ValueArb

the optimistic take should be that it destroys jobs. Every step of human progress has always involved eliminating or reducing labor required to make (or grow) things.

I heard that another factor was that the ETFs make it easy to short BTC now? So I wonder if BTC in the future will be the tail of the ETF dog, being whipped up and down by inflows/inflows/shorting as ETFs grow to bigger proportions of the BTC universe.

This is absolutely true about the spreads. They are a benefit to the patient, and a tax on the impatient. Yesterday I picked up 2,860 shares bottom fishing a few hundreds over the bid on a 33 cent/39 cent spread, so almost $1,000 of stock for a $9.62 commission (interactive brokers), so about 1%. On monday I picked up 40,000 shares using same technique on a 3.5 cent/4.5 cent spread, so again about $1,400 in stock for $12.80 in commissions, just under 1%. 1% sounds like a lot for a transaction cost, and it normally is, but I have a lot of confidence the first stock is worth over 40 cents and second is worth around 5 cents. So in the first case I gave up about 5% of my gain of estimated value to commissions, and in second case about 2%. Double those for commissions on the way out when they get close to full value so commissions average a 5-10% "tax" on my gains when I'm buying penny stocks. When I'm buying stocks above $1, my commissions are a lot lower. I bought 5,000 shares of a $3 stock last week for $26, or 0.2%, so total in/out transaction cost of about 1/3 of 1%. So I get to keep 5-10% more of my gains, but the problem is it's a lot harder to find opportunities as profitable above $1 as below it. I'd much rather make a 20% profit and give up 5-10% to commissions leaving me with 18-19% profit than make a 15% profit with zero commission. This is all in my short term trading portfolio where I'm betting on catalysts within the next 3-6 months. If I was buying for long term holding, the commissions and the spreads matter even less. You forgot to also add that there are many more scams and plain terrible boards and managers who treat the company as their own private possession and sometimes, piggy bank. But I've never been able to figure out why the market maker hates me. I think I see it sometimes when bid is 100,000 shares at 33.31 cents and I put in a 10,000 share bid at 33.4 cents, and fairly quickly someone will buy 100 shares for $3.34, clearly trying to jack up my commission costs thinking my broker is going to charge me $5 just for that one transaction. It doesn't really bother me as IB just charges me 34 cents for that order, so while it's not very profitable for me its not costing me money. So while market makers apparently dislike me, I don't see how they can cheat me as long as I'm always using limit orders. I'd like to better understand what's going on behind the scenes to be sure about that though, what they do all day is pretty much a black box to me.

Capedge.com has transcripts for free if you don’t care about hearing their specific tone and invocation.

If you don't think there is software engineering in writing a language interpreter using object oriented constructs before object oriented languages were widely available, writing high speed graphics algorithms, or designing large volume data processing and indexing systems, I guess we are just going past each other. And algorithms always exist even before they are discovered, if you don't think scientific innovation involves conducting organized research into the most likely solutions you are mystifying the entire process.

Maybe Finney read Szabo's writings? You can call me either. I started my career working on visual programming languages and tools that were eventually sold to Microsoft. Then wrote Mac operating system extensions, cross platform file translation systems for desktop applications, and ended up implementing a key feature of Photoshop 3.0. Led teams that built award winning graphic design tools for creative professionals that required detailed project planning skills to ship and update six products yearly, on time, and with high quality. Founded an internet startup that became the early standard in measuring streaming audiences that required solving how to process huge amounts of data in real time. When a problem doesn't have an already known solution it often takes hours/days/even years of dedicated work to explore the branches of the tree of potential solutions to find one, or the best one. Never said you can plan how long creative inspiration will take.

I'm fine with the belief it took a genius to solve the Generals problem. As a software engineer I'm a big believer that big problems can be solved one piece at a time simply through the application of focus and hard work, and the more time you spend thinking and working on a domain set the more solutions become obvious. And looking at BTC almost everything falls under this except maybe the generals problem, which might have required some special inspiration that grinding at for months on end couldn't produce. But I was responding to the idea that Hal Finney couldn't have had that inspiration because he was just a run of the mill smart guy, and it could only have been solved by a "genius" like Nick Szabo. No one knows what insights another can have, no IQ test can solve for ability to have special inspiration. Einstein was regarded as mentally deficient until he was a teenager because he rarely spoke, and even as an adult his memory was so poor his teachers thought he was a dolt. Supposedly once he was desperately searching his pockets for his train ticket but the conductor told him it was okay and he could stop because the conductor recognized him, but Einstein said if I can't find my ticket I won't know where to get off the train. So if solving the Generals problem could only be done by a genius, then there is no reason to think Hal Finney wasn't that genius. If it could be done by brute focus on the problem for months on end, then there is no reason to think Hal Finney didn't do it.

You should be heavily levered, if you are 30 years from retirement and your entire portfolio is less than one half years income. You probably should not be heavily levered, if you are less than 20 years from retirement and your entire portfolio is multiples of your annual income.

I sold a few years ago when I got back to active investing. And I'm not "disappointed" with Berkshire or Buffett. Just pointing out that he has some innate biases that cost some returns. I still think he's as skilled as ever, but he's carrying such a heavy ball and chain on his returns with such an enormous portfolio that I don't expect him to beat the S&P 500 by more than a few points a year anymore. If Buffett was greedy and did everything to maximize his own net worth, he never would have given up his 25% profit share, never would have given any shares to charity, would have bought shares back aggressively in early 2000s, never traded shares in acquisitions like Gen Re, and would have sold bad subsidiaries or been quicker to shut them down. All combined he'd be working a much smaller portfolio generating significantly higher returns, and that smaller portfolio likely would have helped him avoid mistakes like Kraft and Precision Castparts. Greedy Buffett could have easily achieved a net worth somewhere north of $400B. But Buffett isn't greedy. He loves playing a game he's best in the world at, in a large part because it benefits his partners and shareholders equal to himself. He likes building a great company that puts ethical behavior above trying to squeeze every penny out of its workers and subsidiaries. And amassing the greatest net worth isn't his goal, just the tool he wants to use to provide the greatest possible benefits to worthy causes. But I'm greedy, so I bark at his ankles occasionally then run back to my couch.

I'm not going to argue with you if you are going to use the actual facts while I was reading off the wrong ticker. Thats just mean, man!

You've convinced me. The Byzantine Generals problem is the dividing line between Szabo and Finney's intellect, clearly Finney could not solve that problem because uh, you said so. Which makes you smarter than Finney and as smart as Szabo I guess.

And it was a disaster. Just another in a long line of examples that the intrinsic value of the investment matters far more than clever deal benefits.

This is just an appeal to authority argument. Sure Buffett is the greatest investor of all time, but he isn't perfect. If we can't use the tools he's taught us to critique his own decisions, then we are just cultists. One of his innate biases that have hurt Berkshire returns the last 40 years is that he prizes its size above its returns, he views it as his "painting" and has favorite positions he never sells. Coke is a great example . He bought at 16-18 PE, and over the next decade he made 10x his investment while it's PE grew to 45, well above any rational measure of intrinsic value, even discounted for tax costs. What did he do? He held, and his Coke returns have stunk ever since. It's reasonable to question whether he is repeating this mistake with Apple. The last 9 years revenues have grown 20%. Not per year, 20% total. You might say, that's okay, the Apple story is great profitability and great capital allocation growing earnings much faster than revenues. But earnings peaked two years ago, and TTM earnings are a third of the peak. You can only squeeze out so much more margin over time, esp. when the DOJ and EU are trying to legislate your business model. That enormous size traps him into positions like Coke and Apple and forces him to "hold forever". Its great he finally started doing share buybacks but he missed far better prices over the proceeding decades where he refused to do buybacks. Buybacks that would have made Berkshire a lot smaller, more nimble and created significantly higher returns today.

There are a huge number of liberals in Texas and a huge number of conservatives in California. I doubt there is any chance of states ever seceding again because there aren't any economic/religious interests as strong as slavery was in tying together the vast majority of the population of any single state or group of states. Also add in laws passed after the Civil War to make insurrections and secessions more difficult (14th amendment for one).

I'm not sure. To be honest after being out of the work force for 7 years I just put myself 100% into getting back into work as a developer. I do know it generated a good deal of income for me over the next few years from passive positions paying out distributions and being merged away. I was shell shocked from getting myself overleveraged and stopped tracking returns or doing any real investment research because I didn't want the distraction. I have painful memories of telling co-workers Apple was a buy at a 10 PE and so was Facebook after it fell out of favor right after its IPO but kept my account was in berkshire or index funds and didn't take my own advice

I started off living off a small portfolio, and as it grew so did my spending (bought an expensive house, had two kids, one who required expensive therapy when young). In 2007 I knew the housing market was set to crash but didn't have any way to short it and loved my house too much to sell. So instead I levered up (with 15 year mortgages) to take my equity out and put it into the stock market, not thinking it would crash along with real estate. So when my portfolio was down 50% at one point in 2008 I was in a ton of illiquid stocks with big spreads being forced to liquidate at well below IV to cover my monthly burn. I had no idea how long it would take to turn around and afraid I'd burn through all of it in a few years so I went back to work. My goal was always five positions, but always ended up around 10 because the best ideas are reallly illiquid, you can't always get as much as you want at good prices, and can't always get out as quickly as you like when the get close to IV. So I'd usually have 3-4 favorites that i would grow as I slowly got out of others.

Again, the appeal to a trusted third-party authority (God). Plus some bizarre claims about the mechanics of the crypto thing; from the complaint: Nooo.[1] Whatever. But for some reason they decided to go to a crypto auditing firm called Hacken, whose website tells me that they have done smart contract audits for crypto things including Binance. “Defendants touted the safety of INDXcoin and the KWE by telling investors that the coin and the exchange had undergone a rigorous audit.” How’d the audit go? Seems bad! And yet also good marketing: Anyway I have been quoting the Colorado complaint, these are just allegations, etc., but Coindesk reports on Eli Regalado’s magnificent response to the charges:

It didn't take a genius to come up with Bitcoin. Once you have world wide computer networks, open source software and cheap hosting it became a pretty obvious idea. That said there are a lot of really smart decisions that were made in its design, but again it didn't take a genius, it took someone dedicated to working on it full time and solving problems step by step.

My returns in 2000 to 2008 were 40% annualized. Returns in 2021 to 2022 were a bit over 20% a year. Returns last year were negative, I had lost around 3% on average over all accounts. My key to generating high returns out of net-nets was always to concentrate on a handful with strong catalysts (buyout, recapitalization, large returns of capital or liquidation). Last year I focused exclusively on bio-techs for the first time, and made the mistake of proritizing the ones with highest discount to NAV instead of focusing on shareholder base and board composition. I might have gotten unlucky since I'm so concentrated and maybe that would have worked out if I bought 30+ at a time, but thats probably an excuse. The reality is I relearned the lesson that its better to have a 15% discount and a board focused on shareholder value than a 30% discount and a board focused on keeping their jobs and finding new drugs.

Because Buffett's highest returns by far were when he focused on cigar butts.

I'm not sure this is true. I found a lot of cigar butts between 2000 and 2008, then stopped actively investing for more than a decade. Since I restarted in 2021 I have had no trouble finding lots of targets trading at well below net current assets. So clearly I missed almost the entire zero interest rate period, but it clearly didn't hold true at the end. And I'm skeptical that anyone was overpaying for cigar butts during when so many were happy to overpay for profitless tech companies. We know that "value" stocks (the academic definition) in general did poorly during the entire period, so it seems likely that cigar butts would have been equally out of favor. It would be an interesting back-test to count public net-nets by quarter going back to 2008 and see if there was a tendency to value them closer to their cash position that caused their numbers to decline greatly, as I might just anchored on thinking net-nets have always been unpopular so they will always be unpopular, which I have no real rational basis to assume.

Ouch! DWAC lost it's PIPE, does it have any chance of coming up with $850M to close its merger? If it doesn't close it's clearly only worth $10.20/share or whatever is left to be distributed from the trust account. If it closes the merger, it's then worth quite a bit less given Trump Media & Technology Group Corp. is a scam, not a real business. This seems like playing a rigged craps game in front of a steadily approaching bull-dozer.

Every single position I own is a cigar butt.

There are always puts to buy, but they ain't cheap.