How Crypto Will Generate More Wealth Than The Internet

 

Multigenerational Model 

focuses on a handful of core concepts:

• Value discipline
• Global portfolio
• Diversified portfolio
• Four ways to make money

One is, a value discipline.

You want to buy things that are cheap and hold them for long periods of time where price catches up to the value. 

Second is, you have to be global. 

You should have a global portfolio.

Third is, you have to have a diversified portfolio. 

If you take cash and you had bonds, bonds are riskier, meaning they have credit risk.

Your portfolio risk doesn't go up. It goes down. 

When you add equities, which have default risk, I mean, if default risk have bankruptcy risk, your portfolio risk doesn't go up, it goes down. 

And so that construct means 

uncorrelated assets, that you add to a portfolio, add incredible value.

Last piece is that there are four ways to make money. 

Four ways to make money

Only four. If you take none of those four risks, you make no return.

Take no risk. You get the risk free rate.

So you have to choose one of four risks or all four risks. 

You take credit risk by bonds.

You take equity risk by equities.

You can take illiquidity risk by private investments, private equity, private real estate, private energy, private debt, and 

you can use structure, which is a fancy term for leverage.

Bitcoin the perfect uncorrelated asset and ultimate innovation

Innovation is an asset class.

Innovation creates the businesses that create the stocks, bonds, currencies and commodities.

So without innovation, we can't generate new wealth. 

Printing money does not create wealth. Never has. Never will. Bad idea. 

So where does Bitcoin fit into this whole construct?

Well, it's the perfect uncorrelated asset.

Bitcoin is 0.15% correlated to stocks and 0% correlated to bonds.

It's the perfect diversifier.

So, if you add it to a portfolio, your risk goes down and your return goes up.

It's the perfect diversifying asset, because it has a symmetry of upside versus downside.

So it's a great asset.

The second reason, it's the ultimate innovation.

Bitcoin is an innovation in money.

Gold is the only money in the world.

Everything else is just credit, and every other currency in the world has an associated liability, government debt.

Gold is the only asset that has no liability associated with it. That's why for 5000 years an ounce has bought a fine person suit, right.

It is the ultimate store of value, but it's not very portable and it's not very divisible. It's really hard to break a bar of gold, so I could give you half of it.

So, Bitcoin is better, and it's digital.

And as we move from the analog world to the digital, from the electronic world to the digital world, it is the perfect money.

So for all those reasons, innovation and a diversifier, you have to have it in your portfolio.