Ruffer Investment also made some predictions for 2021.
Ruffer Investments’ extravagant Bitcoin bet appears to be paying off.
In an update to the London Stock Exchange, the company revealed that the $745 million in BTC it purchased in November has already surged by 90%.
And the good news doesn’t end here. It also snapped up stock in MicroStrategy and Galaxy Digital, and both stocks have risen by 100%.
Explaining its rationale, Ruffer Investments said:
“Our rationale has been well publicized but briefly, we have a history of using unconventional protections in our portfolio. This is another example, a small allocation to an idiosyncratic asset class which we think brings something significantly different to the portfolio.”
It's worth noting that Ruffer is a little more clear-eyed on its investments than other institutions that have thrown themselves into this space. The update added:
“Think of Bitcoin’s bad reputation as a risk premium — as we move through the process of normalisation, regulation, and institutionalisation, the compression of this premium can have a dramatic effect on the price. If we are wrong, Bitcoin will return to the shadows and we will lose money — this explains why we have kept the position size small but meaningful.”
Ruffer also offered its investment outlook for the coming year. Although the company predicted that COVID-19 will be conquered by the vaccine in 2021, its analysts believe that central banks are going to keep printing money without limits — and government spending isn’t going to slow down any time soon.
“Given the unique blow to the economy and the co-ordinated shock-and-awe global response, it seems fair to conclude that the distribution of possible outcomes from here is wider than it has ever been. This makes a genuinely all-weather portfolio even more important,” Ruffer added.