The Ledger
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Peters: Private equity is done and managers will emerge looking terrible
“This is the kind of thing that may make me look foolish. I think private equity is done. I think that it will always be an investment style like it has for over the course of my career. It was just LBO investing when I started, I guess now it's private equity,…”
Peters: Equities Drive 90% of Institutional Portfolio Risk
“If you look at the real risk in their portfolio, it's probably 90% driven by equities, and it comes in all sorts of different forms, private equity, public equity, credit. You end up with portfolios that there's just one risk factor, which is equities.”
Peters: Blockchain Integration Will Put Digital Wallets on Every Phone
“This is where global financial markets get rewired onto blockchain based rails. And when that happens, it means that every single person in the world, when that's fully complete, will have a digital wallet on their phone.”
Peters: Markets Face a 15-Year Breakdown of Historical Asset Correlations
“COVID, I believe, propelled us into this new regime. And whether most big investors believe that that's true or not, they have to at least acknowledge that it might be true, that nothing's permanent, but we might be in for a 10 or 15 year period where the reli…”
Peters: Private Equity Capital Return Struggles Signal Rising Liquidity Risks
“When I see equity markets at all time highs, and I keep just reading the papers and private equity guys don't seem to be able to return capital to their clients. Wow. Imagine what that would look like in a bear market. That's an example of liquidity risks that…”
Peters: Digital Cash Enables Total State Financial Control and Surveillance
“Once you've moved people off paper money, there's no place to hide. And so that's how the government acquires power through that, because once they do that, well, think of all the things that you can do with that, right? One of the things you can do is you can…”
Peters: Regulators Can No Longer Destroy Bitcoin
“And so, you know, a number of years ago, the regulators could have destroyed Bitcoin. They can no longer destroy it. They could do various things, but they can't destroy it.”
Peters: Bitcoin Lacks Sustainable Downside Until Institutional On-Ramps Are Built
“Until those on-ramps are built, and until I'm getting those calls from the biggest brokers and investment banks, and there's that, of course, there's downside. There's always downside in market, but I don't think there's much sustainable downside until we at l…”
Peters: Bitcoin Will Coexist With Digital Fiat Currencies
“The investor in me is, look, this is the future of money. If it's allowed to survive and coexist with digital fiat, which I strongly believe it will be, then we're at the outset of A decade or a hundred year journey in terms of what this asset class will becom…”
Peters: Crypto Is a Deeply Discounted, Highly Convex Version of Gold
“These assets are just uniquely positioned to do well, by the way, gold should do well as well, except these are just this really interesting, highly convex version of gold. That's I think just deeply discounted.”
Peters: A 2% Digital Asset Allocation Offers a 10x Macro Hedge
“The ones who are thinking about digital assets are thinking about it in kind of that debasement hedge part of their portfolio. And it's really attractive because it is highly convex. So you could have a relatively small allocation and it could go up 10 X or it…”
Peters: Central Banks Are No Longer Truly Independent of Treasuries
“We no longer really have independent central banks. They're working together with treasury, and politicians are looking at that as a solution right now, and inflation hasn't taken off.”
Peters: Universal Global Digital Wallet Adoption Expected Within a Decade
“In 10 years, you have a high degree of confidence that almost everyone on the planet will have digital wallet on their phone. And they'll view it as being as secure as Citibank or anything. And they'll be able to move money between currencies, both government …”
Peters: Bitcoin and Ethereum Skew Heavily to the Upside at $50,000
“The upside versus downside is so skewed to the upside that the most important thing I can do as a fiduciary for my clients, which are big institutional investors, they're not small mom and pop punters or Robin Hood investors, they're just Institution. So the m…”
Peters: Most Crypto Assets Will Underperform Bitcoin and Ethereum
“It's probably the case that a lot of those assets over time won't even come close to the performance that I see out of these two assets.”
Peters: Without COVID stimulus, equities would have fallen 30% to 50% further
“And in the absence of what the fed and what the government have done with this, I think the equities would be down 30 to 50% from where they are right now.”
Peters: Pensions will not be able to hit 7.5% return targets
“There's no way pensions are going to be able to even come close. They're not even to be able to pretend that they can anymore.”
Peters: Equities are likely to drop much lower before crisis ends
“I think we're a lot closer to the ceiling in terms of equity prices here than we are to the floor. I think it's highly likely that we'll be a lot lower in equities before this is over.”
Peters: Post-COVID deleveraging will slow growth and expose public pension insolvency
“So the question I think you have to ask yourself is, will we go back to that type of financialized leveraged Corporate sector and investment portfolio. And I would say that it's pretty clear to me that is not happening. Okay. And so if that's not happening, th…”
Peters: Portfolios leveraging pseudo-diversification will be the worst performers
“I think we're going to find that the portfolios that applied that logic to the greatest degree are the worst performing. And so that behavior will be significantly curtailed, whether it's through regulation or whether it's through investment committees and end…”
Peters: Fed bailouts preventing capital destruction guarantee a prolonged low-return environment
“What the Fed is doing and the Treasury is they're saying, let's just make sure that no one goes broke, and let's make sure that none of this capital gets destroyed, and so I don't see how that doesn't lead to a long period of really low returns.”
Peters: Future Equity Returns Will Be Weaker and Highly Volatile
“I suspect that it won't be as strong as looking back over the last 20 years. I suspect it'll be more volatile. There could be times where it's brilliantly positive as well. I think there are big right tails. There are also some really bad tails that are potent…”
Peters: Future Financial Markets Will Be Built on Ethereum
“So Ethereum financial markets and infrastructure will be built on Ethereum. Maybe parts of it will be built on Solana too. I'm not sure.”
Peters: Bitcoin is a highly convex long-term inflation hedge
“You just talk yourself out of buying something that is a highly convex inflation hedge over the medium to long term. Doesn't mean in any given quarter, any given year.”
Peters: Bitcoin Convexity Will Decline and Trade Like Gold
“At some point, it won't be that highly convex because the overall market cap will be so high and so many people will be in that it'll probably trade a bit more like gold, where gold sometimes trades like a great inflation hedge and sometimes it doesn't.”
Peters: AI Boom May Resemble 1950s High Returns, Not 2000s Bubble
“I would argue that because of AI, it might be more like the fifties than 2000.”
Peters: Hyper US Exceptionalism Is the Most Bullish Geopolitical Scenario
“You could imagine this hyper US exceptionalism dragging the rest of the world to do things that they've been reluctant to do. That's the most bullish scenario from a geopolitical and an economic perspective.”
Peters: Bitcoin's Six Boom-Bust Cycles Prove Its Structural Strength
“A lot of people will look at the volatility that Bitcoin has had over its life, and to date, it's had six discrete boom-bust cycles, and they would say that's a weakness. And I would just point out that I think that that's an enormous sign of strength, actuall…”
Peters: Bitcoin price volatility will decrease as its price rises
“I believe that the price will become less volatile the higher it goes.”
Peters: Post-Pandemic Policy Response Marks Beginning of Major Monetary Debasement
“We've expressed views that it's highly likely that the late stage of this long economic and market and debt cycle Will lead to a large monetary debasement essentially, which by the way, if you're a market historian, that's kind of obvious that that happens. Th…”
Peters: Bond Portfolios Are Guaranteed to Lose Money Under Current Policy
“If you have the Fed and the Treasury, in many respects, co-joined, and the Treasury's issuing a lot of debt, and the Fed is creating money to buy that debt, and then it's being spent and kind of pumped into the economy, and the Fed is actively trying to keep i…”
Peters: The Traditional 60/40 Portfolio No Longer Works
“The 40 just doesn't work anymore, right? And the reason that you love the 40 for the last few decades, our entire trading career, your and mine, has been that interest rates have been declining, and they finally got to a point where they just really couldn't d…”
Peters: US Regulators Aim to Build a Foundation for Digital Assets
“I think that what people misunderstand is the intent of regulators is to create A sound foundation for digital assets upon which American entrepreneurs and financial institutions can innovate and can build.”
Peters: Market Overprices Digital Asset Risks, Keeping Valuations Artificially Low
“I think as a fiduciary, we're doing the right thing because I think the market is overpricing all these risks, and that's why the price is low relative to where it will be.”
Peters: Cryptocurrencies are undergoing structural repricing because they are wildly underpriced
“Markets move because there's some underlying factor that's being priced in. And I think that underlying factor is the realization that this is part of the future and they're just wildly underpriced for that. And so that's why we're seeing kind of a repricing m…”
Peters: Bitcoin Will Not Take Over the US or EU
“This isn't Bitcoin gone wild and take over the world. I think in some nations that are very weak structurally, that could be the case. It puts a lot of pressure on them. Place like the US, not the case. Place like EU, not the case.”
Peters: Good Institutional Investment Vehicles for Crypto Do Not Exist
“What I've learned through this process is that there just aren't good vehicles for them to invest in.”
Peters: Cheaper hedges that offset negative carry often blow up in dislocations
“So what inevitably happens, and this is a hugely important lesson is when people are trying to mitigate a risk, there is an expensive way to do it, which is usually sound. And there are a whole range of cheaper ways to mitigate it in ways where you offset the …”
Peters: Private equity managers are the most over-leveraged actors in markets
“Everyone's over levered, and private equity guys, they're the worst in terms of this.”
Peters: One River entered crypto in November 2020
“And then we also entered crypto in November of 2020. And that was really to express one of those themes, which was monetary debasement and also captured some of the convexity of this new technology that was poorly understood at that time.”
Peters: Stacking Leveraged Beta With Convexity Drives Massive Compounding Through Rebalancing
“The result of it is if you combine equity beta in a leverage way, like a portable alpha type return stacking way, with what we do at this firm, our strategies are negatively correlated, positively convex, So anytime there's a wobble in the market, what we do s…”
Peters: Chasing S&P Outperformance Often Causes Investors to Exit at Bottoms
“Some of them try to outperform the S&P, and they end up oftentimes taking on a lot of additional risk that's quite correlated to underlying equities. It works great in the right market environment. And then when the market turns against those players, the loss…”
Peters: Euro Stoxx 50 and Hang Seng Were Worst Major Markets
“Eurostoxx, 50, and Hang Seng, those are the two really worst stock markets in the world from a performance standpoint over the last 1720 years.”
Peters: Discretionary Investing Spots Unprecedented Events But Suffers Emotional Bias
“The upside is as a discretionary investor, you can potentially see things around the corner that have never happened before, haven't happened in such a long period of time that your quantitative strategies can't foresee it. So that's the advantage. The downsid…”
Peters: One River Only Holds Long-Volatility Positions
“We have a very purist approach, and when I'm purist, I mean, we only ever are long-fall. We never are short-fall, and the reason for that is over my career, which is now 35 years, at every cycle, I have seen people who have convinced themselves they're long-fa…”
Peters: Rebalancing hedging profits during drawdowns boosts post-bear market compounding
“Even though equities are deeply discounted, but you're rotating money back into the S&P. When that market correction or bear market ends, you're now compounding from a much higher base than if you just owned equities the whole time.”
Peters: Monthly Calendar Rebalancing Is the Optimal Strategy
“The conclusion from that was actually the optimal approach is pretty simple, actually. Somewhere around a month is a pretty good place to be.”
Peters: Systematic Calendar Rebalancing Outperforms Threshold-Based Approaches
“Threshold is inferior statistically, and the probability of really getting it wrong is much higher, but people are still going to do it. I completely understand why, but if you have, in a way, if you can make the choice to do it in a dispassionate way, over ti…”