Billionaire Investor is Betting BIG On Bitcoin
Friday January 14th, 2022 - Issue # 2
Have you ever heard of a guy called Bill Miller? He’s known for holding the record for beating the S&P 500 for 15 straight years (1991-2005). He’s a billionaire and an absolute legend in the investing world.
He’s not your average “play it safe” investor when it comes to his personal portfolio - when he sees an opportunity, he presses hard.
Over the last couple of years, we’ve seen the brightest minds in macro emerge as Bitcoin believers - most notably: Paul Tudor Jones, Stan Druckenmiller, Bill Miller and the most recent conversion, Ray Dalio of Bridgewater Associates (the world’s largest hedge fund). That’s pretty much all I’d need in order to take a position but let’s explore a little bit further.
From the last time we heard from them, PTD and Druck have single digit exposure to bitcoin in their portfolios which they said acts mostly as an inflation-hedge or as an insurance policy against mismanagement of government and monetary systems. The phrase “doomsday insurance” is quite common when describing a modest allocation to bitcoin in ones portfolio. A recent example of this was from just the other week when Dalio said that a 1% to 2% allocation to bitcoin was reasonable.
To be fair, if I was a billionaire hedge fund manager building my position in a new, wildly dominant technology, I’d also downplay my interests. Successful hedge fund managers don’t exactly embody the essence of altruism, anyway.
Bill Miller is obviously all filled up as last week he made a rare appearance and disclosed that he has 50% of his personal portfolio in bitcoin. Boom.
Bill bought a bit at $200, a bit more at $500 and then stopped buying it till last year when it rocketed up to $66k and then dropped 50% to $30k where he loaded up as he felt it was probably a bottom even though historically bitcoin’s pullbacks were 80%+. His reasoning behind buying a lesser dip was that a lot more people are using it, there’s a lot more money going into it in the venture capital world, and there are a lot of skeptics who are now at least starting to try it out. He was also ready to buy it all the way down if it kept going lower.
He believes that Bitcoin has reached a certain level of runaway dominance where it’s almost impossible for something to get in the way of its success in becoming a much bigger network. So, when asked “why the outsized position?” Bill eloquently explained that the richest people in the country are massively concentrated. Whether it’s Buffett in Berkshire, Bezos, or Zuckerberg - they’re extremely concentrated because they have a high degree in confidence in the value of their investments. Suffice it to say, Bill’s a (self-proclaimed) bitcoin bull.
The interviewer made the assumption that the other half of Bill’s portfolio is in value funds or something much safer to diversify his risk - Bill jumped in and said that actually, the other 50% is in Amazon stock. This method of investing - betting big on new technologies with sufficient escape velocity has his funds in the top 1% of all fund performance over the past 25 years.
Investing like Bill is not for those with lettuce hands. The notion that achieving lower volatility than the average, or achieving low volatility in your portfolio in general should not be the objective of investing. Maybe it’s a psychological objective since Bill makes the point that the coefficient of loss is two to one but the objective is to make money or to outperform the market.
I’m a huge fan of pitching bitcoin without any sort of technical jargon. Bill does a great job in summing it up:
Bitcoin has an unmatchable track record
Bitcoin is very, very underpenetrated
Bitcoin can provide a service of insurance against financial catastrophe that nothing else can provide
Bitcoin can go up 10 times or 50 times
What else can you buy in your portfolio that offers you all of that? Nothing.
Here’s the link to the full interview:
In case you missed it…
Rio De Janeiro to allocate 1% of their treasury to BTC https://thecryptobasic.com/2022/01/14/following-miami-brazil-city-rio-de-janeiro-is-looking-to-hold-1-off-city-reserves-in-bitcoin-and-pay-taxes-in-btc/
Jack Dorsey’s Block to make Bitcoin mining even more decentralized https://www.reuters.com/technology/jack-dorseys-block-build-an-open-bitcoin-mining-system-2022-01-13/?
Turks rushing into BTC & stablecoins as the Lira continues to sprial https://cryptoslate.com/turkey-embraces-bitcoin-and-tether-as-the-lira-keeps-spiraling-down/
Tonga on the path to make Bitcoin legal tender. https://cointelegraph.com/news/tonga-to-copy-el-salvador-bill-making-bitcoin-legal-tender-says-former-mp
Fidelity Digital Assets Research Report for 2021