Legendary investors are exactly that: legendary. Legendary, as defined by various sources, means remarkable enough to be famous or very well-known. It’s not the saying used in “How I Met Your Mother.” These icons have made remarkable investment calls or seen trends occur before the herd. Early investments in new-age technology or betting certain stocks were overvalued made these guys enormous sums of money. Investors or visionaries such as Carl Icahn, Warren Buffett, Jeff Bezos, George Soros, Jeff Gundlach, and Mark Mobius all see things that most do not. George Soros, known for some of his rather disappointing business practices, put his name on the map when he and Stanley Druckenmiller bet that the GBP was extremely overvalued.
Druckenmiller was originally going to put out a $5.5 billion trade betting against the GBP. Soros told him, “Don’t be a fool, you should put at least 200% of our net worth on this once-in-a-20-year opportunity.” The fund was able to bet $15 billion against the pound, and it eventually took the Quantum Fund from $15 billion to $22 billion. That means Soros made over $1 billion, making it is a legendary trade. Blockchain and cryptocurrency hit some sore spots with some of these guys, which can be a good thing for us little guys in the long run. Bill Gates is on record saying that if there was an easy way to short Bitcoin, he would do it. If he would have done so this year, he would have been decimated. The market mismatch this year gives us one of those rare opportunities.
Mobius Changes Tune On Bitcoin
When legendary investors stick their neck out to criticize and then change their tune, that catches my attention. Mark Mobius, co-founder of Mobius Capital Partners, is that exact person. Mobius called Bitcoin a fraud in the past and said it was valueless. He recently changed his tune when speaking to Bloomberg. In the interview, he stated that “there’s definitely a desire among people around the world to be able to transfer money easily and confidentially. I believe Bitcoin and other currencies of that type are going to be alive and well.” Mobius is as heavily entrenched in the old way of doing things as anyone. From an asset manager perspective, the returns that crypto can offer are exponential. The volatility in this space is an asset manager’s dream. In a perfectly balanced portfolio, the asymmetric risk return of holding crypto can turn a modest return into a dream return.
Stewards Of Capital
You currently see managers rolling risk into emerging markets, and at some point in the future, you will see them rolling funds into crypto, specifically Bitcoin. Diversifying into an uncorrelated asset will push a portfolio over the hump in terms of return. Geopolitical tensions across the globe have shown Bitcoin to be a correlated asset to this tension. As the trade war has ramped up over the last couple of months, Bitcoin and gold have trended higher. Bitcoin was $3,187.93 on December 11, 2018, and at one point on May 29, Bitcoin neared $9,100. If you are in traditional finance, are you being a good steward of your clients’ money? Is this the proper risk/return for your clients?
It was recently reported that Bulgaria still holds 200,000 bitcoins from a criminal gang that it busted for illegal activities. This happened in 2017, when Bitcoin Cash was forked off the Bitcoin blockchain. Based on the amount of Bitcoin and Bitcoin Cash they hold, the value could be well over $1 billion. If they continue to hold these crypto assets, the value will increase their overall reserves and could improve their financial position in the world, resulting in them passing many other countries in terms of reserves. Got Bitcoin?
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