Famed value investor Bill Miller claimed to have 50 percent of his personal investment portfolio in Bitcoin, which could signify a move towards the niche segment by fundamental investors who prefer to place bets based on intrinsic values rather than volatile trends, despite the recent significant fall in value.
Miller said that having a one percent exposure to Bitcoin is “sensible” as anyone can afford to lose that if Bitcoin falls to zero, which is “highly improbable,” but “is possible.” The investor said that he started buying Bitcoin when it was trading around $200 back in 2014 after hearing Wences Casares, who introduced crypto to silicon valley, talk about it.
Miller stopped buying the coins but resumed when the price fell after the initial highs reached during the March–April period in 2021 when prices briefly rose to almost $66,000. As a value investor, he put in money when the price crashed to around $30,000.
Miller also warned against the volatility of the asset claiming that it was “very dangerous” for short-term investors. He reasoned that the price would soon rise as more people kept pouring money into the sector, especially from the venture capital world.
The crypto market saw a surge later on in the year, with Bitcoin hitting a record of almost $69,000. However, since then, the market has crashed with steadily declining fortunes, while Bitcoin currently hovers around the $41,000 mark, a dip of almost 40 percent.
If that happens, half of Miller’s portfolio would be reduced by a third of its value, given that he bought almost all Bitcoin last year. But, besides the cryptocurrency, he is also invested in Bitcoin-related companies like Stronghold Digital Mining and MicroStrategy, a software intelligence company.
Miller is widely known in the investment world for beating the S&P 500 Index from 1991 to 2005, a record 15 years in a row, during his time as a fund manager at Legg Mason. He currently manages the former Legg Mason Opportunity Trust mutual funds through his own firm, Miller Value Partners.
Miller lost most of his fortune when he placed leveraged bets on Bear Stearns, Freddie Mac, and other financial stocks in 2008. An investor exodus that saw his assets under management fall from $77 billion to $800 million and a divorce settlement resulted in wiping out 90 percent of Miller’s personal fortune during the time.
Despite the common understanding regarding portfolio diversification, many billionaires have concentrated in specific regions because of their inherent value, according to Miller, who was an early and major investor in Amazon. Now, it’s mostly Bitcoin.
Miller compared gold to Bitcoin during the interview saying the cryptocurrency provides an “insurance policy against a financial catastrophe that no one else can provide,” as there is a limited supply of 21 million coins.
Regarding the argument that the asset carries no intrinsic value, Miller brought up the analogy of the Mickey Mantle baseball card and paintings that command a hefty price based on demand. “Bitcoin is the only economic entity where the supply is unaffected by the demand.”
