In a recent speech interviewJohn Paulson, a subprime short investor and billionaire portfolio manager, criticized the volatility of digital assets and advocated investing in traditional safe-haven assets such as gold.
As the co-founder of Paulson & Co, a company established in New York in 1994, Paulson was a historic beneficiary of the collapse of the US real estate financial market in 2008. He successfully set up a legendary short position.
However, after the value of assets under management fell from a peak of US$38 billion in 2011 to US$9 billion in 2019, Paulson recently decided to hand over his hedge fund to the family office.
In the interview, Paulson was asked about his views on the emerging cryptocurrency market. He claimed that these assets were “limited in supply” and “no intrinsic value”, citing the increased volatility of the emerging space compared to emerging markets. The relatively stable traditional market has become a reason to discourage investment.
He also mentioned that he was unable to recognize the same asymmetric pattern mentioned in his legendary transaction ten years ago. This is an opportunity where the market seems to have little downside risk while offering huge upside potential.
Paulson ended his view on the issue of believing in cryptocurrencies with a stern response, “Cryptocurrencies, no matter where they are traded today, will eventually prove worthless. Once the prosperity subsides or liquidity dries up, they will return to zero. I don’t recommend anyone invest in cryptocurrency.”
When asked about the prospects of gold as a valuable investment strategy in the current financial environment, Paulson pointed out that in response to the economic impact of COVID-19, the supply of money entering the market has increased. It’s about 25%.” He believes this is the best indicator of future inflation.
In this case, Paulson’s tendency to invest in the safe-haven asset gold will act as a hedge against the decline in traditional legal tender that he expects in the next few years.
Paulson’s harmful views on the core capabilities of cryptocurrencies echo those of billionaire investor Warren Buffett, who made a long verbal comment on the intrinsic value of crypto assets as early as 2018. claim They are “rat prescriptions.”