clutch

The whole basis of this thread is flawed. You are supposing that there will be long term winners in this space to brag about. I disagree. Pot is an agricultural product that is easily grown by anyone (even by yourself in your own garden). That is like saying you are going to get rich investing in tomatoes. Unless the government steps in and creates an artificial monopoly (i.e. licensing only certain companies to grow and/or sell it), then I don't see what competitive advantage any one grower or seller has over any other. I'm sure there will be name brands with proprietary strains and pretty packaging, but that is a long way off and impossible to predict. I think the safest long term bet to profit from pot would be Altria, probably not a bad idea actually. I don't think that's what he's saying at all. Crypto was the #1 performing asset class of 2017, but Canadian marijuana stocks were probably number 2, with many/most up hundreds of percent. As just one example, TSX:WEED is a 10 bagger in the last 18 months or so. Of course, its market cap was unreasonably large before that 10X, and at $7 billion is absurd, its clearly a bubble. But there are people who are absolutely convinced that everyone is going to start using marijuana recreationally, and that these companies are the next MO because of it. Maybe there will be a couple of winners out of this (probably) but I don't see a way to find them in advance, and the valuations assume that all the companies will be big winners, but that's absurd. Very much like crypto, actually. Maybe one or two coins will work out as long term stores of value, but the world doesn't need hundreds of crypto-currencies, so most will flame out. Plus, the companies changing from ice-tea (for example) to crypto probably don't have a durable competitive advantage in crypto currency, so the fact their stocks are going up on a name change is absurd. Basically, there are two big bubbles right now, and we have a thread with people discussing their big gains in one. Surprising that no one has big gains on the other to brag about. I was the only one who admitted owning any of them, and I only had it as a merger arb position. The two segments don't seem that different to me in bubblyness, so I'd be surprised if we had buyers of one but not the other on the forum. Fair enough I guess. I've been out of the loop on this and not following it. I do think long term there is something there with crypto, something completely new on a par with the internet and weed is an agricultural product on a par with avocados or tomatoes. Thinking out loud, maybe coffee is a better analogy since there are many different strains yet they are all similar (unlike beer which varies greatly as many different ingredients and processes are used to make it). So maybe there will be a Starbucks of weed someday. I don't know. But to try to equate pot to crypto is like trying to equate coffee to the internet. One is plant product that you either enjoy or not and the other is a fundamental technology which will change the lives of every human on Earth. To a bear, everything expensive looks like a bubble.

Though frankly you could also describe Berkshire that way. Hence the fallacy of dismissing the value of any entity based on it's physical make-up.

What happens if one HQ decides one thing, and the other decides something else? Will the AMZN empire split in two? Will there be an Eastern AMZN and a Western AMZN? What happens if one of them is overrun? I do wonder if they ever consider splitting retail and AWS.

So then gold isn't a store of value?

To crypto bulls, you probably look like this: (i'm joking here; take it lightly)

I'm a believer that switch to autonomous / electric cars will make certain mechanical cars appreciate. Not only that, companies like Porsche and Ferrari will still make mechanical cars, even to their purest forms (e.g., no power steering or stability control as long as within legal boundaries) in the future, and market these cars as ultimate luxury items. In fact, we are already seeing this in the used car market. The same analog can be found in the watch making industry - the big come back of luxury mechanical watch markets after the adoption of quartz watches. If you have rare sports cars with low mileage and meticulous maintenance record, I believe you will do very well over time. The problem is that you won't be able to enjoy them as much if you care about their appreciating value. :)

Considering they went down for scheduled maintenance and haven't come back up, I'm assuming that they haven't been hacked (you don't usually schedule being hacked) and are just having unexpected technical difficulties with their upgrades. But as I've said a bunch of times by now: Don't leave any balance in an exchange. If you must use an exchange, make a deposit, make a trade, make a withdrawal. The whole process should take about 10-30min depending on the coins involved. Get in then get back out as quickly as you can. https://www.google.ca/amp/s/blog.kraken.com/post/1449/kraken-returns-with-free-trading/amp/

Is that really a typical hypothesis? Or is a typical hypothesis something like: "Company X has competitive advantage Y, which should lead to measureable good operating outcome Z," e.g., circa 1980 a hypothesis might be "Walmart has strong local economies of scale, which should lead to increasing net margins and returns on capital far in excess of its cost capital as it expands into geographically adjacent markets." Or the typical value-investor regression-to-the-mean hypothesis: "Company X is in Industry Y. Companies in Industry Y typically earn Z margins. Company X has been earning .5(Z) margins because of Fixable Issue 1. Fixable Issue 1 will be fixed, leading Company X's margins to increase to Z." The difficulty is that these are statements about the future, but all we have is data about the past, so we can't test it today. Perhaps not typical, but an essential hypothesis for value investing IMO. You bring another good point though. Even if the hypothesis is testable, you need time to test it, and you have to commit to your hypothesis before you can test them.

Do you have any thoughts on the energy consumption and transaction speed (7-10 per second) that are often cited as reasons that blockchain will not be able to scale? More specifically, is it possible for blockchain to achieve mass adoption for various use cases with those two hindrances core to the protocol? Thanks If you think about it, power required and speed (especially the latter) are limitations to almost any technological advancement. But we figure out improvements in both software and hardware to make technologies viable. Aircrafts, EV, computer graphics, machine learning, ...

The problem in this comparison is that many of the investment hypotheses / methods can not be validated or disapproved in the same manner that scientific falsification can. Think of a typical hypothesis we make: "Company X has intrinsic value of Y", so when Y is higher than price P, we buy the company. How can you ever prove or disapprove this hypothesis? We can never measure and confirm the intrinsic value in reality. All we can "measure" is the price people pay for the company, which by the value investor's definition is not equal to the intrinsic value. Even if the price has converged to your estimated intrinsic value, that does not prove that your intrinsic value was right! In contrast, scientific hypotheses involve physical quantities that are measurable, e.g., "Blood cells will rise by X amount if condition Y is applied". We can measure X before and after the application of Y, to test whether our hypothesis is true or false. In investing, you can go out to disapprove your hypotheses, but you wouldn't know what it takes or how much evidence you'd need to disapprove them, and in the end you have to make conclusions based on some subjective decisions anyways. So, I don't think it fits well with the method of scientific falsification.

From the title, I thought Munger bought into the weed mania. ;D

I think there is one limitation of cryptocurrecies that strikes at the core of its value proposition. The primary strength is its decentralization and its independence from any state or organization. However, it requires a global computer network, i.e., the Internet, for it to work. The problem is that the infrastructure that provides the Internet is centralized and owned by states / corporations. So the bedrock on which the blockchain network lives on is not decentralized and independent. Also, if you are cut off from the network, you cannot participate in this. Just think of the citizens of North Korea - they cannot participate in any Bitcoin transactions because they cannot even access the public Internet. What happens if a totalitarian state abolishes the infrastructure for the Internet because they see cryptocurrencies as their biggest threat? Maybe not even a single state, but the world as a whole decides for whatever reason that the Internet needs to be abolished? Or another world-war destroys all the digital infrastructures? I guess such conditions are so dire that considerations of the value of cryptocurrencies are moot... But don't these things supposed to be a store of value because these events could occur? That is also one positive for gold. Even if we go back to fighting with rocks and sticks, gold could still have value.

Are you just talking about the complexity and reliance that occur during transactions? Either way, think of all the processes required in mining, processing, selling, regulating, trading, and storing gold (in a relatively safe environment). Think of all the complexities and third parties involved in those processes.

Both. Your private key is made up of numbers and letters and your public address is also made up of different numbers and letters. But they can both be made into a QR code which can be scanned by a smartphone camera. Any string of numbers and letters can be made into a QR code, that includes website addresses, bitcoin addresses, or anything else. After buying on Coinbase go to your account and select "send", you will fill out a form which needs the amount to send and the address to send to. Fill in the amount to send, then go to jaxx and find your receive address, copy it, then paste it into the form on coinbase. Then hit the send button. It is pretty easy. Jaxx is an application that runs on your computer or phone, but it doesn't send any info off of your device. But yes if someone got control of your device they could steal your bitcoin from you. This is the same if you kept your private key on your hard drive, if someone hacked your computer they could steal your bitcoin. If you have a substantial amount and you are afraid of someone hacking your device you don't have to keep the Jaxx software on your device. The best way to learn this I think is to actually do it. My recommendation would be to take $100 to experiment with for educational purposes. 1) Set up a Coinbase account and buy $100 worth of Bitcoin. 2) Download the Jaxx app to your phone. 3) Run the Jaxx app and set up a new wallet. IMPORTANT: Write down the 12 word backup phrase that you are given and save it somewhere secure. 4) Once you have your Bitcoin available in Coinbase send it to your Jaxx wallet. a) In Coinbase select "Send". b) Put in the amount to send (the max amount). c) In Jaxx copy the receive address. d) in Coinbase paste your jaxx receive address in the address to send to. And hit the send button. e) Wait until your Bitcoin shows up in Jaxx. This could be as quick as 2 min or as long as an hour. But will probably be within 10 min. 5) Now that you have Bitcoin in your private Jaxx wallet. You can remove the Jaxx app from your phone. Just uninstall the app completely. It is now gone and no one can get your Bitcoin by hacking into your phone. The only way anyone could steal your Bitcoin from you now would be to somehow get a hold of your 12 word backup phrase which you wrote down when setting up Jaxx. 6) Now to restore your wallet you simply re-install Jaxx and instead of creating a new wallet select restore wallet the first time you run it. It will ask you for your backup phrase. Type it in and your wallet containing your Bitcoins will be available for you to use. You can do this to check the balance or to make a transaction. Then you can uninstall Jaxx again to have your wallet exist nowhere but on paper again. rkbabang, are you just simplifying your explanation here about what is bitcoin and how its transactions work? My understanding is that you never download a bitcoin. Bitcoins (more precisely, their values) are not stored on any specific device, but they "inhere" on transaction records on the blockchain network. By creating your own wallet and "sending bitcoins" to there, you are recording an additional transaction to your own address (this address is still part of the network). To make further transactions, you would need to know and use the private key that is generated by the wallet. And this private key is what gets stored in your wallet. And to answer emily's question of why you cannot simply download "bitcoins" - Because it is simply not a download of an information artifact, but software like jaxx interacts with the blockchain to participate in the transaction recording (ledger) and manages the key generation / storage. You could write software yourself that does this, but obviously not straightforward like storing a file.

I thought about this issue a bit more and identified perhaps an interesting example to think about. Compare a digital watch to a mechanical watch. As far as functionalities and utilities go, a digital watch is much more valuable than a mechanical watch. Digital watches are much more accurate, easy to manufacture, less likely to break, no need to maintain, more energy efficient, etc., compared to mechanical watches. Yet, mechanical watches in general demand much higher prices, and some of them are even considered as a store of value (e.g., Paul Newman's Daytona sold for $17.8m last year). You may say then, it is the rarity of some mechanical watches (especially the Paul Newman watch) that make them a good store of value. Those that are numbered and limited are good examples of this case. However, we need to be clear about this notion of rarity. Suppose a Chinese manfacturer makes exact replicas of the Paul Newman watch, including its serial number, and even its wear and tear. They make millions of them. From the pure materialst's point of view, the original watch is no longer rare. Unless of course, Rolex and the owner of the original watch uses their copyright and intellectual property laws to claim that only the original watch is "the Paul Newman watch", hence making it rare. Such acts are the social acts that constitute social constructs such as "a store of value" as I described in the original post. And the legal system and societal context that allow Rolex to protect the value of the original watch are all results of social acts. Forget about the IP aspect for now and just focus on the objects on hand. Assume that we have many replicas but we can still identify the original watch. In this scenario, regardless of IP laws, people would still value the original watch much more than replicas. Why is it so? It is because of the history behind this watch - the fact that it was owned and worn by Paul Newman, the marketing strategy employed by Rolex, our obsession over such luxury / unique items, etc. Without this history - even if the watch had all the best intrinsic properties that a watch could have - the watch would not have the same function as a store of value. (In some sense, it is rare because of its history.) I believe this theory also applies to gold. Or bitcoin. Surely, gold has a certain set of nice intrinsic properties, which led to social acts that made it being accepted as a store of value. But again, those properties themselves are not necessary nor sufficient conditions. It is the history of gold that makes gold accepted as a store of value in our society. Extending this theory, one could argue that it is the history of bitcoin - the invention of a unique cryptography technology by Satoshi Nakamoto, its resonance with decentralization / libertarian values, our growing skepticism about central banking (especially after 2008), etc. - that is transforming bitcoin as a store of value. Sure, its intrinsic properties are, I think, requirements for these stories to be true / accepted by people, but IMO its unique history itself plays a much more crucial factor. And, that is also the reason why bitcoin2 may not become accepted as a store of value, even its intrinsic properties may be better than bitcoin, much like how some rare earth metal other than gold, with better intrinsic properties, may not become a better store of value in our society.

I agree with this.

A horse was a bad example. https://en.wikipedia.org/wiki/Store_of_value#Other_Stores_of_Value As for your second question - why aren't other rocks (e.g., granite) used as a store of value?

This post is not about valuation of cryptocurrencies nor whether they are investable assets or not. My intention is to define what cryptocurrencies are, not by explaining the underlying technologies, but by categorizing its nature based on a philosophical / ontological perspective. My hope is that this will clarify some of the misunderstandings and how they get compared to things like fiat money, gold, etc. First thing we have to discuss is how social reality is constructed. I’m going to use the framework mainly established by John Searle (for details, see his work “The Construction of Social Reality”). Searle argues two categories of reality - first, we have observer-independent reality, such as molecules, mountains, gold, etc. that exists independent of our perception or interpretation, and hence whether humans exist or not. Then there is observer-relative reality, such as baseball games, money, marriage, etc, which only exist because we exist, i.e., they are social reality constructed by us. Searle then explains how such social reality is created, essentially originating from observer-independent reality. He proposes a logical formula, “X counts as Y in C”, that is some entity X functions as Y in the context C. He argues that this formula can be used recursively to identify the “root” material entities that any social construct is based on. For example, “a paper with some specific ink pattern counts as money in a particular country’s economic system”. Or, “a lump of gold counts as a store of value in human societies”. Again, Searle argues that all forms of social reality are constructed out of some material entities. In this sense, he’s a devout naturalist. Now, Barry Smith (a famous ontologist) rebuts Searle’s argument. He argues that many interesting social constructs are “free-standing Y terms”, which do not specifically dependent on material entities. A prime example of this is money. Money nowadays is mostly in the form of computerized bank accounts, and so Searle would have to argue that some blips in a bank’s database count as money. However, you cannot go to stores and buy goods with these blips. Blips are simply representation of money, and you would need to find another form of bearer that is accepted by the store. In this sense, money is an entity that is generically dependent on some bearer (paper bills, commodities, blips in a bank’s database, etc.), and can be carried by other forms in different times. Money does not dependent on a specific material entity for it to exist. In fact, in some ancient villages money may have existed as speech or memory in people's minds, so they do not even have to inhere on physical things. This is true to many financial concepts such as debts, contracts, price, or a store of value. So let’s go back to the statement “a lump of gold counts as a store of value in human societies”. Following the Smith’s theory, the notion “store of value” is a generically dependent entity that can be carried by any particular X entity (including non-physical). And we know this is true - gold, paintings, wines, and horses could all be used as a store of value. What should be clear from this is that gold specifically has no special intrinsic properties that warrant it to be a store of value. The dependency is only one way. The only reason why gold is a bearer of a store of value is because of our history of social acts that led up to gold being accepted as a store of value, nothing more. Same argument can be made with all forms of money and other social constructs. You may ask then, but gold has some intrinsic properties that are valued by our society, e.g., its shininess or ductility or conductivity, and these properties are what make gold function as a store of value. Certainly, those factors make gold desirable, but those properties are neither necessary nor sufficient conditions for gold being a store of value. Many other things with much more usefulness than gold do not count as a store of value; and, some things that seemingly have no utility such as baseball cards can be a store of value. Again, the store of value is a socially constructed notion that is free-standing and only generically (and often temporarily) dependent on some bearer entity. So finally, what are cryptocurrencies? From a pure brute facts standpoint, they are just blips existing on a network of computers. But can they serve as money or a store of value? Based on the ontological argument above, there is nothing that would prevent them from becoming one. From this perspective, there is no difference between a cryptocurrency and gold / money in terms of its potential to serve as a store of value. If a series of our social acts constitute enough confidence / agreement among us, it could eventually become a stable store of value. Now I have no idea whether cryptocurrencies will become one, nor what are the chances, but I hope I made a convincing case that it is a fallacy to dismiss them because they do not have the intrinsic properties of gold or fiat money, nor because they are not based on some physical material entity.

DEST: ~20% loss on a large position Aimia preferreds: ~30% loss on a small position MND.TO: ~50% loss on a small position (haven't closed it yet) Learned a lot from these losses. In hindsight, all of them outside the circle of competence, but coat-tailing others.

How much has your life changed after a 12000% year? Congrats, that’s awesome. +1 on congrats. How did you convince yourself to continue to hold when it started reaching significant amounts?

Thank you for another reminder that I should probably switch to indexing. :)

7% for me. The good: AMZN, GOOG, BRK (continued holding), NVDA (continued holding until early this year) FFH (bought a lot at the bottom + sold the most recently) Good timing with some Canadian oil stocks The bad: Big blow ups... DEST, AIM.TO preferreds, MND.TO Small blow up... CBI Sold NVDA too soon (it doubled up since I sold them!) p.s. I've made some minor investments in crypto currencies that are up ~300% but didn't include them since I consider them as gambling. I took the original investment out and now just rolling the dice with the house money. ;D

+1 Value Investing: From Graham to Buffett and Beyond The Little Book That Builds Wealth

I don’t think it is an exaggeration to say that it was never possible before. In all the history of mankind up until Satashi published his white paper, any currency created by man would have been easily inflated and would require you to trust the issuer. So no, there is no precedent. Wait, wasn't money created out of "thin air"?