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Bret S. Messing, Partner, President and Chief Operating Officer, SkyBridge asked: It has been an incredible year in terms of the Chinese Ban, El Salvador and ETF. The Bitcoin Price is up a lot. The one thing that gives me a pause is that everything is up a lot, AMC stocks or many different assets. We would have had a similar kind of return; I want to make sure what is the bullish factor for adoption. How do you think about that?
Michael Saylor: Let us look in to the last 12 months. Bitcoin is up 352 percent. Gold is down 7.5% The S&P is up 34.1%, NASDAQ is up 41% Long dated treasuries if you held them down about 7% We have a year of unpleasant and political unrest. And, political risk and we clearly we had a lot of monetary inflation. You have meme stocks – individual crypto and individual stocks, all over the place and some of them screaming. I think there are some conclusions you can come to if you look at asset classes.
The first conclusion is in the biggest geopolitical unrest, inflation and in our business life – Gold is a complete abysmal, utter failure. And, so you could just start, without observation, gold is a complete utter macroeconomic failure, and if you waited for 40 years, for a year like this, you finally got it and it was useless. On the other hand, we knew that long bonds were over-valued. So, bonds and gold as an asset class is looking scary as heck.
And, you have got a conventional inflation hedge and if you want low risk conventional monetary inflation hedge, you buy the S&P index. If you want a bit more hedge, you buy the NASDAQ index. About 34% on S&P, it implies to me that the monetary inflation rate or the debasement rate is 34% plus or minus the risk premium may be it is 31% with a 3% or 4% risk premium, but if I had to guess what is the inflation rate, I would say well CPI is 5% And, producer price index is, you talk to anybody that manufactures or who does anything in the real world, they will tell you their cost to be 20 to 25% 30% more.
And, if you look at the S&P index it is screaming at you. About 30% inflation, and bitcoin is beating by 10X that. Now, what I think about risk well, I think that over the course of a decade, Bitcoin is a 170% a year, every year for a decade, NASDAQ is 19% every year for a decade and the S&P is 14% every year for a decade. So, if you look at it like that and gold by the way is you will love this one: -.06% it is -6 basis points a year every year for a decade. And long bonds 240% basis points.
I mean the conclusion that you come to, is pretty clear. If you can stomach the volatility and the novelty of bitcoin you are getting paid 10x, and if you can’t stomach it, you sit in the S&P index. The other things are speculative. And If you are a VC or speculator or trader you can deal with that.
