Galaxy Digital CEO Michael Novogratz explains why it is a dangerous time to be in the stock market right now, leading up to the U.S. presidential election. While bearish on the dollar, Novogratz is bullish on bitcoin and gold but thinks that bitcoin has more upside than gold.
Dangerous Time to Be in Stock Market, Buy Bitcoin
Billionaire investor and Galaxy Digital CEO Michael Novogratz explained his view on the best investments as the November U.S. presidential election approaches in Wednesdayâ€™s episode of CNNâ€™s Markets Now show.
â€œI think in the short run we saw the high in the Nasdaq, we saw the high in Apple, we saw the high in Tesla,â€ he began, adding that going into the November presidential election, the Nasdaq â€œcan easily trade down to 10,000, another 10%, 11% down from here.â€
Emphasizing that the election is only about 40 days away, Novogratz said: â€œI think between now and the election, volatility stays high and risk gets taken off.â€ He elaborated:
I think itâ€™s a really dangerous time to be in the market. Iâ€™ve taken a lot of risk down and kind of waiting for better, more clarity and better entry points â€¦ I do think selling the dollar will be a trend that continues.
â€œThere will be a time to buy stocks again but I think with this election literally 40 days away, if Biden wins, heâ€™s raising taxes and heâ€™s raising capital gains tax, most specifically. The market is not going to digest that well,â€ he noted, adding, â€œI think Biden is going to win.â€ The billionaire investor further revealed: â€œI am short the Nasdaq, I am short some Apple, [and] Iâ€™m short Tesla.â€
On the subject of bitcoin, he highlighted that the cryptocurrency has some correlation to the Nasdaq and the S&P, but said, â€œI donâ€™t believe thatâ€™s a long-lasting correlation.â€
To illustrate his point, he described: â€œIf the Nasdaq fell 5% today, bitcoin would probably be lower, not higher. But I think you are going to see those correlations break down. The macro story is so promising for shorting the dollar, going long gold, and going long crypto. And we are seeing more and more adoption.â€ When asked if an average investor should own bitcoin, he affirmed:
Yes, yes. The average investor should have 1% to 3% of their portfolio in bitcoin. It is an amazing hedge.
â€œIn my lifetime and in the history of independent central banks, we have never had an environment where the central bank and the treasury are no longer independent. They are the same thing. The treasury prints, and the central bank buys. And so we donâ€™t know whatâ€™s going to happen. The level of uncertainty around fiat currency, around the dollar, around inflation has to be significantly higher than any time in our lifetimes,â€ he continued.
Novogratz also discussed gold and the reasons why he prefers bitcoin. â€œI think gold and bitcoin are very similar assets. Why I like bitcoin better is that itâ€™s much earlier in the adoption cycle,â€ he divulged. â€œIf you want to buy gold, you know how to buy gold. Itâ€™s still a pain in the rear to buy bitcoin. And so there are firms like ours and Fidelity and plenty of them that are working overtime to make it easier for people to buy â€¦ and feel safe owing bitcoin.â€
While believing that the price of gold will rise, Novogratz expects bitcoinâ€™s price to increase to â€œ$50,000, 5X from hereâ€ in two years. The billionaire investor concluded:
I am a real bull on gold. Iâ€™m a real bull on bitcoin. I just think bitcoinâ€™s got more upside.