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👀 A peek into a billionaire's portfolio

👀 A peek into a billionaire's portfolio

PLUS: SBF's twisted love affair

Alex M.
October 12, 2023

GM everyone. This is 2036, the crypto newsletter that pays you.

Here’s what we’re serving up today 🍲: Paul Tudor Jones is a hedge fund billionaire (worth ∼$8B) who’s correctly profited from more crashes than almost anyone. And he’s loading up on two investments right now.

Let’s dig in.

🥔 Today’s meat and potatoes

Get smarter on crypto in 2 minutes

Paul Tudor Jones is a legend in the investment world:

He shorted stocks during the crash of ‘87 and made $100 million (a cool ∼200%)
He shorted Japanese stocks in 1990 and made ∼88% in a year
He’s coached daily by Tony Robbins - and let’s be honest - I’d probably be a better trader, too, if a 6’7 giant yelled at me every day

come on Paul, you can do this!

Paul Tudor Jones was on CNBC this week to explain his latest big asset allocations.

Here’s what he said…

“Right now is a difficult time to own stocks because of:

1/ Geopolitical uncertainty

Paul sees 3 theaters of political uncertainty right now, which he calls “the most threatening geopolitical environment of his lifetime”:

Russia & Ukraine
Israel & The Middle East
Taiwan & China

He thinks three nuclear powers led by sociopaths (China, Russia, and North Korea) and one led by religious fanatics (Iran) are cause for concern.

He also believes that the biggest danger to the Middle East is a direct conflict between Israel and Iran, which could lead to a World War 1-type of escalation, where everyone gets involved.

At the same time…

2/ The United States is in the most difficult fiscal position since World War II.

It’s very different to anything we’ve ever seen.

Unlike, say, Pearl Harbor or 9/11 - the fiscal situation is really clear. We can see it coming.

But with 122% debt to GDP, the US is in an untenable position. As interest costs increase - you get into a vicious cycle in which:

higher interest rates —> higher interest expenses for the government —> higher debt issuance —> more bond selling —> even higher interest rates

… and that’s no bueno.

In a few years, the US will have the highest interest bill as a % of GDP that it’s ever had, ∼20%.

This has to be the biggest conversation in the coming election.

But the problem is that the two guys who put us in this situation - Trump and Biden - are the two guys running for re-election.

And neither of them has a plan to address the issue.

The US needs to:

cut spending
change social security and limit Medicare and Medicaid
raise taxes on the very wealthy

Most politicians will either a) cut spending or b) raise taxes - but never both.

And nobody wants to touch entitlements, as it’s political suicide.

As a result, Paul Tudor Jones thinks we’re going into a recession sometime in Q1 of 2024 because the bond market - not the Federal Reserve - will raise interest rates.

Investors will require a higher return on US debt because they doubt its ability to pay it back in the future.

Ok - so what is Paul Tudor Jones buying?

He’s staying away from stocks until the conflict between Israel and Iran has been settled.

Instead, he likes:

Gold as a traditional risk-off asset
Bitcoin

Paul Tudor Jones turned very bullish on bitcoin in 2020. At the time, he published his thesis for bitcoin, which is a brilliant and insightful read.

Since then, his case for owning it has only gotten stronger.

He sees bitcoin as:

a hedge against inflation from central banks printing money (comparing it to the gold trade of the 1970s)
an increasingly accepted asset among institutions
a potential global reserve currency

… and recommends both gold and bitcoin “take on a larger percentage of your portfolio than they would historically.”

He’s called bitcoin the fastest horse to bet on in this environment.

And he said he’s never getting off of it.

It looks like the horse is only going faster today. And it looks nowhere close to slowing down.