Value investor Oaktree Capital Management’s co-founder and co-chairman Howard Marks continues to improve his views on cryptocurrencies after he started getting warmer a couple of years back.

In his recent video interview with The Korea Economic Daily, Marks said he was “very dismissive” of Bitcoin in 2017 when he first came out of it because “it doesn’t have intrinsic value,” but it has changed now. Marks said,

“There are a lot of things that people want and value highly which have no intrinsic value. The supply is fixed by the software … so it can’t expand much, unlike the dollar which can be printed in infinite amounts. And the demand is growing because more people are interested in it.”

This year, the legendary investor revealed that his son has invested in Bitcoin on behalf of the family.

His same favorable sentiments apply to electric car maker Tesla, whose P/E ratio has exceeded 1,000. Tesla CEO Elon Musk is a Bitcoin supporter, and earlier this year, the company invested $1.5 billion in Bitcoin.

Marks likened those betting against Tesla to gambling, saying, “Tesla is a great example of a company where nobody knows anything about the future.”

Oaktree Capital is one of the largest distressed debt investors in the world and manages $148 billion in assets as of the end of 2020.

In the interview, Marks further talked about how retail investors have been leaning toward passive investment vehicles like equity-traded funds (ETFs), which would eventually push high-valued stocks like tech giants to overvaluation levels that cannot be sustained.

“Certainly the trend toward passive investing, like through ETFs, has been very strong … If the ETFs are receiving a disproportionate amount of the cash flow into the market, then the stocks that they feature will do better than the market as long as it continues.”

ETFs have outperformed because they got more demand which “can’t go on forever.” According to him, individual investors need to invest through actively managed mutual funds with a long track record.

But the fact that stock prices have recovered substantially, running far ahead of the economy, which had begun its recovery only now, does not mean they are in a period of risk because “we have a big economic recovery ahead of us.”

“The principle is that even the value investors should be open to companies that are fast growing and have a future, and are high priced based on the numbers.”

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