This Billionaire Has 50% of His Wealth in Bitcoin

Plus, Mayer Multiple flashing signs, and more....

Jan 14, 2022

Billionaire Bill Miller has 50% of his Net Worth in Bitcoin

Fifty percent. Not a typo.

Let’s back up. So, who’s this Bill Miller? Well, Miller is a billionaire now, but oh, what a ride he’s been on.

Miller has been in the investment game for over 40 years, and was the head of the Legg Mason Capital Value Management Trust. Miller, at one time, had $70 billion under management. Billion, with a B.

Miller’s flagship fund beat the S & P 500 for fifteen straight years, from 1991 through 2005. That’s quite a record.

But, during the financial crisis of 2008, Miller’s fund lost over half of its value. Miller had placed huge leveraged bets on Bear Stearns, Freddie Mac and other stocks that had had been especially hard hit during that time. Miller figured that the Federal Reserve would bail out those institutions.

Miller was wrong.

His fund lost 55% of its value. His personal net worth eroded proportionately. Adding insult to injury, Miller was going through a divorce at the time and lost another chunk of his wealth. All told, Miller had lost 90% of his net worth in less than a year. Ouch.

The Comeback Story

Bill Miller had also been investing in a little company called amazon.com. He first invested in 1997, then bought call options on AMZN in 2008. The stock was about $40 per share then, split adjusted, and is now around $3,200. That’s an 80x gain. Miller is now thought to be the largest Amazon shareholder besides Jeff Bezos and MacKenzie Scott.

He also started buying Bitcoin in 2014, at about $200 per coin. He then doubled down in 2021, when Bitcoin dropped from $65,000 to $30,000, scooping up more discounted coins. His average cost per coin is reportedly around $500. Nice. And he has quite a stack, apparently.

At this point, Miller says he’s about 50% in Bitcoin and 50% in Amazon. Not textbook portfolio management. Not for the faint of heart, either.

But Why Bitcoin?

To be fully honest, Miller’s 50% allocation consists of actual Bitcoin and two stocks that are major Bitcoin players, MicroStrategy and Stronghold Digital. Still, he’s all in.

In an interview with WealthTrack last Friday, Miller disclosed he first invested in Bitcoin after hearing tech entrepreneur Wences Cesares speak at a media and tech conference in Sun Valley. He bought in at $200 - $300 and then didn’t buy any more for several years. When he jumped back in last year, he listed these reasons:

Bitcoin’s track record. Annual growth of almost 200% per year for thirteen years. Definitely not acting like a “bubble.”
Bitcoin is very “underpenetrated,” meaning that we are still very early in the Bitcoin adoption cycle.
Bitcoin can provide insurance against a total collapse of the financial system.
No other asset class has the potential to go up “ten times or fifty times.”
“More people are using it.” More adoption. Yep.
More money is coming into the space from venture capital.

Miller sees Bitcoin surpassing gold, and cites Bitcoin’s scarcity as the dominant factor in that statement. Though others argue that Bitcoin has no “intrinsic value,” he cites the Mickey Mantle baseball card that sold for $5 million in January, stating “It comes down to the very basic level of supply and demand. Bitcoin is the only economic entity where the supply is unaffected by demand.”

Bill Miller recommends that every investor allocate 1% of their portfolio to Bitcoin. So, do as he says, not as he does. His reasoning is,

“If you put 1% of your portfolio in it for diversification, even if it goes to zero, which I think is highly improbable, but of course possible, you can always afford to lose 1%.”

Seems like wise advice.

Mayer Multiple Flashes Strong Buy Signal

Time to stock up on more Bitcoin?

As of January 11, Bitcoin’s “Mayer Multiple” was down to .91. That's a level not seen since April 2020, when the world was in full-blown Covid panic. All investment asset classes were melting down. We know what happened after that. Bitcoin grew ten-fold. That’s right. Ten-fold. From $6,000 to over $60,000.

The Mayer Multiple and Why It Matters

Trace Mayer, self-described philosopher, entrepreneur and investor, created The Mayer Multiple as a metric to analyze the price of Bitcoin in a historical context.

The Mayer Multiple is calculated by dividing the current price of Bitcoin by its 200-day moving average. Mayer’s work concluded that the best long-term results were attained by accumulating Bitcoin when The Mayer Multiple was below 2.4. In times of extreme exuberance, the multiple can help identify bubbles, overbought situations.

The chart below shows that we are currently near the bottom of a two-year range in terms of the Mayer Multiple. Historically, the Mayer Multiple has been higher than its current reading 78.6% of the time. The multiple has had a historical average of 1.43. Probably nothing, right?

To me, it’s flashing a huge “Buy” signal. Especially if you’re in Bitcoin for the long haul, as many are. If you believe in the technology, and if you believe in the future of decentralized, hard-capped money, then you should be stacking for the long-term.

Look, Bitcoin has been around now for over thirteen years. It doesn’t seem to be going away. In fact, adoption of Bitcoin is happening every day. More nations, more corporations, more investment firms are getting into Bitcoin. And, if you believe in the Lindy Effect, you have to think Bitcoin will be around for a long while. “Lindy” basically says that the longer something has been in existence, the greater the probability it will continue. (Named for Lindy’s Delicatessen in NYC.)

(Link to my story about the Lindy Effect.)

Current Bitcoin price and Mayer Multiple

Mayer was previously the host of the popular Bitcoin Knowledge podcast. He helped organize and presented at the first Bitcoin conference in 2013. His Mayer Multiple has been highly publicized by Bitcoin legend Preston Pysh, host of The Investor Podcast.

Link to the Mayer Multiple Twitter account.

From the Twitter Account:

Mayer Multiple @TIPMayerMultple Created by @bitcoinkn host @TraceMayer & popularized by @PrestonPysh. The Mayer Multiple is calculated by dividing the current price by 200-day moving average.

18.4K Followers

This Month in Bitcoin History

January 3, 2009 The Bitcoin network came into existence, with Satoshi Nakamoto mining the “genesis block” of Bitcoin, which had a reward of 50 Bitcoins. Over $2 million at today’s valuation.

January 12, 2012 Bitcoin was featured as the main subject in a trial on an episode of The Good Wife. The episode titled Bitcoin for Dummies featured CNBC’s Jim Cramer, stating “There’s no central bank to regulate it.” And that’s the point.

January 25, 2018 Billionaire investor George Soros referred to Bitcoin as a “bubble.” Thirteen years later, it appears to be anything but.

The Good Wife" Bitcoin for Dummies (TV Episode 2012) - IMDb — Attorney Alicia Florek, aka The Good Wife, argues for Bitcoin developer

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