Famed investor and co-founder of Miller Value Partners Bill Miller says owning a portfolio without Bitcoin is a big mistake.
In his Q4 2020 letter on income strategy, Miller attempts to showcase Bitcoin’s benefits to his readers, going so far as to say that not owning Bitcoin in the past and going forward is a miscalculation.
Miller argues that despite Bitcoin’s volatility and other possible downsides, the trend shows that BTC is an asset facing consistently increasing demand.
“Bitcoin has been the best performing asset over eight of the past ten calendar years, and its annualized performance has blown away the next-best performer, the Nasdaq, by a factor of ten over the past decade. Not owning any Bitcoin has been a massive mistake, and we expect that will continue to be true. A long-term candlestick chart shows progressively higher lows despite significant volatility, clearly representing growing demand from long-term holders willing to tolerate the swings.
There is a 12-year track record of demand growing consistently faster than supply, and failing to own any Bitcoin at this point implies a belief that there will be a reversal in a long-prevailing and increasingly powerful trend. Almost every long-term holder of Bitcoin has earned a higher rate of return in Bitcoin than in anything else, and those who understand it see little reason to put their excess marginal liquidity into other assets at this point.”
Miller goes on to spotlight Bitcoin as the asset with the largest combined upside potential and liquidity while having a relatively small market capitalization.
“…There is no other asset that combines Bitcoin’s liquidity with its upside potential. Bitcoin is still an emerging and under-owned technology in an enormous addressable market, and it has a brilliant, logically consistent protocol with distributed governance.
Data from the World Bank, IMF (International Monetary Fund) and OECD (Organisation for Economic Co-operation and Development) imply that the total amount of broad money in the world at the end of 2020 was north of $130 trillion. At a market capitalization of $700 billion, Bitcoin represents approximately half of one percent of all the accounting systems in the world, despite some clear advantages over them.”
Miller says that although Bitcoin’s success is unexpected and outsized, it may well be that its growth indicates a global financial revolution.
“The world is ruled by fat-tail events, or seemingly improbable occurrences that have an outsized impact, and all indicators so far point to Bitcoin being one. Preferred mediums of exchange tend to move in long cycles, and we may be in the midst of a major global transition that continues to go largely unnoticed.”
Don't Miss a Beat – Subscribe to get email alerts delivered directly to your inboxFeatured Image: Shutterstock/Tithi Luadthong