Sridhar Vembu, the creator of Zoho, reaffirms his long-standing preference for gold over cryptocurrencies
Zoho Founder Rejects Crypto
According to him, gold outperforms T-bills and even most equities in the long run, serving as protection against currency depreciation. Vembu‘s position is in opposition to those of tech executives who support digital assets.
Former CEO and Zoho creator Sridhar Vembu has reiterated his long-held belief that gold is a safe hedge against cryptocurrencies. Vembu said that he “is not interested in crypto” in a recent post on X. The inventor of Zoho went on to say that he prefers gold because of its historical stability and capacity to withstand financial upheavals.
Additionally, he placed himself apart from a number of tech titans who have said that digital assets are the way of the future for finance.
It has been more than 25 years since I first joined the “gold as insurance against currency debasement” group. In the long run, gold has maintained its buying power in relation to commodities such as petroleum and has been able to compete with wide stock market indices. In the article, Sridhar Vembu states, “No, I am not interested in crypto.”
Gold Outperforms T-Bills
In light of worries about inflation, currency volatility, and geopolitical tensions, Vembu‘s remarks coincide with a renewed interest in gold among international investors. In the meanwhile, despite institutional investment and legislative advancements in some areas, the cryptocurrency market has remained unstable.
Vembu included images of passages from a post by author and investor Lyn Alden in his post. The article reads: “Professor Aswath Damodaran keeps track of the performance of different asset classes dating back to 1928. By the end of 2023, you would have $2,249 if you had invested $100 in T-bills beginning in 1928 and compounded them through 2023. You would have made $7,278 out of $100 if you had invested in longer term T-bonds and took on greater volatility risk.
At first glance, it seems fantastic, but it is all because of the depreciation of the dollar. You would have made $10,042 if you had only invested $100 in gold. Between 1928 and 2023, the amount of dollars in the US wide money supply grew by more than 400 times.
Most Stocks Underperform Gold
Hendrik Bessembinder, a professor, put together some of the most extensive records on this subject.
More than half of the 26,000 equities he identified between 1926 and 2019 did not beat T-bills, according to his U.S. analysis. However, the situation is worse than that. Only 4% of all equities were responsible for almost all stock market gains that exceeded T-bills; the other 96% of stocks as a whole equaled T-bills. Furthermore, just 86 stocks were responsible for half of all excess gains.
To put it another way, historically, most U.S. stocks underperformed T-bills, followed by a large minority of companies that produced relatively modest excess returns over T-bills, and finally, a tiny percentage of gigantic outperformers that accounted for almost all stock market excess returns over T-bills. As seen in the preceding section, T-bills did not perform as well as gold. Therefore, the great majority of equities were unable to outperform a piece of yellow metal in terms of buying power.
And that applies to the US, whose equities enjoyed the strongest returns during the previous century. The figures are significantly worse for stocks that are not in the United States. Over the course of three decades, Bessembinder examined 64,000 stocks from throughout the globe for his worldwide analysis and discovered a remarkable concentration of returns.