In a recent episode of “Behind the Ticker,” Brad Roth, Chief Investment Officer of Thor Financial Technologies, engaged in an insightful discussion with Mike Willis, the Co-Founder and CEO of Cyber Hornet ETFs, delving into Willis’s journey into the world of cryptocurrency and Bitcoin investing. The dialogue covered various topics, including proxy voting, the unique investment strategies behind Cyber Hornet’s S&P 500 and Bitcoin 75/25 Strategy ETF (BBB), and the nuances of navigating the complex landscape of crypto investments.
Willis shared his transformative experience from being a traditional stock picker to embracing passive investment strategies. After years of outperforming the S&P 500, he faced a humbling moment in 2013 when the market recorded a 32% return that his managed portfolios could not match, despite extensive research and effort. This pivotal experience propelled him to establish his own firm, where he pioneered an index fund. Over time, his approach evolved into a conviction that led him to advocate for Bitcoin, even having the opportunity to meet investment legend Jack Bogle during Bogle’s final months.
The BBB ETF, which features a 75% allocation to the S&P 500 and 25% to Bitcoin, was designed with an emphasis on human behavioral responses to market movements, rather than solely relying on mathematical models. This allocation was strategically chosen to ensure that drawdowns remain within a range most clients are comfortable enduring, thereby minimizing the likelihood of panic selling. Historical performance data supports this approach, demonstrating that the ETF yielded gains of 39% during a strong Bitcoin year, a respectable 10% during market downturns, and offered a stable ±5% band year-to-date, even in a broader crypto market experiencing significant declines of 50-70% from previous highs.
A key feature of the BBB ETF is its monthly rebalancing mechanism, which serves as a “discipline machine.” By automatically adjusting the portfolio—reducing Bitcoin when its price surges and increasing exposure during downturns—this strategy effectively removes emotional decision-making from the investment process. According to Willis, this structured approach to buying low and selling high is a challenge that many individual investors would struggle to implement effectively during periods of market volatility.
Additionally, Cyber Hornet ETFs is addressing concerns related to index fund voting influence, a critical issue highlighted by industry pioneer Jack Bogle. With large asset managers like BlackRock, State Street, and Vanguard controlling a significant portion of index fund voting power, Willis believes it is both a fiduciary duty and a distinguishing characteristic of his firm to restore this influence to actual shareholders.
This episode not only highlights the innovative investment strategies being developed within the cryptocurrency space but also emphasizes the importance of aligning investment firms’ practices with the needs and behaviors of investors. For those interested in the full discussion, the conversation is available for viewing on various platforms, including their YouTube channel, and can also be listened to on popular streaming services like Spotify and Apple Podcasts.
