Cryptocurrencies are attractive as a ‘small part’ of any portfolio, George Ball says

bitcoin
  • CEO of investment firmSanders Morris Harris, George Ball, said cryptocurrencies are “attractive” as a part of any portfolio.
  • Ball said he sees cryptocurrencies as an effective hedge against currency debasement.
  • The CEO also argued stock speculators will make the shift to crypto markets if there is a pullback in equities.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

George Ball told Yahoo Finance on Thursday that he believes cryptocurrencies are “attractive” as a “small part” of any portfolio.

Until recently, the chairman and CEO of investment firm Sanders Morris Harris had long been a critic of bitcoin and other cryptocurrencies.

In a video call with Reuters last August, Ball told investors that it was time to buy bitcoin.

“I’ve never said this before, and I’ve always been a blockchain, cryptocurrency and bitcoin opponent. But if you look now, the government cannot stimulate markets forever, the liquidity flood will end,” Ball said.

Now, Ball is again making the case for investors to consider digital assets.

“With the cryptocurrencies, I think there is a fundamental hydra-headed shift that makes them attractive as a part, a small part, of almost any portfolio,” Ball said.

Ball told Yahoo Finance that he believes cryptocurrencies are now ideal targets for investment by wealthy individuals and institutional investors for two main reasons. First, Ball argued cryptocurrencies will be an effective hedge against the debasement of fiat currency.

“Longer-term if inflation is back, if we start to debase the currency badly, then the cryptocurrencies have a great deal of allure,” Ball said.

Secondly, Ball believes the increase in retail traders who speculate on stocks could lead to rising crypto prices. Ball said that the retail investor market has gone from “5% trading volume to 30%, to maybe 35%, of all volume today.”

The CEO said retail stock speculators will move to cryptocurrencies if they begin to face losses in the equity market.

“So if the investors are losing money in common stocks, but still want to speculate, then the cryptocurrencies I think will be the logical and likely next focus of their combined, individually small, but combined very large dollars,” the CEO said. 

Ball’s bullish view of cryptocurrencies comes amid a historic run for bitcoin, which hit record highs of over $58,000 per coin in February buoyed by institutional investment and interest from Tesla, MicroStrategy, and Square, among others.

And with high-flying tech stocks struggling, Ball’s prediction of a shift from stock speculation to crypto speculation may prove prescient.

Read the original article on Business Insider

Cryptocurrencies are attractive as a ‘small part’ of any portfolio, former Prudential Financial chief says

bitcoin
  • Former Prudential Financial CEO and current CEO of Sanders Morris Harris, George Ball, said cryptocurrencies are “attractive” as a part of any portfolio.
  • Ball said he sees cryptocurrencies as an effective hedge against currency debasement.
  • The CEO also argued stock speculators will make the shift to crypto markets if there is a pullback in equities.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

Former Prudential Financial CEO George Ball told Yahoo Finance on Thursday that he believes cryptocurrencies are “attractive” as a “small part” of any portfolio.

Until recently, the chairman and CEO of investment firm Sanders Morris Harris had long been a critic of bitcoin and other cryptocurrencies.

In a video call with Reuters last August, Ball told investors that it was time to buy bitcoin.

“I’ve never said this before, and I’ve always been a blockchain, cryptocurrency and bitcoin opponent. But if you look now, the government cannot stimulate markets forever, the liquidity flood will end,” Ball said.

Now, Ball is again making the case for investors to consider digital assets.

“With the cryptocurrencies, I think there is a fundamental hydra-headed shift that makes them attractive as a part, a small part, of almost any portfolio,” Ball said.

Ball told Yahoo Finance that he believes cryptocurrencies are now ideal targets for investment by wealthy individuals and institutional investors for two main reasons. First, Ball argued cryptocurrencies will be an effective hedge against the debasement of fiat currency.

“Longer-term if inflation is back, if we start to debase the currency badly, then the cryptocurrencies have a great deal of allure,” Ball said.

Secondly, Ball believes the increase in retail traders who speculate on stocks could lead to rising crypto prices. Ball said that the retail investor market has gone from “5% trading volume to 30%, to maybe 35%, of all volume today.”

The former Prudential Financial CEO said retail stock speculators will move to cryptocurrencies if they begin to face losses in the equity market.

“So if the investors are losing money in common stocks, but still want to speculate, then the cryptocurrencies I think will be the logical and likely next focus of their combined, individually small, but combined very large dollars,” the CEO said. 

Ball’s bullish view of cryptocurrencies comes amid a historic run for bitcoin, which hit record highs of over $58,000 per coin in February buoyed by institutional investment and interest from Tesla, MicroStrategy, and Square, among others.

And with high-flying tech stocks struggling, Ball’s prediction of a shift from stock speculation to crypto speculation may prove prescient.

Read the original article on Business Insider

Warren Buffett warned that ‘hot’ stocks fade, joked about his age, and celebrated America in his annual letter. Here are the 10 best quotes.

warren buffett
Warren Buffett.

  • Warren Buffett released his yearly letter to Berkshire Hathaway shareholders.
  • The investor warned that frenzies around fad stocks eventually fade.
  • Buffett also discussed bonds, trading fees, and America’s wealth generation.
  • Visit the Business section of Insider for more stories.

Warren Buffett described how hype around “hot” stocks can evaporate, reminded stock traders that their transaction fees fill Wall Street’s coffers, and celebrated American prosperity in his annual letter on Saturday.

The famed investor and Berkshire Hathaway CEO also joked about his age, bemoaned the outlook for bond investors, and admitted to overpaying for Precision Castparts in 2016.

Here are the best quotes from Buffett’s shareholder letter for 2020, lightly edited and condensed for clarity:

1. “Precision Castparts is far from my first error. But it’s a big one.”

2. “Investing illusions can continue for a surprisingly long time. Wall Street loves the fees that deal-making generates, and the press loves the stories that colorful promoters provide. At a point, the soaring price of a promoted stock can itself become the ‘proof’ that an illusion is reality. Eventually, of course, the party ends, and many business ’emperors’ are found to have no clothes.”

3. “In contrast to the scoring system utilized in diving competitions, you are awarded no points in business endeavors for ‘degree of difficulty.’ Furthermore, as Ronald Reagan cautioned: ‘It’s said that hard work never killed anyone, but I say why take the chance?'”

4. “Bonds are not the place to be these days. Fixed-income investors worldwide – whether pension funds, insurance companies, or retirees – face a bleak future.”

5. “Since our country’s birth, individuals with an idea, ambition, and often just a pittance of capital have succeeded beyond their dreams by creating something new or by improving the customer’s experience with something old.”

6. “In its brief 232 years of existence, there has been no incubator for unleashing human potential like America. Despite some severe interruptions, our country’s economic progress has been breathtaking.”

7. “Mrs. B, it should be noted, worked daily until she was 103 – a ridiculously premature retirement age as judged by Charlie and me.” – joking about Rose Blumkin, who sold Nebraska Furniture Mart to Berkshire in 1983. Buffett is 90 and Charlie Munger, his business partner, is 97.

8. “At Berkshire, we have been serving hamburgers and Coke for 56 years. We cherish the clientele this fare has attracted.” – referring to investor Philip Fisher’s advice to public companies to be consistent in their actions and communications if they want to attract a certain kind of shareholder. Fisher compared it to restaurants serving either hamburgers and Coke or French cuisine with exotic wines, but not both.

9. “Investors and speculators in the United States and elsewhere have a wide variety of equity choices to fit their tastes. They will find CEOs and market gurus with enticing ideas. If they want price targets, managed earnings and ‘stories,’ they will not lack suitors. ‘Technicians’ will confidently instruct them as to what some wiggles on a chart portend for a stock’s next move. The calls for action will never stop.”

10. “Investors must never forget that their expenses are Wall Street’s income. And, unlike my monkey, Wall Streeters do not work for peanuts.” – Buffett said a monkey who picked 50 S&P 500 stocks to purchase by throwing darts at a board would make money, as long as it resisted making changes to its portfolio.

Read the original article on Business Insider

Legendary investor Jeremy Grantham says the stock-market bubble could burst before May in a new interview. Here are the 16 best quotes.

jeremy grantham
Jeremy Grantham.

  • Jeremy Grantham said the stock-market bubble would likely deflate before May.
  • The GMO cofounder also criticized SPACs and cheered electric vehicles.
  • Here are Grantham’s 16 best quotes from his “Invest Like the Best” interview.
  • Visit the Business section of Insider for more stories.

Retail investors piling into stocks have fueled a historic bubble that will probably burst before May, the veteran investor Jeremy Grantham said on the “Invest Like the Best” podcast this week.

The GMO cofounder and chief investment strategist also discussed how the bubble would deflate, slammed SPACs, shared some of the insults he’d received for criticizing bitcoin, and predicted that electric vehicles would revolutionize the auto industry.

Here are Grantham’s 16 best quotes from the interview, lightly edited and condensed for clarity:

1. “This bubble is more impressive even than 2000, which was the champion. About 80% of the value measures have this one higher. We’ll be rather lucky to have this bubble last until May.”

2. “When the financial headlines migrate to the front page, when the evening news mentions the market or some crazy behavior of GameStop, Tesla, you know you’re getting very warm.” – outlining some of the signs of a bubble about to burst.

3. “This is not primarily an institutional bubble; this is an individual bubble. The individuals are absolutely crazy. They have expanded their share of the market trading, and they have really entered into the market with great enthusiasm for the first time in decades.”

4. “I have to confess that I find it all exhilarating. I’m only concerned somewhat for the relatively new investors who get drawn into these things and then find out the hard way. I sympathize completely with these people out there enjoying this bubble, but they’ve always ended very badly, and I have no doubt this one will too.”

5. “I’m not optimistic that anyone caught up in this wants to hear my advice and consequently would act on it. When you get into that excitement, mini frenzy, pretty hard to stop you with dry historical stories. ‘That was then, this is now, baby! Get aboard. You don’t understand. You dinosaurs don’t get it.’ Well, the trouble is we do get it, but there is no way I can persuade them. Just tread out the regular story, and one out of a hundred might listen. I will sympathize with them when they’re cleaned out.”

6. “We’re a crazy marketplace full of irrational human beings who behave themselves 80% of the time and then 20% of the time totally freak out one way or the other.”

Read more: The world’s top investment firms pay Rob Arnott for advice. He shares 2 investing ideas that could go down as ‘the trade of the 2020s’ as the world bounces back from COVID-19.

7. “They don’t want to look foolish with their neighbor, and I concede that seeing your neighbor get rich is about as irritating as anything that life has to offer.” – discussing how retail investors get caught up in speculation.

8. “The market tops out when the last bull has put his last money in. There is a moment of maximum enthusiasm, and the next day there’s plenty of enthusiasm but less than the previous day. So the buying pressure is released a little bit, like the famous water jets under the ping-pong balls. You turn the faucet down a little bit and the ball is still way up in the air, but it’s just dropped a couple of inches. It’s that process of slowly lowering the pressure, and the overpriced ping-pong ball slowly descends until it hits the proper level.”

9. “Rapidly rising hostility to bears is a very good, very late signal that the bubble is way advanced. I gave my fairly bland opinion about bitcoin, just that it was faith-based, there’s nothing new or shocking about that. But armies of individual fanatics descended on the comments. There was no insult that was not good enough for me, not just senility and old age and complete ignorance about bitcoin. I got three insults back about my big ears which I hadn’t had since I was 7 years old.”

10. “SPACs are terribly speculative, undesirable, unnecessary instruments. They’re really a license to rip investors off. It’s a testimonial to the sloppiness and slow-moving nature of the SEC that they haven’t banned these things long ago.”

11. “QuantumScape went from $10 to $130, where it was worth more than General Motors or Panasonic. That compares pretty well in scale with anything around in 1929 or 2000. To have a company that has no earnings or sales for four years, brilliant or not, and to look out that far into the future and make it worth more than General Motors, that’s a pretty good demonstration of something. And it was wonderfully ironic, because by then I’d already been sounding off about the undesirableness of SPACs. And there I am with far and away, for a second or two, my biggest investment ever.” – discussing his 53-fold gain on QuantumScape after a SPAC acquired the solid-state-battery company.

12. “I don’t believe the banks are nearly as important as they would love us to believe. They managed to fake the majority of people in ’09 into thinking they were so desperately important that if we didn’t bail them all out, if we let a single banker go out of business, we’d be deep in 1932, in the Great Depression.”

13. “The baby bust is going to be worse than anybody thinks, way off the scale of anything we’ve ever talked about. It’s going to change the world.” – emphasizing the effects of declining birth rates in many of the world’s largest economies.

14. “Electric cars will be cheaper to build. They’re already cheaper to run and cheaper to operate by far, and safer and better to drive. We have killed gasoline and diesel cars.”

15. “We’re compounding the wealth of society much more slowly. If you’re not in the game, just think how terrible it is: You pay twice as much for a house, the stock market is twice the price it used to be, the farm up the road if you’re in the countryside is twice the price it used to be. It’s glorious for the people who own a lot of assets, for old fogies who are selling their assets, that’s terrific. But everybody else, and particularly the young, it’s a pain in the ass.”

16. “For heaven’s sake, do the little that you can do to prepare for the future, which is to have a great infrastructure and a great educational system. Reality is the quality and quantity of your workforce. How motivated, how happy, how well-organized they are, how well-trained they are, and how well-retrained they are, if necessary, plus the quantity and quality of your assets per worker. That’s real life.”

Read the original article on Business Insider

Legendary investor Jeremy Grantham warns the stock-market bubble could burst before May in a new interview. Here are the 16 best quotes.

jeremy grantham
Jeremy Grantham.

  • Jeremy Grantham warned the stock-market bubble will likely deflate before May.
  • The GMO cofounder also criticized SPACs and cheered electric vehicles.
  • Here are Grantham’s 16 best quotes from his “Invest Like The Best” interview.
  • Visit the Business section of Insider for more stories.

Retail investors piling into stocks have fueled a historic bubble that will probably burst before May, veteran investor Jeremy Grantham warned on the “Invest Like The Best” podcast this week.

The GMO cofounder and chief investment strategist also discussed how the bubble will deflate, slammed SPACs, shared some of the insults he received for criticizing bitcoin, and predicted electric vehicles will revolutionize the auto industry.

Here are Grantham’s 16 best quotes from the interview, lightly edited and condensed for clarity:

1. “This bubble is more impressive even than 2000, which was the champion. About 80% of the value measures have this one higher. We’ll be rather lucky to have this bubble last until May.”

2. “When the financial headlines migrate to the front page, when the evening news mentions the market or some crazy behavior of GameStop, Tesla, you know you’re getting very warm.” – outlining some of the signs of a bubble about to burst.

3. “This is not primarily an institutional bubble, this is an individual bubble. The individuals are absolutely crazy. They have expanded their share of the market trading, and they have really entered into the market with great enthusiasm for the first time in decades.”

4. “I have to confess that I find it all exhilarating. I’m only concerned somewhat for the relatively new investors who get drawn into these things and then find out the hard way. I sympathize completely with these people out there enjoying this bubble, but they’ve always ended very badly and I have no doubt this one will too.”

5. “I’m not optimistic that anyone caught up in this wants to hear my advice, and consequently would act on it. When you get into that excitement, mini frenzy, pretty hard to stop you with dry historical stories. ‘That was then, this is now baby! Get aboard, you don’t understand. You dinosaurs don’t get it.’ Well, the trouble is, we do get it, but there is no way I can persuade them. Just tread out the regular story, and one out of a hundred might listen. I will sympathize with them when they’re cleaned out.”

6. “We’re a crazy marketplace full of irrational human beings who behave themselves 80% of the time, and then 20% of the time, totally freak out one way or the other.”

7. “They don’t want to look foolish with their neighbor, and I concede that seeing your neighbor get rich is about as irritating as anything that life has to offer.” – discussing how retail investors get caught up in speculation.

8. “The market tops out when the last bull has put his last money in. There is a moment of maximum enthusiasm, and the next day there’s plenty of enthusiasm but less than the previous day. So the buying pressure is released a little bit, like the famous water jets under the ping-pong balls. You turn the faucet down a little bit and the ball is still way up in the air, but it’s just dropped a couple of inches. It’s that process of slowly lowering the pressure and the overpriced ping-pong ball slowly descends until it hits the proper level.”

9. “Rapidly rising hostility to bears is a very good, very late signal that the bubble is way advanced. I gave my fairly bland opinion about bitcoin, just that it was faith-based, there’s nothing new or shocking about that. But armies of individual fanatics descended on the comments. There was no insult that was not good enough for me, not just senility and old age and complete ignorance about bitcoin. I got three insults back about my big ears which I hadn’t had since I was 7-years-old.”

10. “SPACs are terribly speculative, undesirable, unnecessary instruments. They’re really a license to rip investors off. It’s a testimonial to the sloppiness and slow-moving nature of the SEC that they haven’t banned these things long ago.”

11. “QuantumScape went from $10 to $130, where it was worth more than General Motors or Panasonic. That compares pretty well in scale with anything around in 1929 or 2000. To have a company that has no earnings, or sales, for four years, brilliant or not, and to look out that far into the future and make it worth more than General Motors, that’s a pretty good demonstration of something. And it was wonderfully ironic, because by then I’d already been sounding off about the undesirableness of SPACs. And there I am, with far and away, for a second or two, my biggest investment ever.” – discussing his 53-fold gain on QuantumScape after a SPAC acquired the solid-state battery company.

12. “I don’t believe the banks are nearly as important as they would love us to believe. They managed to fake the majority of people in ’09 into thinking they were so desperately important that if we didn’t bail them all out, if we let a single banker go out of business, we’d be deep in 1932, in the Great Depression.”

13. “The baby bust is going to be worse than anybody thinks, way off the scale of anything we’ve ever talked about. It’s going to change the world.” – emphasizing the impacts of declining birth rates in many of the world’s largest economies.

14. “Electric cars will be cheaper to build. They’re already cheaper to run and cheaper to operate by far, and safer and better to drive. We have killed gasoline and diesel cars.”

15. “We’re compounding the wealth of society much more slowly. If you’re not in the game, just think how terrible it is: You pay twice as much for a house, the stock market is twice the price it used to be, the farm up the road if you’re in the countryside is twice the price it used to be. It’s glorious for the people who own a lot of assets, for old fogies who are selling their assets, that’s terrific. But everybody else, and particularly the young, it’s a pain in the ass.”

16. “For heaven’s sake, do the little that you can do to prepare for the future, which is to have a great infrastructure and a great educational system. Reality is the quality and quantity of your workforce. How motivated, how happy, how well-organized they are, how well-trained they are, and how well-retrained they are if necessary, plus the quantity and quality of your assets per worker. That’s real life.”

Read the original article on Business Insider

‘Big Short’ investor Michael Burry says Tesla stock could plunge 90% without major fallout – and a slump could reduce speculation

Michael Burry
Michael Burry.

  • Michael Burry says Tesla stock could plunge 90% without crashing the financial system.
  • “The Big Short” investor suggested a slump could temper speculation.
  • Burry, who is short Tesla, has criticized reckless investing in recent months.
  • Visit Business Insider’s homepage for more stories.

If Tesla stock plummets 90% this year, it would put a stop to cult-like support of certain companies without endangering the financial system, Michael Burry tweeted on Monday.

“$TSLA below $100/share by later this year will not crash the system,” the investor said. “There is no reflexivity in such a fall,” he continued, dismissing the risk of a positive feedback loop where investors lose confidence and hoard their money, hurting the economy and scaring investors even more.

“But it would trigger the end of an era for a certain type of investing,” Burry added. His latest comments echo his recent criticism of speculative betting on Tesla, bitcoin, and GameStop, and his warning of “dangerous” bubbles in markets last week.

Read more: GOLDMAN SACHS: These 40 heavily shorted stocks could be the next GameStop if retail traders target them – and the group has already nearly doubled over the past 3 months

Burry is best known for his billion-dollar bet against the US housing market in the mid-2000s, which was immortalized in author Michael Lewis’ book “The Big Short.” The Scion Asset Management boss also laid the groundwork for the recent GameStop short-squeeze when he invested in the video-game retailer in 2019.

The investor has been skeptical of Tesla since at least last fall, when he began tweeting about the automaker’s limited profitability, reliance on sales of regulatory credits, and sky-high valuation relative to its industry peers.

Burry revealed he was short Tesla in December and called its stock price “ridiculous.” Elon Musk’s electric-vehicle company has soared in market capitalization by 37% to north of $780 billion since then.

Read more: Tom Finke recounts how he went from running a $345 billion money manager to joining in the SPAC boom as a sponsor – and shares 3 characteristics investors should look for in an ideal blank-check company

The Scion chief compared his bet against Tesla to his wager on a housing-market collapse in a January tweet. “My last Big Short got bigger and bigger and BIGGER too,” he said. “Enjoy it while it lasts.”

It might seem extreme for Burry to suggest a drop in Tesla’s stock price from more than $815 as of Friday’s close to less than $100. However, the company’s shares traded at that level as recently as last April.

Here’s a chart showing Tesla’s remarkable stock performance over the past year:

Tesla_stockchart_150221
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