Kevin O’Leary says there’s a 100% chance that another crypto debacle will happen “again and again and again.” Here’s what he likes instead

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‘Meltdown to zero’: Kevin O’Leary says there’s a 100% chance another crypto debacle will happen ‘again and again and again’. Here’s what he likes instead

Bitcoin is on another wild ride.

Late last year, the fall of cryptocurrency exchange FTX sent investors running for the exits. But now bitcoin is up 39% in 2023.

Still, Shark Tank star Kevin OLeary warns there could be more fiascos in the crypto world.

When asked if he believed there would be another FTX during a Kitco News interview, OLearys’ answer was yes.

If you ask me, will there be another collapse to zero? Absolutely, 100% it will happen and it will continue to happen again and again and again, he says.

All unregulated exchanges are currently seeing massive outflows. Smart money has a joke. They saw what happened in FTX. They are not sitting down for an explanation.

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Simply put, institutional investors will not put their money into unregulated crypto exchanges.

If you’re not ready to be audited, and I’m talking about any exchange, if you don’t have an auditor, you don’t want to be transparent, you don’t want to disclose ownership, why institutional capital should he stay there? Of course, it’s not.

That said, OLeary is not giving up bitcoin.

keep it safe

Mr. Wonderful bought the dip.

I have been back to the crypto markets lately. Every time bitcoin drops below $17,000, I add to our positions there.

And where does OLeary keep its crypto investments these days?

North.

The only place I have crypto right now is in the Canadian market, which is 100% regulated. They have a broker attached to an exchange regulated by the CSO [Ontario Securities Commission]all kinds of rules, you can’t mix them up, he tells Kitco News.

The story continues

It’s called Bitbuy and I have my money there. It is owned by WonderFi, a public company. I have a lot of capital tied up in there, it’s the only place.

As you might expect, OLeary is not going to put its money in unregulated exchanges.

Forget it, never again.

Read more: Wealthy young Americans have lost faith in the stock market and are instead betting on those assets. Enter now for strong long-term tailwinds

Gold

Some say bitcoin is the new gold. Although OLeary has been one of bitcoin’s most vocal supporters, he still loves the original yellow metal.

OLeary tells Kitco News that to hedge against inflation, he has a 5% weighting in gold and a 5% weighting in bitcoin.

This is because gold cannot be printed out of thin air like fiat money. And its value tends to remain resilient even in times of crisis.

There are many ways to gain exposure to gold. OLeary uses two methods for its 5% exposure.

I have half of that two and a half percent in physical gold that I pay for storage. And I use various ETFs for the rest so I can rebalance each quarter.

Some gold investors also own shares of gold mining companies, but OLeary is not one of them.

I don’t own the miners because over a long period of time, 25 years, you want to take silly management out of the equation, he says. All they do for you is pull it out of the ground. You might as well own the merchandise.

Shares

Ultimately, the OLearys wallet does not consist primarily of gold or bitcoin. He is still an equity investor first and foremost.

I have a large equity allocation, he says.

And like most smart investors, OLeary doesn’t put all the eggs in one basket.

No equity greater than 5%. No sector over 20%. So it’s very diverse.

Of course, even a diversified portfolio can experience ups and downs. In 2022, the S&P 500 fell 19.4%. So what should investors be looking for in a company in today’s market?

Now I’m looking for companies that, A, have positive cash flow, B, make profit distributions. So, in other words, they take the money and distribute it as dividends. Some of them will do stock buybacks, but not now that it’s taxed, I think the dividend is going to be more popular, he says.

At the same time, OLeary stresses that it is important for companies to do so without taking on debt.

So if you have a healthy balance sheet, not too much debt, and are distributing profits, well, it’s a good place to invest.

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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

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