John Burbank’s Bullish Views on Crypto, Saudi Arabia and Tech

Featuring John Burbank

In his much-anticipated return to Real Vision, John Burbank speaks about his new global outlook and investment strategy with Thiel Macro portfolio manager Michael Green. Burbank, the founder and CIO of Passport Capital, explains why he sees significant opportunities in cryptocurrencies. He also discusses his bullish view on Saudi equities and his thesis about the ways in which technology is drastically changing the broader economy across numerous sectors. Filmed on May 22, 2018 in San Francisco.

Published on
1 June, 2018
Topic
Global Outlook, Crypto-currencies, Technology
Duration
64 minutes
Asset class
Crypto-currencies, Equities
Rating
82

Comments

  • MT

    Mike T.

    27 6 2018 05:14

    0       0

    Crypto? A place to put money right now? I don't think so. At the moment nobody, as in nobody is trading bitcoin. Daily Volume for /BTC futures barely measurable

  • MM

    Michael M.

    13 6 2018 13:35

    0       0

    I was so hopeful and excited about this interview beforehand, like looking at a giant beautiful rose bud, and watching it bloom into glory larger throughout the interview. Instead.....it died on the vine. While I believe Michael was prepared with questions to "fertilize the interview", without "water when the sun shined" the interview suffered. Look at Michael's expressions on camera, most of the time he looks confused. When someone says they believe Etherum is the greatest opportunity they've seen, that's sunshine, WATER THE FLOWER!!! ASK WHY!! Instead this drifted from that topic to Healthcare, to patterns in 30 seconds. I love Realvision and when the interviews are on topic it's in a class by itself, the questions posed are followed up with specific follow-ups and I learn something. Come on Realvision, YOU ARE BETTER THAN THIS!!!

  • RO

    Robert O.

    12 6 2018 05:26

    0       0

    John Burbank was correct that central bank interventions affected markets that he was involved in but does he not see the risk of government and regional regulation affecting new technology? China and Europe are having more to say about how big tech companies operate and profit. Will the US be that far behind? Adoption by willing users does not translate into adoption by governments, especially governments who value control over profits.

  • TA

    Trevor A.

    8 6 2018 04:46

    8       3

    This video was great, Mike Green is a treat and John Burbank is successfully reinventing himself through cryptocurrency. Monero is a crypto to keep an eye one. When I log in to RealVision lately I feel like I am sifting through a lot of trash to find gems like this interview. Raoul is forcing the production of videos that appeal to a false perception of millennials. As a 22 year old viewer I will tell you that making short form content to cater to millennials is useless. Focus on organic long form content, that is what is cool. My most recent RV subscription occurred at the previously high sub price and I am disappointed in the value I am getting now that RealVision has shifted toward short form content. I am still coming back for these long form pieces but if there is a continued shift to ten minute millennial focused content I will not resub this fall. Thank you for reading.

  • TM

    Todd M.

    7 6 2018 03:21

    8       2

    Mike Green is flat out brilliant and my personal favorite interviewer. He makes staggering connections and when on you just see the Chess moves. I feel like he backed off Burbank a bit here and Mr. Burbank just does not shine through with his usual brilliance. Just not much real info hear here sadly.

    These crypto comments would have ben interesting 2-3+ years ago - today old news to no news and very little real real grip here. I feel like Mike throttled back....

    More Mike Green with anyone, anytime!

  • mw

    mathias w.

    6 6 2018 10:10

    4       0

    Good interview, Mike Green is a great interviewer. Think more should have been said about John's massive underperformance in 2016/2017 while betting against commodities and anything China related. Would have been interesting to hear Johns view on why that happened (besides CB money printing) and more importantly what he learned from it.

  • sB

    sylvain B.

    6 6 2018 02:55

    3       1

    I'm puzzle by the bullishness on crypto from John. As a specialist on commodities, i would have expected him to go all in on Uranium stocks. Uranium in my view is the most mispriced assets at the moment with the potential for a huge squeeze, especially if one has John B. time horizon.

  • AP

    Andrew P.

    5 6 2018 16:56

    0       0

    Be interesting to see where cobalt demand is vs production; without knowing much about this particular market, I know the mining side (esp. in DRC) has some flexibility to ramp up cobalt production in some large co-product mines.

  • CM

    C M.

    5 6 2018 14:51

    5       1

    I agree with some that John rambled a little long on crypto. Similar to Mark Yusko, some investment managers are know jumping on the crypto band wagon without really explaining how they are doing it. They talk about how the transfer of knowledge and assets is going to accelerate without really stating how. They allude to platform shifts but John even says "I don't have to understand it". His argument seems to be heavily based on legacy systems and that crypto is a new platform and seems to be the best to take the lead of the "new" platform. But he clearly is not sure how it will work.

    Truly feels like 1999 when Buffett was hazed for not investing in the Internet stocks of the day as he stated "invest in what you know". John is taking a shotgun approach of betting on a trend but doesn't know which horse will win the race. As Buffett reminds us, go back and look at the winners of the automobile race or the airline race when those industries revolutionized travel with "new" platforms so to speak.

    • CM

      C M.

      5 6 2018 15:20

      6       1

      To add to my response, as someone who worked with a lot of start-ups, John reminds me of the enterpreneur who is looking for his next big idea after having one work out in the past. And like a lot of entrepreneurs, it is difficult to find that next big hit. It is why I viewed this interview as someone struggling to indentify an investing idea and buying into a trend that they don't seem to understand and cannot express their thesis outside of it being the next big platform. Interesting that John Paulson faced similar issues with his investment fund after scoring big in shorting subprime loans in 2008. This WSJ article was enlightening to John's failing track record since his one big hit in the real estate crash of 2008: https://www.wsj.com/articles/john-burbanks-struggling-passport-hedge-fund-hopes-for-new-savior-in-bitcoin-1513088044

  • MM

    Mak M.

    4 6 2018 21:52

    6       0

    Excellent interview.

  • RA

    Robert A.

    4 6 2018 20:51

    1       1

    Excellent video. Could Milton contact John and provide some information as to how we can invest in the Passport Crypto fund to those of us that might be interested in so doing? Clearly each of us will have to show accredited status and go through all the AML and Know your Customer protocols. We can then contact John/Passport to learn about the minimum investment amount and the redemption/gating that might be in place.

  • WH

    W H.

    4 6 2018 18:02

    0       3

    If Moore’s Law holds in any form, won’t technology continually “debase” crypto?

  • JC

    John C.

    4 6 2018 15:26

    3       0

    I know some people said it could have been shorter, but I could have watched 3 more hours of this. Very good stuff and as usual both Burbank and Michael Green were great. Would love to have then do this again in the near future. Also would like to know a bit more on how to potentially invest in Passport's crypto fund. Thx.

  • RK

    Robert K.

    4 6 2018 14:23

    4       2

    What is the marginal cost of creating a new crypto asset?
    It is very close to 0 (zero). And that is the long term value of any crypto currency. Unless the crypto asset is backed up by "something" it has no value.

    • RK

      Robert K.

      4 6 2018 14:24

      3       2

      And those who say that maybe crypto but for sure blockchain: it is was like saying in 2000s let's invest in the HTTP protocol. In other words - complete bullshit.

    • GM

      Gavin M.

      4 6 2018 14:31

      6       0

      True, which is why 99% of crypto will be worthless eventually. However network effects will concentrate value in just a few, possibly including Bitcoin. The marginal cost of creating a new bitcoin is not zero, it is the cost of mining. The cost of creating a new USD is also zero but it has a value due to network effects and a 'promise' from the US Gov.

    • LK

      Lyle K.

      4 6 2018 14:42

      4       1

      The value is derived from what people are willing to pay for it. That's the beauty of a decentralized thing is that the market is the pricing mechanism and buyers and sellers are pushing and pulling in search of price discovery.

  • TJ

    Terry J.

    4 6 2018 13:23

    2       0

    Totally absorbing and absolutely fascinating to have a front seat at John and Mike's discussionon about technology. To have the opportunity to hear the invaluable insights of these two investment gurus was a real privilege and so instructive. Thank you RVTV!

  • BC

    Burton C.

    4 6 2018 02:37

    7       4

    I like listening to Burbank, but I have to say this should have been a 30 min interview. Fully one half of the time was spent rambling on about crypto, but he never really said anything that one could use except its going to change everything and its going to be big. OK... how about some actionable ideas or even concepts even, but none was offered. Specifics would help. And if he doesn't want to give up his ideas then maybe direct us towards where one could look.

    • JM

      John M.

      4 6 2018 18:36

      0       1

      Agree completely but I also realize that we now pay relatively little for this service so my expectations have dropped very sharply.
      I don't remember John saying he was investing in SF real estate in previous interviews....that was a very wise speculation maybe even better than crypto.

  • DS

    David S.

    3 6 2018 20:57

    2       4

    Most of the inflation caused by central bank's QE inflated the value of stocks and bonds. If we ever do crawl out of the rabbit hole, stocks and bonds will be hit hard. Mr. Burbank does not want skin in that game. DLS

  • ST

    Simon T.

    3 6 2018 07:57

    4       1

    Some good inputs, but I found it rather narcissistic
    Further how can one invest 2/3 in Saudi assets considering their poorest track record for pretty much everything ...

    • RK

      Robert K.

      4 6 2018 14:26

      2       0

      Indeed. It is like investing in a Potemkin village.

  • MW

    Marco W.

    3 6 2018 07:01

    1       1

    I have to admit that I am a little puzzled by the human capital and technology comment. In my humble opinion, the ultimate human capital and technology play is readily available in XBI, which has outperformed S&P for more than 20 years. I will bet XBI outperform BTC in the next 5 to 10 years.

  • RI

    R I.

    3 6 2018 03:27

    21       2

    As Burbank rambled on, I couldn’t help but think (as I usually do when Michael Green is conducting an interview): when will someone interview Michael Green instead?

    • PT

      Priit T.

      3 6 2018 13:20

      1       1

      Raoul did it last year.

    • AL

      Andrew L.

      3 6 2018 14:01

      2       0

      There are a couple great Michael Green interviews here on RV, some of the best content available.

    • RI

      R I.

      3 6 2018 17:36

      1       0

      Yes, they’re few and far between.

    • JW

      James W.

      4 6 2018 02:34

      3       2

      A ramble to nowhere, unfortunately. More content, less value on RV.

  • SR

    Steve R.

    2 6 2018 23:29

    9       5

    I find it quite perverse that in today's modern world you have to 'mine' a cryptocurrency, using up vast amounts of time and resources to do so, with the high risk it may eventually end up being worthless (unlikely with gold). To me this just seems such a totally stupid concept. So despite Silicon Valley's greatest minds this is the best they can come up with? So not really that clever is it? Just plain greed? IMHO tech has partially lost its way, definitely lost its moral compass.

    • BK

      Brian K.

      3 6 2018 13:01

      6       5

      Yeah having stacks of $700 GPUs mining nonsense and using tons of electric will be looked back on as idiotic. Not to mention crypto will be useless once their are better quantum computers. It's nothing more than loose monetary policy for far too long. They should interview Druckenmiller on this show.

    • MM

      Mak M.

      4 6 2018 22:25

      3       2

      Please just read what is a cryptocurrency and what is consensus algorithm and why we must use one before you write a comment about crypto.It is obvious that you haven't done your homework.Maybe proof of work it is not the most efficient consensus algorithm,but it can be improved.Also about quantum computers, you know that a software can be modified,right? This means that cryptocurrencies can modify their algorithm in order to be quantum resistance or even use a quantum computer.This means that quantum computers are not the end of the world or end of cryptocurrencies.

  • DS

    David S.

    2 6 2018 21:25

    2       2

    Always good to listen to Mr. Burbank and Mr. Green. Excellent. Block chain technology will be the big winner, but hard to figure out how to invest in it. Crypto-currencies are much sexier for now. I would like to see a cost per transaction in Bitcoin when all the Bitcoins are in circulation. At that time the cost of mining and administration must be charged to each Bitcoin transaction. DLS

    • ww

      will w.

      3 6 2018 16:55

      2       0

      As more coins are created, the number of coins given as a (mining) reward for validating a block is lowered (reward is halved each time it's reduced - which has been occurring ~ once every year or so). A lower # of coins rewarded will lower the mining incentive - ASSUMING no significant change in VALUE-per-coin. So less mining activity will occur, and the 'Difficulty Rate' (which adjusts many times each day) will also lower (so less electricity will be needed for mining). That could result in lower transaction costs, because miners then won't need as great a reward to make a profit (IF the difficulty rate declines enough to significantly reduce mining costs...!).

      But IF there's also a significant increase in the (spot mkt) coin VALUE, the reduced mining reward will be at least somewhat offset by the value increase, in which case less, or perhaps even no relief for transaction costs.

      BTW, David: your always-thoughtful comments (like those of many, but not quite all, other RV members) are a nice addition to the RV community. Thanks.

    • DS

      David S.

      3 6 2018 20:43

      1       0

      will w. - Thanks for the information on Bitcoin mining and administration costs. I owned a few Bitcoins, but the State of Hawaii forced Coinbase to close all accounts with Hawaiian residences. I doubled my money, so it was a good experiment.
      Also thank you for your BTW. I appreciate the RealVision product and community. It helps me to put the video in perspective to write a response and/or a question. I do get carried away sometimes, which is normal for me. Thanks again. DLS

  • RH

    Rob H.

    2 6 2018 20:01

    4       0

    I liked it and won't pick it apart since I am happy if I get one little nugget of gold from an in-depth interview and this one delivered. I like how he spoke about attention and how he had to narrow markets down to give the right amount of attention to the opportunities he thought would yield the best returns in the future. What I didn't like was he did not go into any detail on any one subject.

  • SZ

    SALEH Z.

    2 6 2018 14:40

    4       1

    A bit too philosophical in content - I got what the thesis was but didn’t quite grasp the “why”...

  • MB

    Mike B.

    2 6 2018 11:13

    11       2

    Could have done a better job delving into why and what’s driving his crypto theories and what specifically is he focused on. All I got from this was Saudi Arabia, Bitcoin and Ethereum. Old news.

  • HM

    Hot M.

    2 6 2018 10:09

    11       3

    I think John is still trying to answer the siren call of the central bankers, and said as much himself in the interview.

    I can imagine a world without mobile phones, without facebook, twitter, these 'social' platforms, and a lot of the rest of this tech because like John I like the era prior to its existence. I'm not saying it doesnt have its utility or that I think its going to go away. But what I do think is that I think it is relatively overvalued for what it actually does.

    And that brings us back to central banks, their hyperliquidity and the like. It has enabled the over valuation of these businesses, that essentially have not innovated forward but laterally eg, self driving cars that dont get you places faster; glorified advertisers like facebook that have simply aggregated activity that would be happening otherwise.

    I wouldnt rule out 'old economy' value yet.

    Interesting also to contrast his views with Tony Deben. Fortunately there are many ways to get to where you'd like to be.

    • AL

      Andrew L.

      3 6 2018 14:07

      1       0

      If you want to advertise effectively Its hard to beat FB and Google even after accounting for click fraud and such. I work in marketing analytics and the fact is CMOs have a massive pile of money to spend and a few logical and acceptable ways to spend it. These platforms are the go-to answer for many marketers not just because of the audience and the ability to target directly but because it makes sense in their view and vs other options it stand out.

  • EM

    Enrico M.

    2 6 2018 09:44

    7       7

    What a gem! New addition to my top 5 RV interviews. What an interviewer M Green is.

  • DF

    Dominic F.

    2 6 2018 07:09

    3       1

    It is interesting listening to this conversation and looking out the window at all that high rise office space that really doesn't need to be there. The future :-)

  • MC

    Mark C.

    2 6 2018 05:37

    2       0

    I agree with John. Betting on platform change (and accept higher volatility so sizing is important), is the way to make big money.

  • GS

    Greg S.

    2 6 2018 04:26

    7       1

    I have tremendous respect for John but I get the impression he is burnt out try to fight CB intervention & manipulated markets. I can relate being somewhat burnt out myself

  • rc

    ryan c.

    2 6 2018 03:36

    12       0

    Wow, the RVTV gods have read my mind once again...watching Game 1 of the NBA finals on TV the other night and boom - out of the blue, there’s John Burbank baseline courtside - thinking to myself...wonder what he’s been up to / what’s his thoughts on markets these days after closing passport to the public.

    And always think it’s been way too long since a Mike Green RVTV appearance (still think it’s been too long since he’s been the interviewee though)!

    Then whadyaknow...this gem!

    Outdone yallselves once again!

  • ap

    angus p.

    2 6 2018 01:45

    7       9

    Somewhat unconvincing.

  • JO

    Joseph O.

    1 6 2018 23:13

    21       10

    John is a very smart man. Yet, I cannot help but notice that a lot of his points are based upon generalized narratives and trend-following. Almost seems like he has drank a little bit of the Valley kool-aid. Unfortunately, this is often an Achilles heel of the well educated, intelligent and confident.

  • FC

    Fractal C.

    1 6 2018 21:45

    3       6

    These are tough market given absence of volatility. However, there are a very few legends in money management world who could manage assets with leverage and WITHOUT diversification - example, Soros and Druckenmiller. These are the guys who also possess enormous flexibility of mind. John mentioned his preference for low portfolio volatility in the interview and that, I believe is a killer for good returns. Generally an abstract and dry interview though.

    • RM

      Robert M.

      2 6 2018 03:42

      1       0

      Low vol is one of the strongest factors for stock returns per Haugen.

    • FC

      Fractal C.

      2 6 2018 13:23

      0       0

      Don’t know who Haugen is. In Alchemy if Finance, Soros has chronicled his trades and returns and if you analyze those, you will realize the volatility in his portfolio. And it also makes sense as you are betting big on high conviction ideas and are willing to be proven wrong. These guys used to do exactly the opposite thing if diversification. Low volatility happens when your size is small and you are infinitely diversified. In fact, John himself is alluding to this point without linking this point directly to low returns of his.

  • BB

    Bill B.

    1 6 2018 20:33

    6       0

    John didn't get into machine learning. If all the topics discussed here are the fire, machine learning is like gasoline thrown on the fire. Andrew Ng VP & Chief Scientist of Baidu, calls machine learning the new electricity.

  • CB

    Conor B.

    1 6 2018 19:05

    16       0

    Clearly smart and thoughtful guy although another in the list of RV contributors who have been forced into family office because of poor returns (Hendry, Bass etc). That seems to be glossed over in most of these presentations (w/ exception of Grant and Hendry's St Barth's interview... i guess one shouldn't too bad for these guys)

  • SS

    Sam S.

    1 6 2018 15:18

    23       0

    We may look back and wish we had bet more on these shifts which we can't deny are happening. Just look at India. It can happen really fast. I would like to hear Mr. Burbank provide trade ideas on these shifts with the understanding it's not investment advise. One thing I "think" I've learned, when everyone is against something or the news is negative on a change, it's most likely going to happen and the big boys are pilling in while the rest of us run for the hills. Count me in. Thank you RV, Mr. Green and Mr. Burbank.

    • WE

      William E.

      2 6 2018 15:03

      0       0

      Perhaps I didn't hear him correctly (admit I was cleaning kitchen) but I thought I heard him say it's hard if not almost impossible for individual investor to get properly positioned. Yes, maybe Ethereum but not a lot of possibilities. But again, I might have this wrong.

  • AA

    Ali A.

    1 6 2018 15:09

    8       1

    There will definitely be opportunity in John's new focus area, but what isnt addressed is that being at the "cutting edge" of technology is a totally different risk profile

  • IA

    Ibrahim A.

    1 6 2018 14:31

    4       0

    I had the pleasure of meeting John in intimate settings in mid 2013 and 2014. In 2013 he was making the case for being long gold. In 2014 he was negative EM, bullish Chinese Internet and very bullish CF industries - a commodity play. He was bullish Saudi both times.

    • DR

      David R.

      1 6 2018 20:03

      2       2

      So yikes, that was bad, bad, bad, bad and bad.

    • DR

      David R.

      1 6 2018 20:05

      10       9

      Cryptos going to zero, except for the coming government ones. Rest will be banned by gov't, blaming tax evasion, terrorism financing, money laundering, whatever. It's how gov't works. No way gov't goes quietly into the night.

    • DS

      David S.

      2 6 2018 21:12

      7       0

      David R. - I agree that major governments will do their best to eliminate digital currencies competition. Only the biggest will have the resources to win the battle. There will always be many parts of the world where Crypto-currencies will be useful. The existential factor then will be the cost of mining and administration of Crypto-currencies. DLS

  • WH

    W H.

    1 6 2018 14:01

    11       0

    Great stuff. One main takeaway is value without tech is a dead end. Options created by potential tech adoption ARE the value, not potential mean reversion for profit margins for widget making.

  • IO

    Igor O.

    1 6 2018 12:47

    5       5

    John completely avoided talking about particular crypto he likes.

    His Platforms shift concept hard to argue on five-ten year scale. They are coming:
    Self driving cars
    AI/genome based healthcare
    Blockchain in financial sector.

    Any more examples?
    What about smart contract powered government?.. I am ready. Might take a while though.

  • GS

    George S.

    1 6 2018 11:52

    3       0

    One for the books!

  • Nv

    Nick v.

    1 6 2018 11:35

    9       2

    Cobalt comments are incorrect.
    The cost of cobalt is material in an EV.
    The cost of Lithium is immaterial