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Richard Bernstein, a member of the Institutional Investor Hall of Fame, is sounding the alarm bells on bitcoin.
He warns that bitcoin is a bubble and that the crypto fever is pushing investors away from market groups positioned to grab the biggest gains, especially oil.
“It’s pretty wild,” CEO and CIO of Richard Bernstein Advisors told CNBC’s “Trading Nation” on Monday. “Bitcoin has been in a bear market, and everyone loves that asset. And, oil has been in a bull market, and that’s basically you never hear a thing. People don’t care. “
Bernstein, who spent decades on Wall Street, calls oil the most ignored bull market.
“We have this major bull market for commodities, and all people say is it doesn’t matter,” he said.
WTI crude oil is trading around its highest levels since October 2018. It stood at $ 70.88 on Monday and is up 96% from a year ago.
Bitcoin may have risen 13% over the past week, but it’s still down 35% over the past two months.
Even though bitcoin experienced a meteoric rise last year, Bernstein suggests that a return to these levels would not be sustainable. He believes the rush for bitcoin and other cryptocurrencies has become dangerously parabolic.
“Bubbles differ from speculation in that bubbles invade society. They exit financial markets,” he said. “Definitely with cryptocurrencies now, and quite possibly with most tech stocks, you’re starting to see this happening where people talk about it at cocktail parties.”
Right now, Bernstein is more optimistic about companies that are not designed to innovate or disrupt the economy. It turned bearish on tech stocks in 2019.
“Your wallet could suffer a lot”
“If you’re on the wrong side of the swing over the next two years, maybe five years, your wallet could suffer a lot,” Bernstein said. “The side of that swing you want to be on is the kind of pro-inflation side that most people don’t invest in.”
Bernstein predicts that inflation will surprise many investors, but at some point he expects the tide to turn.
“In six months or 12 months or 18 months, growth investors are going to buy energy, materials and industrial products because that’s where the growth is going to happen,” Bernstein said.
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