What important truth do very few people agree with you on?

That’s the way billionaire investor Peter Thiel opens his book Zero to One. 

“That’s his secret as a contrarian investor,” says Paradigm’s crypto expert Chris Campbell. 

“Contrarian investing is all about doing the opposite of ‘common sense,’” he says. 

“Instead of following the lemmings off a cliff, contrarian investors hunt for opportunities where everyone else is either losing their minds with pessimism or riding a delusional high of optimism.

“By spotting undervalued assets, contrarians make a killing while everyone else scoffs… 

• “Amazon in 1997: While traditional investors dismissed Amazon as ‘just an online bookstore,’ contrarians saw the potential. Today, Amazon runs the world

• Tesla in the early 2000s: When the crowd scoffed at the idea of electric cars, contrarians loaded up on Tesla stock, betting on Musk’s vision. Now, they're sitting on piles of cash

• Bitcoin in 2014: While everyone else was calling it a scam and a bubble, the smart contrarians bought in and laughed all the way to the bank. 

“Thiel is the ultimate contrarian investor,” Chris adds, “consistently betting big on ideas everyone else dismisses.

“In 2004, he put $500,000 into Facebook when social media was a joke and MySpace ruled. That bet paid off bigly, establishing Facebook as a tech titan.” 

PayPal, Palantir, SpaceX… We could go on and on citing Thiel’s contrarian-investing acumen, but you get the idea. 

“Thiel’s latest investment has raised a few eyebrows,” Chris notes. “Perhaps we should pay attention… 

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Your Rundown for Monday, May 20, 2024...

An Asymmetric Trade

“The general sentiment is that the SEC won't approve an Ethereum ETF this year, which has already led to negative sentiment, depressing Ethereum’s current price.” 

According to Polymarket — a platform that enables users to speculate on the potential outcomes of various real-world events by leveraging Ethereum’s blockchain — “we see a dismal 10% chance of an Ethereum ETF approval by the end of the month,” says Chris. 

Source: Polymarket
This year, Peter Thiel’s Founders Fund invested $45 million in Polymarket

“However, there’s reason to believe the market might be undervaluing the odds,” Chris says. 

“Speculation aside: The asymmetry comes from the fact that while the probabilities of the most favorable scenarios (ETF approval or favorable regulatory classification) is lower…

“The impact on ETH’s price to the upside under favorable circumstances would be dramatic.” 

On the other hand? “The likelihood of adverse scenarios (ETF denial) is higher…

“The impact would be relatively minimal because this is exactly what everyone expects. (Of course, Ethereum could plummet WAY down… but we’re talking probabilities here.)

“Moreover, if we see any worst-case scenarios — which pit the SEC against Ethereum holders — I’m not counting out a Gamestop-style ‘SEC vs. the People’ run. (However low the odds.) 

[At the time of writing, by the way, Ethereum is up 0.70% to $3,090]

“I know I’m not saying anything groundbreaking here,” says Chris. “And I’m also NOT saying go bet the farm on Ethereum.

“Just this: Contrarian investors focus on these scenarios for the highest potential returns.”

For his part, Thiel “[bets] on the inevitable clash between outdated regulations and unstoppable technological progress.

“When the dust settles,” Chris says, “Thiel will likely be on top, as usual.” 

Market Rundown for Monday, May 20, 2024

The S&P 500 is up 0.10% to 5,300. 

Oil is down 0.75% to $79.47 for a barrel of WTI. 

Gold is up 0.20% to $2,422.80 per ounce. 

And Bitcoin is up 1.25% to $67,000. 

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