Raoul Pal defends the idea of investing in security assets during the crisis, as is the case with Bitcoin and gold
When Raoul Pal, the former hedge fund manager who founded Real Vision first learned that the coronavirus was spreading rapidly, he thought, “The whole world is infected.”
“I said, ‘Listen, this is the biggest economic event of all our lives – and it is coming. And that was, in retrospect, the best call I’ve ever had, ”said Pal on the podcast“ Lindzanity ”, recalling how in a period of three to four days the spread reached Iran and then Italy.
Pal, who quit his job at Goldman Sachs and GLG Partners now writes a market survey for Global Macro Investor, also predicted in October that the Federal Reserve needed to cut interest rates to zero and warned that they could fall into negative territory.
A crisis like no other
According to Pal, the pandemic will cause “the biggest insolvency event in history”. He added,
“I think the balance of probabilities is that this is a much longer event – in terms of economic impacts – than anyone is thinking. I think it is a huge social change that comes from all of this. ”
Isolation will make people more local and cause supply chain complications, he said. Title king Jeffrey Gundlach shares a similar view and said recently that we will be “much more, less connected to globalization”.
Last week, Kristalina Georgieva, head of the International Monetary Fund (IMF), also said that it is a “gigantic” problem and a “crisis like no other, (…)”. Never in the history of the IMF have we seen a situation in which the world economy has stopped. “
“Is this zero or is it millions”
Coronavirus has already caused the Dow and S&P 500 to have their worst first quarter. But those who project a sharp V-shaped recovery in the last two quarters of this year, in Pal’s opinion, are incorrect in their assumptions. He expects another 20% drop before the “3- or 4-month jump in hope”.
As the coronavirus drags on without production and consumption, the risk of bankruptcy and deflation increases. Under these circumstances, Pal suggests allocating 25% of his portfolio to Bitcoin, gold, money and trading opportunities, each.
Although the world’s leading cryptocurrency has fallen more than 40% in line with the stock market, it has recovered 84% of its value since then.
The CEO of Social Capital Chamath Palihapitiya, one of the first Bitcoin investors who in 2013 owned about 5% of the entire BTC, believes that “This is zero or it is millions”.
To a former Facebook executive, he said it is currently still a speculative investment, but “the dependency on the path to Bitcoin is that, if it looks like [degradação] it is likely, it will really emerge as an escape to security, ”said Palihapitiya.
Source: BTC EG