Against a macro backdrop of structurally low interest rates and rising inflation, it seems that every few weeks a billionaire comes out to declare a Bitcoin position.
The latest is Bill Miller, a fund manager with more than 40 years’ experience in financial markets. Unlike his peers, Miller isn’t diversified – over 50 percent of his net worth is in Bitcoin.
Former Value Investor Turned Bitcoin Bull
In traditional financial markets, Miller enjoys legendary status after his record-beating 15 consecutive years of outperforming the S&P 500 index.
In a video interview with Wealth Track published last week, Miller revealed that 50 percent of his personal assets were in Bitcoin and related investments – a far cry from the “1-2 percent” recommended by fellow investment heavyweight Ray Dalio.
Despite previously disclosing a Bitcoin position, Miller had, until now, shunned the “Bitcoin bull” label, preferring instead to call himself “a Bitcoin observer” – one who is watching the trajectory of Bitcoin as a new technology relative to other game-changing technologies like the printing press, steam engine, automobile or electricity. In his view, Bitcoin is following a well-understood path for the adoption of new technologies.
When asked about why he went so big on Bitcoin, he noted:
It goes against many of the tenets of financial discipline. On the other hand, the people that actually are the richest people in the country all are massively concentrated. You know, Buffet in Berkshire, Bezos, Mark Zuckerberg … they’re not widely diversified, they are highly concentrated and I think that’s because they have a high degree of confidence in the value of those investments.
Speaking to the question of intrinsic value and whether Bitcoin had any, Miller suggested it was best viewed as digital gold:
It comes down to, at the very basic level, to supply and demand. Bitcoin is the only economic entity where the supply is unaffected by demand. So even with gold, which is $1,800 today, if gold goes to $18,000, there’ll be a lot more gold mined because mines that are unprofitable will become profitable.
Miller said he personally started buying Bitcoin at around US$200 in 2014 after hearing a talk by Wences Casares, and then continued to buy more over time.
After stopping for number of years, he then decided to get back in when Bitcoin dipped to US$30,000, saying “there’s a lot more money going into it in the venture capital world, and there are a lot of people who are sceptics who are now at least trying it out”.
Despite being heavily concentrated, Miller’s recommendation to average investors is to put 1 percent of their net wealth into Bitcoin because “even if it goes to zero, which I think is highly improbable, but of course possible, you can always afford to lose 1 percent”.
I think the average investor should ask himself or herself, what do you have in your portfolio that has that kind of track record – number one, is very, very under-penetrated; can provide a service of insurance against financial catastrophe that no one else can provide, and can go up 10 times or 50 times? The answer is: nothing.
At 72 years of age, it’s impressive that Miller has been involved in Bitcoin since 2014. Staying ahead of the technology curve is difficult, but what makes his investment ever more impressive is that he seemingly beat countless tech entrepreneurs to the punch, including Peter Thiel.
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