‘If you’re a short-term macro trader, like you’re thinking in terms of hours or days or even weeks, you’re really concerned about that question, but I think that if you have a time frame of four to ten years, I think there’s a different question, which is why are the interest rates going up and what is the macroeconomic environment?’ – Michael Saylor.
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As Bitcoin continues to slide, it hit the $30k resistance, quickly bouncing back to $31,200 at the time of writing. Some pundits and analysts have called for under a thirty thousand dollar bitcoin price, most notably Gareth Soloway and Peter Brant, who both called for twenty thousand and twenty-seven thousand, respectively, as the market is showing red across the board.
Many investors are asking questions and looking for answers as to where the market is going. In an hour-long interview on the Money GPs podcast, Michael Saylor, CEO of MicroStrategy, gave an answer to one question. Sailor stated that if you’re asking yourself about the bitcoin price in the short term, then you shouldn’t be invested in it. Saylor’s time horizon is beyond the short-term fluctuations we are experiencing in the market and, of course, Saylor suggests that you now take this opportunity to make bitcoin part of your portfolio:
‘I would say you probably shouldn’t even buy bitcoin if you’re, uh, if your time horizon is less than four years, because you’re a trader, and if you’re a trader, you’re probably not going to care about anything. I have to say you’re just looking at whether it’s correlated or uncorrelated and throwing lots of money around without thinking about it.
I think if you’re really a deep thinker or a macroeconomic investor, the bigger issue is that we have monetary inflation. I think the money supply or the currency supply is expanding. Today’s news in Turkey was 70% inflation in the Turkish lira. We probably have an inflation in the range of 15 to 20 percent in the US dollar, and the euro, we’ve got 40 percent inflation in like an Argentine peso or more. What you have is an inflationary environment. We know the CPI, which is a manipulated measure of inflation, is actually the lowest inflation that one could reasonably measure. In the United States and Europe, I believe it is around 7.5%, 6.5%, or 8%. the CPI is 8% but the actual asset inflation rate is double to triple that. So the reason that interest rates are going up is because there’s pressure on the central banks to get inflation under control and their one tool to do that is raise interest rates. But they’re not going to stop the inflation because the inflation is caused by excessive money printing, budget deficits, and political policies domestic and foreign. These policies continue. Given the fact that we have an expansive currency environment and what you can see is the price of food, energy, and scarce resources keeps going up, the question really is, “If I have some money, what should I invest in?” and the answer is, “You don’t want a whole currency because the currency is collapsing in value.”
The US dollar lost 99.7% of its value over 90 years. I mean, and that’s the winner. The losers are losing 99.9% of their value over 100 years. So the currencies are all collapsing. So I don’t want to hold the currency. I don’t want to hold bonds because bonds are currency derivatives. Basically give you a million dollars and I’m going to give you interest on the million dollars at three percent for 30 years, and I’ll give you the million dollars back and in 30 years the dollars will buy 10% of what they buy right now. That’s even worse.
You don’t want to hold a value stock that generates valued on cash flows because if the stock is valued on cash flows without growth, it looks just like a bond. You might be slightly better than a bond. But if the currency is losing 10% of its value a year and you can’t raise your cash flows or raise your prices, you have to increase your cash flows by 10% a year to offset a 10% currency collapse. So when the currency is collapsing at 70% a year like Turkey’s, the company you own has to raise its prices in Turkish lira by 70% or by an amount such that your cash flows would increase by 70% so that you hold parity in value.
Equities are currency derivatives. Partial currency derivatives: bonds are almost complete currency derivatives; commercial real estate is a partial currency derivative. The currency is a currency derivative, right? It’s a full currency derivative, so what do I own? The answer is that I want to own scarce property, particularly desirable property. What is it that you own that an affluent, intelligent person will want to buy from you in a decade? That’s the question you have to ask yourself.
If you’re owning things that will last a decade, right, I mean, if you buy a car that’s not going to last a decade, it’s not really an asset, it’s depreciating, but maybe you own a sports team or a Picasso’s painting, I don’t know if people want to buy gold from you in a decade. They want to own the building that you own in a decade. They want to own the intellectual property rights. It all depends.
Bitcoin is a scarce and desirable asset because it represents digital property. If I own a million dollars’ worth of buildings in Moscow in a decade, who’s going to want to buy them from me? Presumably, wealthy and intelligent Russians, but will an affluent, intelligent British person, or a Chinese business person, or an American want to own that asset? For example, you own a million dollars’ worth of buildings in Nigeria. Who’s going to want to buy them in 10 years? Who’s going to want to buy what you own?’
What do you think of Sailor’s thoughts here?
[This article is a transcription of a video made by Only The SAVVY]
Original video: https://youtu.be/TQsNk8LcS68 ]