January 27, 2022

A few weeks ago a WEALTHTRACK interview with legendary value investor Bill Miller garnered a tremendous amount of interest because he talked about his outsized position in bitcoin in his personal portfolio, approximately 50% of his unencumbered net worth. Miller uses leverage in his personal portfolio.

He told us how he first bought some bitcoin in 2014 when it was around $200, then some more up to around $700 but that was it until last spring. 

Excerpt: Bill Miller on WEALTHTRACK January 07, 2022

Now that bitcoin has dropped more than 20% year to date, what’s he been doing? I e-mailed him to find out. 

In responding he wants to make sure people understand his holdings as some other press reports about our interview didn’t quite get it right. 

“First, there has been some confusion about my weighting in bitcoin. People have reported I “put” around 50 pct of my net worth in bitcoin. That is not the case. I bought bitcoin starting at around $200 and paid up to about $700 for it. I did nothing but hold it for years and it became around 50 pct of my unencumbered net worth due to appreciation. I have done nothing in the recent sell off as I have enough. I do think at present prices it ought to be part of a diversified portfolio.

Bitcoin IS a risky asset but all risky assets are not the same. Bitcoin’s correlation has bounced all around over the years. Now it is correlated with high growth, disruptive technologies such as those owned by Cathie Woods’ firm, so it has been under pressure due to concerns about Fed tightening. I have no idea how long that may continue. 

Bitcoin has been a far superior store of value than gold since it was created. Gold is down over the past 10 years and bitcoin has gone up well over 100pct per on average. It has also gone down over 80pct three times and over 50 per cent nine times so it is far more volatile. Gold’s biggest problem as a store of value is that it’s hard to transport and easy to confiscate as the US govt did in the 1930’s. Gold was illegal for US citizens to own until the 1970’s. As long as you have an internet connection bitcoin can be sent anywhere in the world at a trivial cost.”. 

We want to thank Bill Miller for his timely response to our questions.  

On television this week, WEALTHTRACK is revisiting an interview with Motley Fool Co-Founder, David Gardner who recently announced he is stepping down from active money management at the now global and highly successful online investment service. Gardner will take us through his Rule Breakers rules, the lessons he’s learned from three decades of active investing. Watch the episode again here. 

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