Despite the market downturn of 2022, legendary value investor Bill Miller remains bullish on his two favorite investments: Amazon, and Bitcoin.
In a recent interview, the former chief of Legg Mason called cryptocurrencies “misunderstood,” and referred to Bitcoin as an “insurance policy against financial disaster.”
Miller voiced his opinion on the market in conversation with Marvin McIntyre – Morgan Stanley’s Private Wealth Management managing director – at the Forbes/SHOOK Top Advisor Summit on Thursday.
On one hand, the investor acknowledged that well-performing companies over the last decade are now getting crushed in the face of a hawkish Federal Reserve. On the other, he said that this makes for a great opportunity to buy more company shares for cheap.
“If your time horizon is longer than one year, you should do very well in the market,” Miller said.
During his time at Legg Mason, Miller was well known for having beaten the stock market for fifteen years straight, from 1991 to 2005. He’s also known for having personally purchased Amazon stock back during its IPO in 1997.
In an interview last year, Miller revealed that about 50% of his net worth was tied up with Amazon. The other 50%, he said, was in Bitcoin.
On Thursday, the former chairman called Bitcoin “an insurance policy against financial disaster, with “limited fallout” during tough market periods since it’s “not connected to the rest of the financial system.”
Bitcoin is down 70% from its all-time high in November but performed relatively well against most other financial assets in Q3. While it briefly dipped to $18,000 on slightly disappointing CPI numbers this week, its since recovered back to $19,000. Miller said that if the Fed continues to tighten, Bitcoin will likely continue to outperform in this manner.
The investor-backed his argument with quotes from Warren Buffett, John Templeton, and Leo Tolstoy:
“Be greedy when others are fearful”, he said, as well as “The time of maximum pessimism is the best time to buy,” and “The two most powerful warriors are patience and time.”
Miller’s Bitcoin Thesis
Miller’s confidence in Bitcoin also showed resilience back in May, when the entire crypto market came plunging in the wake of Terra’s collapse. That said, he confessed that he was forced to sell a bit of his Bitcoin at the time in order to meet margin calls.
Miller has frequently highlighted Bitcoin’s potential as a global reserve asset – especially after Russian sanctions took effect and its Ruble started to collapse in March. He claimed altcoins do not share this property, however, and were more akin to “venture investments.”
Besides Bitcoin and Amazon, Miller suggested Silvergate Capital as an attractive investment – a bank regulated by the Fed which also includes a cryptocurrency exchange. Silvergate was also the bank responsible for giving Microstrategy its $205 million Bitcoin collateralized loan.