I’ll give my thoughts in three categories: bitcoin and the macro economy. Then the crypto or micro-economy of crypto, so if I start with bitcoin. The first observation is that I’m not a trader. I think that you need to be a professional proprietary trader to have a short time horizon. So, I don’t really think anybody should buy it unless you have a four-year time frame. I’m hoping that you want to own it forever. I think bitcoin is one of those forever assets like the family farm or like a trophy.
If you bought something like the New England patriots or a soccer team you want to give it to your heirs. So, I have a lot of opinions about the long term four years to 10 years out. I don’t have any particularly useful advice over the next four weeks. I’m not a technical person so I hear all sorts of things. So, we can talk about it. But that’s just what I hear in the market and I have a lot more to say on bitcoin in a moment. But I’m going to leave it at that with regard to the macro economy. I think that the economy of the world like I would say western civilization.
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But maybe I actually think the entire global economy peaked in January of 2020. If I think about January 1st like new years of 2020 just before we got hit with covid. I think about how the world worked the concert business was raging. Travel was raging and the airlines were working smoothly and the hotels were on fire and small businesses were on fire. There is entrepreneurialism everywhere and an explosion of yoga studios and specialty everything. I think we kind of hit the peak of this entire business cycle then everybody was able to go about their business unfettered we had a little bit of monetary inflation in this system. So, it wasn’t like things were perfect they weren’t perfect but you know compared to what came in the next two years you know which is just unprecedented government intervention in every aspect of our lives telling you who could come to dinner. How far away you had to stand from your kids, how many masks you need to wear how many vaccines. You need whether or not. You’re you can go to the gym whether you could go to the office, so many things happened that intervened with the free market.
They’re all restraints of trade creating massive inefficiency and all this. I think policy intervention unprecedented across every dimension of life you cut a war on carbon a war on corporations a war on foreigners a war on trade, war on covid. I could go on and on and on, but wars are unprecedented policy interventions by governments in our lives. So, if I go back to January and I just picked like January 1st, 2020 while we were still innocent and before covet hit and then the war and currency hit et cetera and then you go forward to today. I look at at what happened well the money supply the m2 money supply of the us dollar expanded by my chart 41 we expanded the money so by about 41 now how did all the assets behave well gold is up 20 since that day. So, the gold captured half the money supply expansion. It didn’t track the money supply. What did track the money supply us single-family homes up 45-46 you know we all know the story of home prices exploding so single-family homes slightly outpace that money supply. Of course, granted the money supply is an imperfect government metric. They give you their best estimate with a one or two-month delay. So, I mean it might be the single-family homes are about at the money supply NASDAQ the index 19 from that date up 20. But the money supply is up 40 the s p index up 13 from that date bitcoin up 185 from that date.
If you picked a broad commodity index, I bet the commodity index up double the US home. So, you would have beat the money supply slightly with desirable real estate. You would have beat it with commodities you beat it with bitcoin which is like a basically synthetic digital commodity. But it’s scarcity you wouldn’t beat it with gold you wouldn’t beat it with NASDAQ stocks. You wouldn’t beat it with the S P index. You could roll the clock forward. Let’s roll it to August 10th, 2020. That’s the date that my company bought 250 million dollars’ worth of bitcoin, so people knew who I was on that date and we made a macroeconomic commitment.
Now we’ve been studying it for 90 days previous and so we made a commitment based upon the circumstances in the second quarter. But, if you look at the at macro numbers from august 10th. If we had bet 250 million on gold. It would have been down 10 gold is down 10 since august 10 2010. So, go got a boost in the first part of the crisis, but then it kind of flagged NASDAQ was like flat minus one percent zero percent went nowhere for the entire 18 months. The S P slightly up 11 single-family homes up 26 the money supply up about 20 %, maybe 20-25 % depending on how you count it so again single-family homes tracking the money supply bitcoin even as it’s been thrashed right and left up 86. So, it if your um time horizon is less than a year. You’re a trader even if that’s less than two years you’re sort of a trader. If you’re a trader you can be right or wrong about anything in that 18-month time frame you know you could have said you’re an idiot not to buy Amazon stock when it was whatever.
You’re an idiot not to have sold it after a double then you’re an idiot not to have right. You can just drive yourself crazy if you’re a trader and so that’s why I don’t really join with the traders. I just don’t know it, I think you need to have proprietary expertise of some sort. But, what I can say is if you’re an investor you kind of have to have a four-year dimerizer or longer. If you’re a saver you’re a 10-year time horizon or longer. So, I think the macroeconomic environment was strapped in for a while and that was kind of like a given you.
This article is a transcription of a video made by Jamie Tree
Original video: https://youtu.be/wCQNLhL2L2M