Legendary investor Bill Miller: Bitcoin could be the rat poison, while fiat currency might be the rats

Legendary investor Bill Miller looked back on the fourth quarter of 2020 at the beginning of the new year. In addition to analyzing the current global economy, he also mentioned Bitcoin. He believes that Warren Buffett's initial description of Bitcoin as rat poison may be accurate, sarcastically stating, "Bitcoin could be the poison for rats, while fiat currency could be those rats."

Bill Miller

Bill Miller is a legendary fund manager on Wall Street known for his "value investing" approach. The mutual fund he managed, Legg Mason Value Trust, outperformed the S&P 500 for 15 consecutive years from 1991 to 2005, creating an investment myth that was difficult to surpass. After leaving Legg Mason, Bill Miller founded his own investment firm, Miller Value Partners.

It has been reported that Bill Miller has had a positive view on Bitcoin. He purchased Bitcoin as early as 2013, and his bullish stance on Bitcoin is not new, as he usually focuses on global macroeconomic perspectives.

Understanding the Present Is Better Than Randomly Predicting the Future

In hisletter, Miller straightforwardly states that the lesson of 2020 is that annual predictions are useless. No one predicted the outbreak of a pandemic, the worst recession since the Great Depression, and high unemployment rates.

However, Miller emphasizes that understanding the current situation is much better than predicting the unknown future. He points out that the stock market has been in a bull market since 2009 with no signs of stopping, and he quotes the late legendary investor John Templeton:

Bull markets are born in pessimism, grow in skepticism, mature in optimism, and die in euphoria.

Miller believes that we are currently in the optimism phase. In 2021, corporate earnings are expected to improve, inflation rates remain low, the Federal Reserve continues to print money and maintains near-zero interest rates, which will not hinder economic recovery.

Bitcoin Could Be the Antidote

However, Miller believes that the risk of inflation should not be underestimated. Inflation has not risen as expected so far, but the savings rate is at a high. With consumption expected to return to normal levels in 2021, the liquidity of a large amount of cash may fuel inflation. Similar to Robert Kiyosaki, the author of the best-selling book "Rich Dad Poor Dad," Miller also favors silver, gold, and Bitcoin in 2021.

He notes that Bitcoin has risen by over 50% since December and has outperformed all mainstream assets over the past decade. Its market value surpasses that of JPMorgan and Warren Buffett's holding company, Berkshire Hathaway. Miller points out:

It is well known that Buffett calls Bitcoin "rat poison." He may be right, Bitcoin may indeed be the rat's antidote, and fiat currency may be those rats.

Miller emphasizes that companies like Square and MicroStrategy have already invested their cash reserves in Bitcoin, but this is only the beginning. The monetary policy adopted by the Federal Reserve will clearly devalue cash in the future, leading more companies to allocate some assets to Bitcoin rather than holding cash.