A warm summer day back in 2011 I found myself facing a surprising challenge. I had just scored my first well paying full-time job and was witnessing, what appeared to me at the time, to be massive cashflows flowing into my bank account. In hindsight, the impression was greatly enhanced by a couple of years on less than poverty level wages. The question in my mind was “How do I responsibly manage this cashflow?” One thought was to pay off my flight school debt, but knowing the power of compound interest, I landed on another strategy – to grow my way out of it.

After settling on budgeting software and getting my financial house in order, the investing journey was to begin. Having little prior knowledge, but a clear realisation that I wanted to follow a value based approach, I started searching for solid sources and clear guidance. After some consideration, I landed on the Motley Fool’s Inside Value investment newsletter, headed up by Joe Magyer. I can proudly say I have been in the game long enough for this newsletter to have been delivered to me by postal mail the first year or two. After carefully selecting a low cost broker and the right investment account, I made my first purchase; Berkshire Hathaway (BRK.B) at $75.50 a pop.

Studying the masters of the value universe, this was the mindset that characterised my early investing days. My returns were noticed on the social investment platform Shareville, and at one point I was interviewed by the bank manager himself, Anders Skar of Nordnet.

One take-away from Inside Value was that value and growth are not diametrically opposed – it’s just a matter of finding growth at a reasonable price. Amazon, being a high growth company but at times significantly undervalued for that rate of growth, was one of the resulting investments. That turned out quite satisfactorily. My biggest regret regarding Amazon is having trimmed my position over time. This came from a psychological position of weakness, uneasy about the oversized weighting I kept on finding myself with. It didn’t occur to me that instead of selling, this was the business I should have invested more in. Interestingly, after Inside Value, Joe Magyer moved to Sydney, Australia and established Lakehouse Capital. There he managed two funds that delivered significant outperformance throughout his tenure.

The value approach served me well over several years. In addition to managing my value portfolio of primarily US equities, I established a venture portfolio and signed up for the IPO of Scatec Solar in 2014, realising a dream of owning a solar power plant by investing in Scatec rather than creating my own project. It went on a 7 year 1992% run before correcting to a more reasonable valuation. Much can be said on the art of knowing when to sell, but in my investment rationale I had already committed to a 15 year time horizon and decided to stay the course. Management seems to live and breathe environmental, social and financial sustainability, which are values I can stand by. With Scatec’s recent acquisition of SN Power and branching into hydro and wind, I’m happy to be a part of this company’s journey for the long haul. Tony Seba and RethinkX’s projections for renewable energy, as delivered in 2020, and the significant contributions Scatec is making in developing nations, has strengthened my commitment to staying the course.

Value Fund portfolio as of June 2020

Branching out over time as my sources multiplied and interests evolved, I could sense a technological transformation was underway. The pace of innovation was accelerating, and although scooping up Apple at a 12x P/E in January 2019 appealed to my value genes, I knew there was something greater happening. Although discovering Cathie Wood and ARK Invest quite early, what the coming disruption meant for the value universe I was so familiar with, did not entirely hit home until the pandemic struck in March of 2020. As legacy companies went into crisis, disruptive technology accelerated its adoption rates. It became abundantly clear; technological trends that were expected to play out over years, were happening in the span of weeks. As the sources of value abruptly shifted, my value portfolio had to change at the same pace.

Value Fund portfolio as of September 2020

I had been looking at Tesla back in 2013, and accurately predicted their breakout from the trading range they had been in since going public. But instead of researching it, I had dismissed it as a ridiculously overpriced auto manufacturer – in line with all of my ‘mentors’ from the value universe. The introduction of the Model 3 was a clear turning point, and as I started looking to buy a new car, I ended up choosing this model. One line of reasoning I entertained at the time was – if I am willing to pay so much for their product, my conviction in their survival is high, and if I believe they have the superior product, why am I not investing in them?

This led me to look deeper into the company. That is when I discovered the vast array of financially savvy, technology literate, engineering enthusiasts of the Tesla retail investor community. At the end of May 2019 my conviction was sufficiently high that I made my first purchase of Tesla stock , almost hitting the absolute low point at $188.50 (The stock has been split a couple of times since. $12.57 post-splits). As my confidence increased, I continued to accumulate shares. As the pandemic hit, legacy crumbled and innovation ruled, Tesla tanked and I liquidated most other holdings, including Berkshire Hathaway, and started aggressively buying Tesla. While having held a large number of companies in the portfolio over many years, Tesla is currently 100% of my primary ‘Value Fund’ portfolio. The annualised portfolio return 2011-2021 is at 34,83%.

Value Fund portfolio vs Oslo Børs Benchmark Index as of February 2021
Value Fund portfolio returns from inception through to end of year 2021.

As the world shut down to combat the Coronavirus, I saw the central banks responding to the crisis by aggressively increasing the monetary supply. An increasing money supply was a concern I had had for years. I had looked at gold for a year or two, guided by the risk parity principles of Ray Dalio. While interesting, the narrative was not compelling enough to ease my concerns. The amount of money printing during the pandemic though, reached mind boggling levels. Between March 2020 and March 2021, the total amount of US dollars in existence increased by 35%.

As mentioned, during my Tesla research I had come across Cathie Wood and ARK Invest. They embraced another asset that I had previously been quite weary of – bitcoin. Jeff Booth’s interview on Real Vision, and later podcast interview with Preston Pysh made me even more curious about the scenarios as to the future of money and the possibility of a deflationary world. Understanding that bitcoin was one risk mitigation strategy and a possible solution to perpetual money supply expansion proposed by like minded thought leaders, I dug into Saifedean Ammous’ book “The Bitcoin Standard”. Falling down the proverbial bitcoin rabbit hole, my conviction got to the level where I made a significant one-time investment in the Grayscale Bitcoin Trust in the summer of 2020. On the day of purchase, the bitcoin price ended at $9411.84 for the day.

On 11. August 2020, Michael Saylor blew up the Internet when he announced his company MicroStrategy had adopted bitcoin as their primary treasury reserve asset. In the following weeks he became a vocal proponent of bitcoin. With an aerospace engineering background from MIT and a keen understanding of the history of science, his reasoning and philosophy brought it home. In particular, I understood that while value investing was a good starting point, it becomes increasingly difficult as the value denominator is manipulated. Cathie Wood is quoted as saying that price-to-book becomes problematic when “book” falls apart. Although referring to the idea that disruptive innovation causes legacy companies’ productive assets to turn into stranded assets, it is also true for the financial system in its entirety. When money is debased, the value of book equity or future cashflows as valuation metrics become obsolete. As a thermodynamically sound monetary network, bitcoin represents a denominator that cannot be manipulated.

To my great satisfaction, Tesla and Elon Musk reached the same conclusion. On 8. February 2021 the two strongest technological drivers of our generation converged as Tesla bought roughly 48,000 bitcoin at $1.5 billion as a treasury reserve asset. Not only is Tesla as a company plugging into the bitcoin monetary network, but it is also hedging its risk to its underlying fiat currency cashflows.

The same month, my broker decided to discontinue support for the Grayscale Bitcoin Trust. I inquired with Norway’s largest financial services group on a transfer, but they did not want to touch it. Banks are not only masters of compliance (or at least its paper exercise), they are also hostage to it. I sold my Grayscale holding after a 275% runup in eight months.

As for my bitcoin position, my conviction increased significantly the following months after my initial Grayscale investment, and in January 2021 I started carefully dollar cost averaging into bitcoin itself, bringing it up to about 20% of my net liquid assets by March 2021.

Liquid net worth asset growth and distribution as of March 2021, less minor index fund holdings and retirement accounts.