The current state of the economy, particularly inflation, has most investors floating in a sea of uncertainty and turmoil. However, the recent Build Back Better bill intended to combat these trying times is not embraced by everyone. One opponent appears to be Shark Tank investor Kevin O’Leary, who recently spoke out about why he isn’t a fan of the legislation, and what three assets he likes as investments as an inflation hedge.
Canada-born O’Leary co-founded Softkey Software Products, a manufacturer of computer software focused on family education and entertainment. Purchased by Mattel in 1999, the proceeds from the sale of his company made him a millionaire many times over. Since that time, he has transitioned into a new career as an investor, writer and television persona — including his well known turn as an investor on the start-up show Shark Tank. It is estimated that the 68-year-old may be worth in excess of $400 million.
Given his status as one of the most recognizable investors in the world, O’Leary gets frequent opportunities to act as a pundit on all related matters. Confident and assertive to a fault, he is never shy about sharing a bit about what he is doing.
Yahoo! Finance’s Jing Pan reported on recent comments O’Leary made to Stansberry Research on inflation. The veteran investor began by pushing back on the possible notion that inflation had peaked — adding his thoughts on the effectiveness of the Build Back Better measure that is set to inject approximately $1.7 trillion through various grants and initiatives into the economy:
“We haven’t yet (hit the peak of inflation), particularly if this Build Back Better bill prints another $400 to $600 billion and flushes it right into the economy. That’s probably not going to be a good outcome for inflation, because it’s very inflationary, even though it’s trying to be labeled as an anti-inflation bill. Anytime you print money, you get inflation.”
Pan also cited three hard assets that O’Leary likes as a way to help protect portfolios. The first is perhaps the most obvious; gold. The precious metal has long been most trusted and coveted, including when times are tough, such as the present. O’Leary explained his thoughts on gold and the role it plays in his portfolio:
“I’ve added a little gold and I’m using the GLD, which is an expensive ETF. But it’s liquid enough, you can put millions in and out of them in an hour and not move the market. Right now, gold as an indicator is not doing what it should be if you really believe we’re going to hyperinflation.”
Another asset that O’Leary has really warmed up to is Bitcoin. He has been increasingly vocal about his cryptocurrency holdings and is especially bullish on the future of Bitcoin — an asset he once famously referred to as “garbage.” He has previously declared that around 20 percent of his portfolio consists of crypto, and indicated that he holds 32 different positions with none being more than 5 percent of the total 20 percent.
Although O’Leary is bullish on Bitcoin, he was reminded that it is currently hovering about 70 percent beneath the highs it achieved in 2021. He acknowledged the impact, but explained his thought process on the crypto:
“We took a hit, we were at 20 percent (how much of his portfolio is cryptocurrency), and then it grew up to 23 percent, then it went down to 16 percent of the portfolio. It was really volatile.”
I’ve always said, you’re going to get this volatility as an industry that’s not regulated, because there’s no institutional bid… Why not add to the position if you are going to stay long?”
A final hard asset O’Leary is a fan of is one that is a much more niche investment sector — luxury watches. A collector himself, even he has been surprised by the continued growth in prices for these highly sought after time pieces:
“I’ve been listening to this dialogue now for a year about how watches are going to roll over. It simply hasn’t happened because the demand for watch pieces, particularly the brands of Rolex, F.P. Journe, AP, even Omega recently has had a huge run.”
O’Leary came to a surprising conclusion about how good of investment he believes luxury watches have been:
“If you’ve owned these watches for 24 months, it’s still out paced the S&P, it’s still outpaced crypto. It’s the best asset class to have been in in the last two years.”
Ultimately, there are no completely safe bets to protect against inflation. However, doing research and making best guesses about what will be effective hedges may help save some portfolios. O’Leary seems comfortable with the choices he has made, as investors wait to see when the economy will start to pull out of it current dive.
DISCLAIMER: The author is not a financial advisor or expert. The opinions expressed in this article are intended for general educational purposes and entertainment only. They are not intended in any way to provide specific advice or recommendations for any individual or on any specific security or investment product. Individual investors are responsible for their own money and investment decisions. Remember, there is no guarantee that stocks or cryptocurrency will fulfill the analysts’ projections or increase in value. Please always do your own due diligence and if you invest, do so with proper caution. The author holds a small position in Bitcoin at the time of publishing.
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