Not everybody likes bitcoin. We know that already. There are several people out there (like Warren Buffett and Charlie Munger) that have nothing nice to say about it, while others simply cannot understand why it has fans or why some feel it has value. One of those people is Seth Klarman.
Seth Klarman Ain’t a Bitcoin Fan
As the co-founder of the Boston-based hedge fund Baupost Group, Klarman recently gave an interview and stated:
I’ve tried hard to understand the arguments for crypto and figure out why people are so excited. I can’t find value there.
His hedge fund currently manages more than $30 billion, so to say he doesn’t know what he’s talking about when it comes to financial tactics or products would not be correct. However, it’s interesting to see someone with so much financial history under his belt not realize any value whatsoever in a digital asset that has taken the world by storm.
Not long ago, Klarman wrote the introduction to the seventh edition of the seminal value-investing text “Security Analysis,” published by Benjamin Graham and David Dodd (the first edition goes back nearly 90 years). While in the interview he largely promoted his writing work, he did throw in other things about crypto and offered general investing advice. He started off with:
The book has some important reminders for people about the dangers of speculation and the importance of remembering what kind of environment you’re in. Every investor has that challenge. You [must] look at the moment you’re in and say, ‘What of this is real?’
He also described himself as a full-on “bitcoin skeptic.” He believes that while cryptocurrency is “seductive,” there isn’t much to it, and he advised everyone to stick to traditional methods of investing like stocks. He commented:
We’ve been in an everything bubble, I think. A lot of money has flowed into everything… and low interest rates have precipitated that. You’ve had speculation during that bubble in all kinds of things from crypto to meme stocks to SPACs.
Real Estate is Also in Trouble
Interestingly, while he himself may not care for crypto, his company is highly involved in it. The firm has invested in convertible bonds issued by Coinbase Global, though he says he didn’t have much say in the firm’s decision to do that. He mentioned:
The company is sitting on $5 billion in cash and has less than that in debt. We think the company is doing some smart things, and its cash-flow positive, but this is not a bullish bet on Coinbase.
Lastly, he mentioned that while real estate has always been a safe investing bet, he thinks the arena is suffering heavily at the hands of present economic circumstances, and he told people to watch out in that respect.