Everyone seems to be caught up in the recent media frenzy about Bitcoin. People are buying a lot of Bitcoin. Some are making money. According to the former operator of the world’s best hedge fund and the winner of the prestigious Templeton Foundation award, Paul Mampilly, they are all making a grave mistake. He believes that there will be a big crash. He can not say for sure when exactly it will happen, but what he can say is that it is a matter of when, not a matter of if.
When Paul Mampilly thinks of Bitcoin, his mind goes back to 1999, when his friend Tess owned stocks in technology company that went up by one thousand percent. She was rich, she told him. It took his breath away, but he knew deep down that if a stock can rise so quickly so fast, it can drop that much just as quickly.
Lest you think that the stocks that were represented in the dotcom bubble of 1999 were stocks of minor companies, you are mistaken. Unlike Bitcoin, which has many flaws and does not seem to have anything of substance in nature to offer, the stocks in the 1999 bubble belonged to major companies in the Nasdaq index. For example, one of them was Qualcomm, who had stocks that were up by more than two thousand and six hundred percent. If those stocks, from those major companies, can drop so quickly and their holders can lose so much money, then the people who own Bitcoin surely should be afraid, as Bitcoin can certainly drop.
What is similar about now and then is that many people investing are simply newbies. They are not experienced investors and do not know that a stock going up quickly is not a good sign but a sign of a bubble. Many were disappointed then, and many will be disappointed now.
Paul Mampilly did not lose any money in 1999. He sold all of his stocks early, because he saw the bubble for what it was, and he saw the crash that was to come soon after. If you do not want to lose so much money on Bitcoin, then you should sell your Bitcoin right now too. For more info about us: https://dailyreckoning.com/author/pmampilly/ click here.
Paul Mampilly is the Founder of Profits Unlimited. He works with Banyan Hill Publishing as a senior editor and advisor.