Standard Chartered Exchanges Tesla for Bitcoin in the MAG-7 Test: Higher Returns, Lower Volatility
The American big banks are concentrating on a basket of seven technology stocks to strategically participate in mega trends of the digital age. Currently, these “MAG-7” include Apple, Microsoft, Alphabet, Amazon, Meta, Nvidia, and Tesla. But Standard Chartered concludes that Bitcoin performs better than Tesla in nearly every aspect over the long term.
The investment bank Standard Chartered references a new study on the so-called MAG-7 and draws a conclusion for its clientele: Bitcoin is a better candidate for expected returns and stability of such a portfolio than Tesla. In the results, which are now presented on the investment bank’s homepage, analysts examined the benchmark of a diversified approach with these seven chosen companies.
The figures supporting the thesis remain exciting. The calculations assume a start with an average of 1,000 US dollars from December 2016 to May 2023. The individual investment in Tesla then achieves an annual profit (IRR) of 25 percent, with volatility rated at 56 percent. If investors, on the other hand, believe in Bitcoin, they can realize an IRR of 26 percent with lower volatility of 44 percent.
According to the methodology of Standard Chartered, the MAG-7 without Bitcoin would have resulted in an IRR of 24 percent with volatility of only 26 percent. By replacing Tesla with Bitcoin, the IRR could have increased from 24 percent to 28 percent in the putatively ideal MAG-7 while slightly raising volatility to 29 percent. Still, customers of Standard Chartered can take note of the fact that out of the MAG-7, Bitcoin is the only actively traded currency, while the stocks listed on the US stock exchanges in the group of seven are subject to quarterly performance reports and evaluations.
Bitcoin’s Image in a Correct Light
As such, Standard Chartered wants to shed good light on Bitcoin; it also belongs to the banks dealing with Bitcoin 2023 as a primary alternative to fiat currencies. The topic of the “halving” scheduled for the spring of 2024 was recently highlighted in this context, and it is expected to result in new cycles of upward potential for Bitcoin. In the background, major firms such as BlackRock (NYSE: BLK) are organizing to offer Bitcoin Exchange Traded Funds (BTC ETFs) to attract new capital investments to the cryptocurrency.
Simultaneously, new regulations on Bitcoin apply in the European Union, potentially influencing market scale and public perception. In September, French manager Amundi, Europe’s largest asset manager, predicted that Bitcoin and MAG-7 could become internationally comparable benchmarks in investment planning.
These moves indicate that Bitcoin, far beyond its roots ten years ago, is increasingly recognized as an economic parameter. Standard Chartered’s decision, for example, reflects in abstract models how Bitcoin could fit into classic investment portfolios with impressive returns without adding excessive risks.
In early 2023, Tesla CEO Elon Musk did not alter the pro-Tesla stance again. At that time, Musk had declared everything in order concerning the tension induced, potentially seeing Bitcoin in classical oil dependencies.
At Standard Chartered, critics might emphasize that such retrospective analysis is only suitable for a slice of insights. Bitcoin has long distanced itself from Tesla with its advantages: This was reason enough for the investment bank to add Bitcoin as a strategic decision to diverging from its acceptance for business models.
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