capital (as it was known at the time) launched its healthcare fund in the late ’90s. At the time, Pfizer, Inc. (NYSE:PFE) was one of its top holdings, and an archetypical one at that. It was selling two of the biggest drugs on the market: Warner-Lambert’s Lipitor (starting in 1996) and its own Viagra (starting in 1998). And yet Pfizer’s share price hit a high water mark a few years later that it didn’t regain until last year with its BioNTech SE (NASDAQ:BNTX) COVID vaccine. 

Another example I mention in the video was the ETNs based on Jim Rogers’s commodity indexes. As I recall, Jim Rogers wrote that he started investing in commodities again in 1998–perfect timing, with oil trading at $10 per barrel, and everyone focused on the dot-coms. But his ELEMENTS commodity ETNs weren’t launched until about 10 years later. And all three were down double digits over the next dozen years. 

Some food for thought. 

If you have other examples of this phenomenon–or counter examples–please take a moment to share them in the comments.