TwoCitiesCapital

Would honestly hope against another TRS bet and just a large NCIB. TRS wass brilliant at the time, but at some point it's too much of a good thing. If the stock gets back down to sub-$400 and they need quick cash and to take out large value? Fine. But otherwise, the potential negative reflexivity is terrible. Having to post additional cash while the stock is cratering could be problematic. Also, could force them OUT of the position or prevent them from buying other opportunities at the time. This is in part why the short-swaps position was so detrimental to them. Every quarter they needed to liquidate stuff that was working to continue to pay out in TRS-shorts that weren't. Would hate to see that work in reverse on their own stock. Great at the time, but no need for financial engineering again. Don't get fancy with it, just buy back 5-10% of shares every year until the discount closes.

https://www.wsj.com/articles/defi-increasingly-popular-tool-for-laundering-money-study-finds-11643202002?mod=hp_minor_pos12 Article about money laundering in cyrpto in WSJ today. Fairly balanced in its view. Points out that money laundering is happening, and increased in 2021, but that it's a small portion of all transactions (0.05%). Also that the bulk of it is tied to just 5 services/dApps and the flows fairly easy to follow if Feds want to get involved. It appears my assertions of public blockchains being terrible for crime continues to be backed up. The Bitcoin/crypto is for criminals narrative needs to die now.

Got it. Think I just misunderstood the point.

I don't think you're wrong here. But it overlooks those who can't add like the 25% of the population that became unemployed during that period and retirees. They're just kind of f*cked. But if we're going to ignore them, then I think you're generally right. But you also need to also make adjustments for "real" returns. Still a miserably bad outcome to break even nominally after 7-10 years when that money is worth 20-30% less after that decade. Maybe we won't see 25% unemployment and a Great Depression, but is it possible that we dip 50-60% from here and don't sustainably recover until 2030? And is it possible at that point those nominal breakevens will be worth 30-40% less of inflation is actual trending higher than last decade? And is that acceptable in an environment where a massive chunk of society is living in retirement without the ability to add?

IIRC, Parsad gave board members a choice of higher fees or running ads. The vast majority of us voted in favor of ads.

I do think there is a period of time where buying the dip will be punished. But what I mean by that is dips of 10-30%. I think if you get a 'crash' in excess of 30%, it probably starts making sense to accumulate - even if you think its going lower or envisage a 1930s or 1970s period for stocks/bonds. It might take you more than a decade to recover from a 50-60% loss, but that recovery period is dramatically shorter if you miss the first 30% and continue to accumulate as it falls further. Same with bonds - higher rates means lower prices to some extent, but it also means every maturity/coupon is reinvesting at higher yields and at some point the losses stop as you approach maturity/par value. I think in most historical instances of rates rising, 10-year type bond ladders break even in on average by year 3-4. Point is, hold cash if you're concerned. But the whole point of holding cash is to eventually put it to work. Not have a permanent allocation to it. Even if you admit you can't call the bottom, having set triggers to begin buying after major dips makes sense. But I define major dips as being in excess of 30%.

Who knows if it would've happened anyways, but the pullback in markets gave us $465/share USD on Fairfax again. Hopefully it stays here a minute for the dividend to pay and for me to reinvest along with other cash I free up along the way.

Yes, buying back 10-20% below may not happen, but so far I've replaced ~75% of my position with shares that were below $500 USD. I think my average cost or so is $485-ish and I'm waiting to see if goes lower before adding more. So there is some semblance of a double dip on the same profits as intended and absolutely saw the quick 10% gain I envisaged by buying the shares to tender. If you had cash to put to work rebuying the stock BEFORE the cash from the tender hit your account, you could've been repurchasing shares as low as $460-480 AFTER tender results had been announced. I'm hoping we see those levels again post dividend to have even more cash to roll into cheap shares before earnings.

I don't necessarily disagree with you long term, but intermediate term shows stock market has historically risen AFTER rate hikes. We hiked for the first time in 2015 and then held. We hiked all throughout 2016/2017 and we're running down balance sheet. Ultimately the choppiness of 2018 resulted in a pause, but not new stimulus, and stocks went on to make highs again in 2019. I tend to agree that in 2019 the yield curve was signaling economic fragility and that the Fed had overdone it, but that was nearly 4 full years post the first rate hike. If the crash is occurring today, it's due to the nose bleed valuations and inflation and not some perceived 0.25% rate hike in March and 2 others thereafter. Will let you know. Have been short Apple via some puts for a minute and just rolled new ones a few weeks back to a $175 strike. Have others at a $160 strike from 2-3 months back. They all expire in April so we'll see where this goes.

Druckenmiller has expressed a confluence of rising USD, rising rates, and rising oil prices tends to signal earnings recessions.

The creation/redemption is done via institutional entities similar to an ETF. Not anyone can just create/redeem the coins. That being said, the coins circulate via Ethereum network and can be acquired via decentralized exchanges and sent between anonymous wallets. That being said, it's harder and harder to get anonymous wallets and cash into the crypto ecosystem without hitting KYC at the onramps. I'm sure it can be done, but wouldn't know how. Yes. Ethereum has become unusably expensive. Was $300 a week ago when I was forced into a transaction based on the contractual logic. They really made the system awful and gave their competition a foothold when they locked up like 80-90% of the supply for the move to Proof-of-stake while still requiring the remaining 10% act as the fuel for the entire system....and we're burning a portion of that 10% with every transaction. The arrangement absolutely favored token holders and scarcity over the usability of the eco system and was a terrible development IMO. Basically the same thing as if oil went to $300/barrel. Economic activity would crater. That being said, there are still ways to acquire it via centralized intermediaries that batch transactions and keep fees low to nil. Celsius and BlockFi are two I use to hold interest bearing deposits. Deposit fiat and get USDC or GUSD with no fees on deposits or withdrawals. Currently paying 8-9%. PM I'd you want referral codes.

No, it doesn't. They have audited public record of their reserves. Last I checked it was mostly cash with SOME credit instruments. I believe they have since committed to migrating to 100% cash, but don't quote me on that. It is part owned by a publicly traded, regulated company (Coinbase) and is about to be a publicly traded company itself with audits, reporting standards, third party custody, etc etc etc. It's got everything Tether doesn't which is why it recently surpassed Tether as the leading stablecoin on the Ethereum network. Took way longer than expected - months instead of days - but ultimately stablecoins like Gemini USD (GUSD), Paxos' USD (USDP), and USDC are significantly more trustworthy and transparent and will continue to eat market share from untrustworthy sources like Tether.

The major currencies will likely be last to adopt it because they have most to lose by giving up control. But at some point there will be a critical mass of small countries, and small jurisdictions (like Miami), and small individuals all demanding to use it as a form of payment that it'll be in everyone's best interest to simplify commerce and accept BTC as the global settlements currency. Much like everyone basically currently uses the dollar despite the headaches that comes with being in a dollar system that the US has weaponized.

Quite a bit when you look at companies like Visa and MasterCard. My first valuation exercise of BTC was to take the enterprise value of Visa, MasterCard, American Express, and PayPal and divide by 21 million coins. The value at the time was 40-50k/coin. Didn't consider lost coins, didn't consider that a network is more valuable as it gets more participants (and thus BTC should be more valuable than their sum if it disrupts their entire networks), didn't consider the value of all the other payment processors globally, didn't consider there was only 18 million outstanding at that time, and didn't consider any store of value aspect. At the time it was trading for 10k so I started buying. Now? The store of value argument appears to be holding water for many and the enterprise value of each of those companies is significantly higher. So BTC should trade significantly higher than 40-50k if you believe it will successfully disrupt those companies OR add substantially to the volume of payments (nobody puts a house on a Visa but people are buying houses in BTC). Bitcoin is both the rail and the value transferred. I think of it like a pipeline that carries oil. Bitcoin is both pipeline and the oil. It is the Bitcoin protocol embedded in the coin that allows for the transfer of value - BTC/protocol itself is that value that is transferred. The Blockchain is just what gives you confidence in the security, authenticity, and validity of the transaction - it is not the transaction itself.

Good thing that chart is price to sales and not earnings. And sales went through the roof due to stimmies but not as through the roof as equity prices. I can't speak for everyone, but I work in finance for a company that's making record profits. My "merit" based raise for exceeding expectations was ~4% despite our profitability.

In coming around to that idea myself. Was hoping/thinking it'd be similar to FIH and languish again, but may have been wrong. Repurchased ~75% of my position between $480-$490. Might give it another 2-3 weeks and throw in the towel and purchase the remainder of we don't dip again.

7% again Went to a presentation by Bullard in recent weeks where he acknowledged that the Fed may have to be a little more proactive/overreacting to get inflation under control. He expects it to average like 4ish% this year so we'll see.

Probably because he CAN afford to and believes in it. This is the same man who started buying it in 2014 at $400/coin. We're 7-years later and it's $42,000/coin and has been as high as $69,000/coin. Maybe instead of asking how could he have 50% of his net worth in an investment, maybe we should ask ourselves what we missed that allowed it to go from $400 to $42,000 and why people are still so critical of it today? It rose the entirety of 2017 into it's last bubble top of 20k the whole time the Fed was tightening. We've been there and done that.

Seems like the market is broadly negative sentiment again. My guess is this is where the market turns. Or maybe I'm just blindly hoping after this killed my performance over the last 6 weeks. I know I'm feeling pretty despondent about some of these exposures (except for LINK - thank god it finally did something!). But the forums and discords I'm part of all seem fairly despondent. Sentiment was already bad before this last leg down and retail traders never really returned in size after this summer's dip. Seems like all the ones to sell have been washed out and all that is left are slow accumulators putting in a price floor.

This has generally been my argument as well. People won't want the learning curve or the personal risk so CeFi will have a place in the future. BlockFi/Celsius/Ledn/etc have carved out their space since traditional banks didn't want to do it. We'll see these companies do very well in years to come IMO. I do think there's still an appreciable minority that will want self custody (myself included) where multisig wallets, smart contracts, etc will be a thing but will probably largely be the institutional players doing so (much like futures and/or derivatives trading).

We will see. Two year yields are up substantially off their lows, but the long end basically is only up slightly from where it was at before the Omicron scare. Would be nice to see them roll some maturities at higher rates to pick up a slight boost in interest income, but ultimately won't be much impact to the bottom line. I honestly think it'll be a few years before we can hope for anything appreciable out of fixed income. If they weren't adding 10-years at 3.25% in 2018, I can't understand why they'd add at anything below that level now with inflation where it's at.

I think there is some middle ground - particularly with the advent of DAOs. Having a centralized side-chain isn't a big deal if the leadership/ownership of that side-chain is decentralized across 1000+ different entities/individuals via a DAO. So I'd be ok with more centralization of the Blockchain aspects as long as control of those entities was still decentralized. Further, there could just be more sophisticated logic for things that don't require immediate execution. Like a withdrawals and deposits to Aave and Curve and Yearn and etc don't have to be instantaneous for those with patience to wait. Why not allow for logic that would batch orders every few hours to be sent to the chain as a single transaction with one gas fee instead of thousands of independent ones. This lowers network congestion (overall gas fees) and then spreads that smaller gas fee across multiple parties and doesn't require sidechains or increasing centralization. Yearn already does this inside of their vaults but not for transactions to get into and out of the vaults. These would be simple implementations in the short term - but we're just not seeing it yet for whatever reasons.

Does all economic value flow to the fossil fuels that allow for it to occur? Sure a ton of value will flow to ETH, but I don't think it means it captures all of the value. At some point, ETH becomes too expensive and activity slows. What is the value of ETH if there's no activity on the network? The only real solutions here seem to be increasing centralization to lower costs. Roll-ups, side chains, sharding, etc all have some facet of increased centralization to them. Bitcoin isn't immune from this either as Lightning network is what makes small transactions feasible (large ones are still dirt cheap on chain). The L2 roll-ups and side chains in ETH do dramatically lower transaction costs, but it's expensive to get into L2 and expensive and time consuming to get off of L2 so you've really just changed the type of fee you're paying. Also, with various L2 providers, there's been a drop in composability as the L2 services don't necessarily work nicely with one another like everything did when directly on ETH chain. All remains to be seen if ETH can work all of this out, but I view the recent decisions to make ETH deflationary and encourage the lock up of the bulk of its supply for the proof-of-stake upgrade to have been shooting itself in the foot. It just artificially pumped the price, made on-chain activity uneconomic, and gave competing solutions a foothold.

The most recent upgrade to the BTC network allows for smart contracts. It remains to be seen how that will develop - my understanding is Ethereum still has more functionality - but we should start seeing DeFi solutions underpinned by BTC in the future. I believe companies like Stacks and Sovryn are some of the bigger developers in the space but not 100% certain since this is new territory for BTC. How it will compare to ETH? I dunno. As someone who has been involved in DeFi on ETH for a year or so now, it's frustrating that it costs $100-200 to do anything. I've basically been inactive since August because it's not economic for me to even claim the rewards I'm making. You can have 30-40k wrapped up in it and it still not be worthwhile after considering fees to deposit/withdraw/claim/trade etc. The lightning network offers promising scaling solutions to keep activity small activity off-chain for BTC. Stacks is also running a parallel chain that has final settlement on BTC layer so it seems like the developers are already building in scaling solutions where ETH is still trying to migrate there with complex sharing and roll-ups.

Quoted from the returns thread. I think 60x is unlikely over that time outside of an extreme bubble. But 10-15x seems reasonable. Consider there is currently ~15 trillion of negative yielding debt globally. There is ~10 trillion in gold as an investment vehicle (not including silver or platinum also precious metals vehicles). There is ~300+ trillion in global real estate. If Bitcoin is successful at becoming a store of value, it can take a portion of any of these markets. If it becomes a unit of account and global currency, then you can throw the trillions of global fiat in there as well as another market to displace/take from. It is not unrealistic or crazy for to me to think the market cap of BTC will exceed US GDP at it's peak of we assume it's success as a global store of value and payments network.