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Confidence seems to be high in the asset management firm Morgan Creek Digital as its owners are betting $1 Million dollars against the S&P 500. This bet is similar to the one famed investor Warren Buffet made against asset manager Protégé Partners in 2007, that an index fund will outperform 5 actively managed hedge funds. He won the bet which was worth $1 million, proving that his opinion on virtual currency was right and then donated the proceeds of the wager to charity.
Morgan Creek Capital Management, LLC, which is an investment adviser registered with the Securities and Exchange Commission (SEC), provides investment management services to institutional clients, foundations, endowments, sovereign wealth funds, and family offices. It also partners with Bitwise Asset Management to provide these services.
Morgan Creek Digital believes its digital currency index will outperform the S&P 500 over the next 10 years. Its Co-founder, Anthony Pompliano, said in an interview with CNBC that this wager was placed due to a collaboration of the outlook of Morgan Creek Digital not just for the upside of virtual currencies but the outlook on public equities as well. Many people might see this and think they are bullish on cryptocurrency, he stated; however,
Pompliano went on, people need to consider the asset they are going up against. Public equities are not exactly in their all-time highs as well.
Mr. Pompliano also made a reference to recent losses in FANG’S stocks as proof that the S&P 500 stocks will perform less than the digital currency index in the next 10 years. Mark Yusko, the co-founder of Morgan Creek and former Chief Investment Officer at the University of North Carolina also said that its index fund provides accredited investors and individuals with high net worth access to a number of the top digital currencies by market capitalization. The index fund will require a minimum amount of $50,000 from investors.
This wager has been termed “Buffet Bet 2.0” by Morgan Creek Digital; they have also invited any investors who believe that the S&P will outperform their digital index fund to take up the challenge. They also revealed that they will personally fund their own part of the $1 million bet, hence investor’s money would not be used. They also require anyone who takes up the challenge to do the same. The winner of the wager would be mandated to donate the proceeds to charity. Perhaps Mr. Roubini is up to the challenge?