At an investing conference in Bilbao, Spain’s most popular fund manager Francisco García Paramés compared bitcoin buying with gambling. In fact, his comparison sounds pretty accurate as trading is based on making probability-related predictions. Bitcoin’s price fluctuates, which means that buying bitcoin may turn out to be a really good bargain, but it may also appear to be the worst possible deal.
Being in its nascent stages, bitcoin is currently appealing many traders to buy it. Mr. Paramés explained that this volatility of bitcoin may hamper its tradability. According to his words, bitcoin trading is similar to “betting on red or black”. This means that the traders have equal chances to win or to lose. He shared that he would not embark on such a venture and that even did not try to so far. He explained that bitcoin’s high volatility is attractive to traders as trading volatile stocks often provide the greatest profit potential.
Mr. Paramés noted that bitcoin’s lack of any stability on the trading market puts a spoke in the traders’ wheels, as the odds are not in their favor.
Francisco García Paramés Shares Experience with Bitcoin Traders
Francisco García Paramés is a prominent value investor, highly-appreciated for his remarkable strategies. To make the things clearer, value investors seek stocks that they consider undervalued by the market. Mr. Paramés is often described as Europe’s Warren Buffett (an American business magnate, investor, and philanthropist). As for his career, he spent 25 years in the Spanish privately owned fund group Bestinver, where he accumulated 16% in annual returns.
Following his departure from the company in 2014, Bestinver’s assets under management dropped sharply. According to the Financial Times, in 2015 the fund group reported assets under management of $2.5 billion, which represents approximately 30% decrease.
After Mr. Paramés left Paramés, he founded his own company named Cobas Asset Management. Even though the company did not start with flying colors, it reported €1.34bn in assets under management. But Mr. Paramés seems not to be bothered by the company’s slow start as he has a long-term perspective, which includes high-quality companies with profitable returns on capital.
In an interview with Citywire Selector last year, Mr. Paramés said that the young people who have just started their careers as value investors are chasing high and quick return, which is an impossible goal. He elaborated that this leads to avoiding high-quality companies, as these are more expensive and the long-term consequences might be quite unpleasant. Based on his words, it might be concluded that Mr. Paramés’ advice to the young value investors is to prioritize “sure bets” and to climb the ladder of success slowly.