Billionaire investor Howard Marks had some not-too-kind words for cryptocurrencies in his latest letter to investors.
Marks, who runs Oaktree Capital and manages around $99 billion in assets, strongly warned his clients against investing in digital currencies, citing a lack of intrinsic value.
“In my view, digital currencies are nothing but an unfounded fad (or perhaps even a pyramid scheme), based on a willingness to ascribe value to something that has little or none beyond what people will pay for it. But this isn’t the first time. The same description can be applied to the Tulip mania that peaked in 1637, the South Sea Bubble (1720) and the Internet Bubble (1999-2000),” he said.
Bitcoin has more than doubled since the start of the year, and ethereum is up over 2,300% in that time frame. But Marks isn’t convinced.
“Serious investing consists of buying things because the price is attractive relative to intrinsic value. Speculation, on the other hand, occurs when people buy something without any consideration of its underlying value or the appropriateness of its price, solely because they think others will pay more for it in the future.”
Marks has a stellar track record in the financial markets, and has been very prescient in the past with his investing memos. He predicted the financial crisis of 2008-2009, along with the dotcom bubble implosion in the early 2000s.
So even if you don’t agree with him about cryptocurrencies, it pays to at least listen.
Bitcoin was trading at $2605.56 on Thursday morning, up 2.17%, while קthereum was essentially flat on the day at $204.89.