TwoCitiesCapital

"I can't afford my 3rd Ferrari while sending all of my kids to private school and living in one of the most exclusive areas of the world on a passive income . I'm NOT rich "

No, just like I don't assume anyone who lives in Ladue area of St Louis, Missouri as 4 kids on sub-100k. There are areas where that is prohibitibely expensive. You've narrowed your entire argument down to "if I can't live in the most expensive areas, with 4 children, while NOT working - I can't be rich". Really?!??! The fact that you're bringing in 350k post tax is what makes you wealthy. How you choose to spend it is on you. It's not my problem, nor a signal of how "not rich" you are, if you're choosing to blow 20k/month on rent instead of living further out where places are larger and more affordable . It's not a signal of how wealthy you aren't if you're paying 50k/year per kid to send them to ultra-exclusive private schools. Just because that's how you've chosen to blow you're money doesn't mean you're not wealthy - it means you spent it on things totally out of reach for the average person. Am definitely more convinced than ever that you're absolutely out of touch with the average person - none of whom could ever hope to raise 4 kids on a large apartment/condo in Manhattan.

I do take all of that into account. The median of 70k in household income does for me. If you want to take into consideration regional differences, the median income in the Midwest is probably closer to 50k. And as someone who lived in NYC for 7 years, you can do VERY, VERY well on 350k post-tax. Especially if it's passive. I did well on significantly less pre-tax. There's definitely something wrong with the barometer if 350k in post-tax, passive income doesn't register as wealthy. It literally puts you in the top 1-2% of people and you're not even working for it....

Hardly rich? After tax, you're still spending 5x what the average FAMILY takes home in a year (pre-tax) while you're passively sitting around. I think we need to redefine rich in this country. If you don't think you're rich while passively earning 350k, I think you're completely out of touch with the average person and what life is like for them.

I dunno if ETFs get us "around" the 21 million hard cap any more than subdividing that 21 million into satoshis does. But I do expect greater ease of access to derivatives/leverage as a result which might functionally do something similar. But I DO think having ETFs trade may remove the unit bias of a whole BTC since most people will not know their exposure denominated in BTC. They'll just know they have x shares or y dollars invested in it which eases the approach of moving from BTC to Satoshi denominations.

They said the same thing about the payouts from Mt Gox. Not sure if/when those payments started, but was my understanding distributions were being made in December. Coins that have been tied up for a decade plus and the market hasn't crashed yet... instead it was rising.

Rough numbers: 8% Fairfax Financial 5% Exor 3% Fairfax India 3% Eurobank 3% Altius minerals 2% oil companies 2% Sberbank 2% Freddie Mac preferred 1% Alibaba 40% diversified fixed income funds 20% crypto/Bitcoin 7.5% diversified EM funds 1% REITS ~10% in sub-1% names (ATT, Porsche holdings, Coinbase commodity miners, options positions, hedges)

Perhaps. It really depends on who they go to. If they're using Coinbase, for instance, and making those buys OTC instead of open market then it's possible none of it gets put on the base layer until the ETF moves the BTC to cold storage. My understanding of the biggest impact is that there will be a lag between receiving the cash and being able to execute the BTC trade. This lag exposes the ETF provider to market/risk profit/loss during that period. This they will widen the spreads at which they're advertising the BTC to be bought/sold at for a unit of the fund. This will likely lead to higher deviation from the underlying asset than most ETFs experience as this risk/time spread will be built in to the price/profits expected to peg to the underlying.

A fair summary

Part of me believes this. The other part of me thinks this might be where the traditional book bust cycle gets broken - or perhaps it gets broken AFTER this cycle. If this does take on a staple approach in investors' portfolios of 1-5%, and as the halving becomes less impactful relative to daily traded volume, I expect the traditional boom/bust cycle over 4 years may be significantly more muted as consistent/passive flows come in as a base of demand. I don't have strong conviction here - but it does make me wonder if this is a game changer relative to it's prior history.

Haven't looked, but at one point they were at a massive premium to the BTC they held per share. Many of these crypto names were taken as proxy exposure since we couldn't get an ETF. It wouldn't shock me if the scarcity premium is wrung out of a few of them now that BTC can be owned directly. MSTR will probably trade for the value of its BTC reserves plus a small premium for the software business going forward of I had to guess. Just dunno how that compares to the current share price.

This reminds me of the firm I work for. 12-18 months ago, there was an internal educational seminar for employees on several of our products, returns, and outlook for markets. Someone asked if we would ever have research, opinions, and products on BTC now that the futures ETF has been trading for a bit. I remember everyone on stage being very smug and commenting about how our clients had benefitted from not having access since it was down 60+% over the preceding year. What wasn't said that even measuring it at that bottom point of the -60% (then) drawdown, it had still outperformed every other asset class on their performance board over 3-, 5-, and 10-year periods. Some people just can't be intellectually honest with themselves because it means admitting that they missed the boat.

~35k at today's value plus some discounting factor for expected future growth which has been 50-100% per year. I am going to be buying up to $50-60k this cycle

Probably a better conversation for the cryptocurrency thread where it's been debated ad nauseum. TL;DR - exactly how we value/trade all other commodities and/or the companies that produce them.

It will. At least optically so. I think many will find shorting one of the most in-demand assets that also happens to be the most scarce isn't as "easy" as it might initially seem.

Also, I don't think tulip mania lasted for ~15 years

I think you'll find answers here a little biased given that's it's traditionally a value investor forum and often times that favors the status quo and eschews new/exciting/sexy type investments. With companies like Blackrock and Fidelity advising that it's a new asset class and recommending allocations of 1-5% to it, I think you'll see plenty of passive flows over time as firms update their asset allocation models/guidance and delegated accounts get allocated to the ETFs. Not sure if the responses you see here will be what is matched in reality.

Small potatoes AND it's been the same $10 for the last 14+ years. Has been that since I first purchased the company in 2010. On an "inflation adjusted basis", the dividend has actually shrunk. On a payout ratio basis, it has shrunk. On a % yield basis, it has shrunk. So the 50% growth is entirely optics of we consider things YoY in real, and relative, terms. But instead of focusing on big things that actually matter, we're gonna nitpick the management over potential taxes a minority of shareholders pay on the incremental 0.5%?!?!?? I mean, c'mon. Next let's complain that we found out they're not using single ply TP in the bathroom because they shouldn't be using MY money for fancy toilet paper

No - tax treaty with Canada dictates otherwise. I pay 0 withholding as a US tax payer. And even if I did, I get credit for the taxes that are withheld when filing my US taxes.

Yes, 23.8% if you're making above 490k on an individual tax rate. Hence my comments about b*tching about a fraction of a % differential if you're making 500k+. Point is, everytime this company, and others, pays a dividend, this whole argument gets rehashed - and it's hardly worthwhile because history bears out that dividends make sense for MOST companies. Regardless of what I believe in Fairfax, I have to recognize the market is regularly wrong IF the primary source of returns has been the "inefficient" dividend. This HAS been true for MOST of the return in MOST of stocks across stocks market history. Do I think Fairfax is the exception to that rule? Sure. But doesn't everyone believe that about every company they own? And that surely can't all be right! So I'm perfectly fine taking a dividend to hedge the case that I'm wrong. Prem made excellent capital allocations with the buy backs, the TRS, and the interest rate cycle. Decisions 10-100x more impactful than this one. I'm not gonna bitch about the potential taxes a handful of highly compensated people may pay because they upped the dividend by 0.5%... And let's keep in mind, Prem is the largest of those people

1. We're aware of how every Buffet/Munger acolyte feels about dividends. Everyone has heard/had this debate about ANY company paying ANY dividend 1000 times. Dividends will still be paid by companies, and other than the odd exception like Berkshire (and perhaps Fairfax), history bears out that the dividend is better because most companies DON'T reinvest the proceeds optimally over time. 2. Why are you assuming 75% of shareholder base is taxable? My understanding is biggest players in markets are pensions (not taxable). A little further down the list you have the aggregate of retirement savings that are also not taxable. Assuming Fairfax shareholding skews to the average, I'd guess that at least half of it is in tax-free accounts? 3a. 25%? Can't speak for Canadian tax rates, but US tax rates on qualified dividends are 0% or 15% unless if you're making more than ~500k. 3b. If you're making 500k and don't have better things to do then b*tch about buybacks vs dividends because of the small impact of taxes versus compounded returns over a reasonably finite time frame, then you're definitely living life wrong....

All I do is have a column for each account. When I add/remove cash, I just grab the balances from each account, adjust for the cash flow, and then calculate the performance from the last entry. The aggregation of all the performance periods is your time weighted return for the year. I might have 15-20 entries a year from 401k/HSA contributions and I time my IRA contributions to coincide with these to limit the number of entries. But ultimately takes maybe 5-10 minutes per month to get it accurate across my 6+ accounts.

I'd also prefer buybacks, but will not complain about structurally higher dividends signalling structurally higher earnings. Especially on something as small as $5/sh differential

Intermediate bonds were a screaming buy @ 4-5% IMO. But I tend to agree with you here. Most of my adds at this point are going to short-duration spread and not adding more duration - can still get ~6-7% in spread products without much interest rates risk. In tax free accounts, that's pretty good with limited risk. And relative to 3.8% on a 10-year treasury? Much of the easy money in intermediate bonds was made in November/December. Gets harder here on our. Very optimistic seeing as earnings expectations for Q4 and Q1 are already coming down.... My only concern with this happening is oil. If the current global conflicts result in oil sky rocketing and/or the cost of sea borne trade rising significantly due to higher war premium/more days at sea/higher energy costs then I can see a small re-acceleration. I'm hedged to that by continuing to own oil producers. But outside of that, I think think it'll be hard to see inflation reaccelerate. The only thing holding it up at the moment is services. Those will go with the consumer which will go with employment. And employment is a lagging indicator - thus so must services inflation be.