When family offices visit the office of SkyBridge founder Anthony Scaramucci, he finds that they’re often too shortsighted when it comes to investing.
“It’s like, ‘We have an ATM machine in the lobby, and we're going to be short-term on everything,' ” Scaramucci said.
As for trends, he tells them to invest in three areas: artificial intelligence, cryptocurrencies and Asia. "That includes publicly traded AI companies but lots of private AI," Scaramucci told Crain Currency. "You're going to be in crypto, which includes bitcoin and ethereum but also real-world asset tokens and blockchain and all those applications. And Asia right now is a turnoff to everybody because of the fight between China and the U.S. But to write off 2.5 billion people is a huge mistake."
Those three topics — as well as private credit — dominated the agenda at the annual SALT iConnections conference, which was founded by Scaramucci in New York City.
In an onstage discussion with Scaramucci, Galaxy Investment Partners CEO Mike Novogratz was equally bullish on crypto, predicting that bitcoin would hit $73,000 by the end of this year — and then "probably $100,000." Novogratz added that "this trend isn't going away," saying that as millennials and Gen Z inherit money from their baby boomer parents, they'll be much more inclined to buy crypto.
Zoe Cruz, founder and CEO of Menai Financial, was even more optimistic, saying on a panel discussing the future of digital assets that crypto allows investors to diversify their asset portfolio with an enormous upside. And Cruz advised young crypto enthusiasts who want to change the world that they should work with regulators.
"I would love our industry to have discussions with regulators to enable a positive revolution," she said. "There are three principles on which regulators will never compromise: market manipulation, investor protection and KYC [know your customer]. If you accept that, you accept that the [crypto] revolution will come with centralized tie-ins."
On another panel, several high-profile investors discussed the merits of private credit, even as interest rates have stayed high for longer. Michael Arougheti, the co-founder and CEO of $428 billion Ares Management, expects the private credit market to double in the next five years.
“I would say that it’s likely to double again — and again, every time we say that, the headline pops up when we say that it’s going to double. But that’s just basic math, right?” Arougheti said, pointing to a 10-year compound annual growth rate for the private credit markets of about 15%.
Ares is spending a lot of time on distressed opportunities in commercial real estate despite headlines calling it last year's narrative, Arougheti said. "If you look at regional-bank balance sheets, 45% are made to commercial real estate loans," he said. "Those loans will need to be restructured to the reality of new rates."
Daniel Loeb, the CEO of Third Point, said half of his firm's assets have been distressed since 2009. Third Point's investments in three companies — Pacific Gas & Electric, AIG and UBS — have been through some reorganization. "It's an exciting time," Loeb said. "I love credit as an investment strategy. It's relatively opaque and less liquid, but if you have the right kind of capital and skill set, it's a great area to be in."
Loeb also predicted that alternative credit strategies will continue to grow.
As for AI, investor and former NBA star Carmelo Anthony admitted that he passed on a number of early AI opportunities because he didn't understand the technology. "I was like: 'What the hell is this? I'm not talking to my robot.' " But now he has a number of investments in the space.
Anthony's prediction for the next big sports for spectators and investors? Pickleball and cricket.
And he offered some timeless advice, no matter how much the technology changes: Meet the team, build relationships: "What kind of impact can I bring to this company?" he asks himself.
And don't burn bridges. "You never know when you're going to have to come back and cross that bridge."