I took the time to read Paul Tudor Jones (PTJ) May letter for his investors, and did a bullet point summary.
He mentions #bitcoin several times. It got me interested in learning his thoughts.
Hope you enjoy the read.
Thread 👇
He mentions #bitcoin several times. It got me interested in learning his thoughts.
Hope you enjoy the read.
Thread 👇
"A large demand shortfall will prevent goods and services inflation from rising in the short term."
This means that although we've had a big inflow of cash into the economy, it does not directly mean there will be inflation in goods and services, caused by lack of demand. 1/n
This means that although we've had a big inflow of cash into the economy, it does not directly mean there will be inflation in goods and services, caused by lack of demand. 1/n
"Traditional hedges like gold have done well, and is expected that investors will continue seeking them"
Since all Central Banks around the world have been pumping money into the economy, market participants still see gold has a hedge against future inflation. 2/n
Since all Central Banks around the world have been pumping money into the economy, market participants still see gold has a hedge against future inflation. 2/n
"Don't choose sides, let the market price action guide your decision making, and then try to understand the fundamentals."
We've all heard "Don't fight the FED"
This is how PTJ is reacting to the market.
We just want to short $SPX.
Instead, we should follow the price action. 3/n
We've all heard "Don't fight the FED"
This is how PTJ is reacting to the market.
We just want to short $SPX.
Instead, we should follow the price action. 3/n
"it is not inconceivable that the economy-wide debt ratio may increase by 50% GDP over the next year and a half"
The lockdown that each state went through created cracks in the economy, PTJ sees a possibility that debt may further increase. 4/n
The lockdown that each state went through created cracks in the economy, PTJ sees a possibility that debt may further increase. 4/n
"This time banks entered the crisis in a stronger footing and policy is more squarely aimed at putting liquidity directly in the hands of businesses and households, shielding banks from losses."
Banks being in a stronger position than in last crisis, gives us some stability. 5/n
Banks being in a stronger position than in last crisis, gives us some stability. 5/n
"Assets of protection against Global Monetary Inflation (GMI), Gold, Yield Curve, Nasdaq 100, Bitcoin, US cyclicals (long), US defensive (short), AUDJPY"
Gold - A 2,500 year store of value 6/n
Gold - A 2,500 year store of value 6/n
The Yield Curve - Historically a great defense against stagflation or a central bank intent on inflating. For our purposes we use long 2-year notes and short 30-year bonds. 7/n
NASDAQ 100 - Events of the last decade have shown that quantitative easing can rapidly leak into equity markets. 8/n
Bitcoin - There is a lengthy discussion of this below. 9/n
US cyclicals (long)/US defensive (short) - A pure goods inflation play historically. 10/n
$AUDJPY - Long commodity exporter and short commodity importer. 11/n
TIPS (Treasury Inflation-Protected Securities) - Indexed to CPI to protect against inflation. 12/n
GSCI (Goldman Sachs Commodity Index) - A basket of 24 commodities that reflects underlying global economic growth. 13/n
JPM Emerging Market Currency Index - Historically when global growth is high and inflationary pressures are building, emerging market currencies have done quite well. 14/n
"...make sure I am invested in the instruments that respond first to the massive increases in global money. And given that Bitcoin has positive returns over the most recent time frames, a deeper dive into it was warranted."
PTJ sees bitcoin as capital protection. 15/n
PTJ sees bitcoin as capital protection. 15/n
if forced to forecast, PTJ says that bitcoin will be the winning horse against GMI (Global monetary inflation). 17/n
PTJ polled his research group and graded several stores of value on 4 categories.
Purchasing Power
Trustworthiness
Liquidity
Portability
Image shows the final results.
18/n
Purchasing Power
Trustworthiness
Liquidity
Portability
Image shows the final results.
18/n
Financial asset were the most chosen, when it comes to purchasing power, arguing that the only way to defeat inflation was to have some sort of yield.
Important to note that int the 70s inflation was near double digits, and the yield could not keep up with the inflation. 19/n
Important to note that int the 70s inflation was near double digits, and the yield could not keep up with the inflation. 19/n
Regarding purchasing power, fiat cash scored almost 0, since this is designed to depreciate 2% per year through inflation, why own it? 20/n
On trustworthiness, bitcoin being the youngest of all the assets, got the lowest score. 21/n
Cash scored highest on liquidity.
A nice point to note is that liquidity seems to never matter until it does. Pay attention to 10 year cycles. 22/n
A nice point to note is that liquidity seems to never matter until it does. Pay attention to 10 year cycles. 22/n
"...portability, not an issue until it is, in case of need of wealth movement, cash is good, gold as well but clunky, but nothing beats bitcoin."
Portability, bitcoin clear winner.
Once again the argument for #digitalgold. 23/n
Portability, bitcoin clear winner.
Once again the argument for #digitalgold. 23/n
The most compelling argument for owning bitcoin is the digitisation off currency accelerated by COVID. 24/n
"The introduction of libra by $FB, which is not a store of value, since it's pegged to fiat currencies, and China's DCEP pegged to the yuan, will make digital wallets a common place, opening the gates for bitcoin cause of the understanding utility and ease of ownership." 25/n
Owning btc is a great way to defend against the GMI.
Gold remains very attractive hedge against GMI.
#Gold could rally something between $2400 and $6700
26/26
Gold remains very attractive hedge against GMI.
#Gold could rally something between $2400 and $6700
26/26
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