Cryptocurrencies

[Xerxes]

1 hour ago, Parsad said:

 

Fairfax knew the company well because they were both under a similar type of short attack by hedge funds, analysts and journalists.  There was some overlap in the players involved as well.  Whereas Patrick Byrne was this bombastic, confrontational type leader, Prem was a quiet, optimistic, stick to the plan type leader.  Yet both had become targets.

 

Sam Mitchell who was on the core investment team at Hamblin Watsa was old friends with Jack Byrne of Geico fame.  So he also knew Patrick.  I believe Sam was the one who initiated the interest on behalf of Hamblin Watsa.  Francis Chou also took a significant stake and naturally was close to Prem and Fairfax after being a vice-president there for so long.  Between the two, I think they had close to a 20% stake combined...11-12% at Fairfax and 6-7% at Chou Funds.  

 

Sam actually sat on the board of Overstock.com for a while, but Patrick was so erratic and had a hard time focusing on one thing that they eventually parted ways and sold their position.  I can't remember exactly when Francis sold out, but I believe he held on longer than Fairfax simply because he thought it was cheap.  

 

Me personally, I've known about Overstock.com almost as long as I've known about Fairfax or Amazon.com!  I've traded in and out of Overstock.com probably 5-6 times in the last 15 years...making money every time it got cheap and selling when it started to get pricey.  The best trade was in March 2020 when everyone was panicking and Overstock.com fell dramatically.  I bought a ton of shares at $2.99 and a ton of $7.50 LEAPs when it was around $5.  I made 8-10 times on the $2.99 stock and 15-20 times on the LEAPs. 

 

But I actually sold too early!  If I held on till it hit the high of $120 per share, I would have made 40 times on the stock and like 80-100 times on the LEAPs!  I was kicking myself after still making a ton of money!  But as a value investor, you are really stretching yourself ethically and strategically when things start to get speculative.  It's just not in my nature to hold on to something when valuations go crazy! 

 

Rule #1:  Don't Lose Money!  Rule #2:  Don't Forget Rule #1! 

 

Cheers!

Thank you. I am going to keep an eye on this thing.

 

I did add multiple times to my obliterated Bombardier position at 95 cents and below (pre-split). Those were 4-5 baggers for me since 2020, but gains somewhat diluted as I own an initial position (not too large) at a higher cost. 
 

I guess we all go with what stock/company we know best, for these kinds of trades. I still hold all of my Bombardier shares (so perhaps not a trade for me) 

[TwoCitiesCapital]

3 hours ago, Blugolds11 said:

This made me laugh! All I’ve heard for the last year from coworkers/friends of friends is how Im a fool for not buying crypto, BRK is a boomer stock, BTC to the moon, better get in now before it goes back to 100k/Coin…buy all the dips! Greater fool theory…

 

Its been mentioned before..the real winner of the Powerball frenzy is the State via taxes…the real winner of easy cellphone trading/buying crypto are the top of the pyramid who got in first…and those facilitating the transactions and taking their cut. The old analogy of not wanting to be the guy standing in different streams panning for gold in 1949…you wanna be the guy owning the general store selling picks and shovels…

 

To be fair…a guy could post a trend of FB 1Yr and it would also be ugly…but at least FB generates cash, even if the market doesn’t like what Marky Z does with it

 

 

Would just add that despite the ~80% collapse in BTC this year, it's still the best performing asset class over a 10-year period (and probably the last 5 years too). 

 

Everyone taking celebratory circles on it's decline are still missing the bigger picture and only looking at the last 18 months (a period characterized by increasing adoption and acceptance btw)

 

Most crypto is a Ponzi. I'm happy to see most of it go. But there is definite promise underlying things like DeFi and BTC.

 

For an example?  Aave hasn't halted deposits, stopped paying interest, been hacked , etc. despite collapses of Voyager, Celsius, and now BlockFi all who are in the same business. It's been the centralized entities that have proven problematic.

 

If anything, I think this demonstrates the robust nature of a lot of these protocols and the benefits of the DeFi complex when it's done right. 

 

 

[UK]

https://markets.businessinsider.com/news/currencies/crypto-ftx-collapse-spread-icahn-siegel-erian-summers-novogratz-roubini-2022-11

[VersaillesinNY]

On 11/12/2022 at 9:18 AM, nwoodman said:

Destroying the legacy of Bill Ruane one malinvestment at a time.  I would be fascinated to see “The new Sequoia” vs Berkshire returns since 2010.  Next rainy day….  
 

Edit:  

 

Smashing it

 

You are confusing Sequoia Fund (Ruane Cunniff) with Sequoia Capital (Venture Capital), the second did mark down its FTX investment to $0. 

[SharperDingaan]

Lot of things being missed here.

 

'Crypto' is an eco-system. Cash for Alt-Coin to pay the developers => Alt-Coin to Stable-Coin (1),  Stable-Coin (1) to Stable-Coin (2) to raise the credit quality, Stable-Coin (2) => BTC, BTC sold for cash to monetize the developers forced stake in that underlying Alt-Coin. Lots of variations around this - but ultimately it is about escaping the green eye-shades, controlling the flow of dollars into software development. No 'hard' business case at a 25%+ ROI, no money 

 

Exchanges are highly vulnerable here. They do not exist without the market trust and trade volume to make them financially viable. Most major brokerages can now offer the same services, with greater financial stability, better security, lower transaction cost, and regulatory protection. So .... if the KYC of a bank is not an issue, what do I really need a Coinbase for ? So that I can trade dog sh1te ???

 

Stable-coins are highly vulnerable here. Simply because it is highly likely that the value of the Alt-Coin 'collateral' is < than the value of the stable coin issued. So .... if the stable-coin issuer cannot cover the collateral shortfall ... most would expect the stable-coin to 'break-the-buck', 'gated' exits, and essentially a collapse of the stable-coin. And ...... it just needs one stable-coin, anywhere, to demonstrate it.

 

Funds are also vulnerable. Most will either have a (whale sourced) long-term derivative transferring beneficial interest of BTC/ETH in return for a premium and a periodic MTM settlement, or a series of rolling CME BTC/ETH futures/calls. There is 7 weeks until year-end, and at current prices these rolls/MTM settlements are going to suck a lot of cash .... that fund issuers may not have.

 

Much of the disruption is outside the main banking rails, and regulators have worked diligently to keep exposure to just BTC and ETH - net of CME risk management. A crypto blow-up isn't going to spread unless the CME goes down, and should there be a credible threat; they will  have a temporary fed backstop in some fashion. It will be more the banking rails using the disruption to buy the exchanges, and NOT crypto threatening the banking rails.

 

CB's are well versed in using 'condoms' to contain toxic financial waste - DB and CS provide regular practice. The prices of BTC/ETH might be volatile for a time while 'moral suasion' is re-established, but contagion is highly unlikely. In 2022, our various CB's are too well practiced! 

 

May we all do well.

 

SD

 

Edited November 13, 2022 by SharperDingaan

[Dalal.Holdings]

I'm just glad we've returned to a time where Bankruptcies are possible Again! ...

 

Going to be a wild ride

[Dalal.Holdings]

12 hours ago, TwoCitiesCapital said:

 

Would just add that despite the ~80% collapse in BTC this year, it's still the best performing asset class over a 10-year period (and probably the last 5 years too). 

 

Everyone taking celebratory circles on it's decline are still missing the bigger picture and only looking at the last 18 months (a period characterized by increasing adoption and acceptance btw)

 

Most crypto is a Ponzi. I'm happy to see most of it go. But there is definite promise underlying things like DeFi and BTC.

 

For an example?  Aave hasn't halted deposits, stopped paying interest, been hacked , etc. despite collapses of Voyager, Celsius, and now BlockFi all who are in the same business. It's been the centralized entities that have proven problematic.

 

If anything, I think this demonstrates the robust nature of a lot of these protocols and the benefits of the DeFi complex when it's done right. 

 

 

 

Bitcoin is a ponzi. Greater Fool Theory in action. I don't need to think beyond that. 

[nwoodman]

7 hours ago, VersaillesinNY said:

You are confusing Sequoia Fund (Ruane Cunniff) with Sequoia Capital (Venture Capital), the second did mark down its FTX investment to $0. 

Indeed.  Thanks

 

https://en.m.wikipedia.org/wiki/Sequoia_Capital

 

https://en.m.wikipedia.org/wiki/Ruane,_Cunniff_%26_Goldfarb

[Dalal.Holdings]

I'm very surprised this needs to be said on a Value forum, but:

 

The FTX saga is just the beginning. These things will not survive above zero interest rate environments.

 

Like Warren said, "bitcoin is a mirage"...

 

 

 

 

[50centdollars]

Good interview on crypto 

 

[rkbabang]

7 hours ago, Dalal.Holdings said:

 

Bitcoin is a ponzi. Greater Fool Theory in action. I don't need to think beyond that. 

Then don’t.

[Gregmal]

Double chuckle here as a neutral observer. 
 

How many hyper inflation bulls and stock market bears were also bullish on crypto? Lots!

 

How many crypto haters from like BTC $1,000/$5,000/$10,000 are now saying “I knew it!/I called it!” Despite getting their asses ruptured and being remarkably wrong?

[Parsad]

8 hours ago, Dalal.Holdings said:

 

Bitcoin is a ponzi. Greater Fool Theory in action. I don't need to think beyond that. 

 

Not a ponzi...not taking from Tom to pay Harry...just speculative like art, jewelry, collectibles, gold, etc.  But you are right.  Investors aren't missing anything here if they don't invest in crypto. 

 

There are multiple assets classes that people can create wealth out of.  You don't have to invest in everything.  Circle of competence remains the defining reference point for successful investing.  Cheers!

[backtothebeach]

21 minutes ago, Gregmal said:

Double chuckle here as a neutral observer. 
 

How many hyper inflation bulls and stock market bears were also bullish on crypto? Lots!

 

How many crypto haters from like BTC $1,000/$5,000/$10,000 are now saying “I knew it!/I called it!” Despite getting their asses ruptured and being remarkably wrong?

 

I don't think I have anything ruptured (double checking... LOL), but when I first looked up BTC I saw that it had gone up from $20 to $100.

 

I not only decided not to buy any, I was also too lazy to find out how to mine a few. Maybe I am wrong, but I believe at the time I could have mined a couple of BTC easily with a normal PC. So who is stupid here for not taking a bet with almost zero risk on this new thing.

 

Kinda glad I never got involved though. I probably would have sold most of it at $1000 and felt even more stupid afterwards.

[Gregmal]

Yea I just mean the guys who said BTC was rat poison and total crap many years ago, had it go up like 20 fold, and now seem to think they’re validated! Happens everytime. Even here during March 2020 I think.

[dealraker]

7 minutes ago, Gregmal said:

Yea I just mean the guys who said BTC was rat poison and total crap many years ago, had it go up like 20 fold, and now seem to think they’re validated! Happens everytime. Even here during March 2020 I think.

Love it Greg.  Given I think BTC is junk?  Then the prices between when it was $20 or whatever some time ago until the on and off hysterical chase ends aren't "value" in my view, they are just passing through quoted quotes thus entertainment.  

I'm always enjoying the process of predicting the NEW NEW THING - the next hysterical thing - the inevitable obsessive price chase of something.  Things and people that are behaviorally or price intermittent are by their very nature the most addictive.

 

I think many of the things chased today, political-financial-eccentric/rebel/cultural, are based on the middle finger gesture- screw you and the system and such..."I'm the rebel that can live without the government or system".  I think the next ones chased will be old boring stand-by's, boring ass safety and low pe's will reign.    

 

People who chased get older, they didn't chase at the right time and such.  So they lock down the hatches.  

 

 

[Gregmal]

Yea there’s so many different dynamics involved which is why the mockery in context is helpful staying humble because more likely than not we all have at various points crossed different mental paths. If the entire market goes down, does that mean every fundamental bearish take on individual assets or companies was “proven correct”…no, not at all. At least no more than the Reddit boys were “right” about GME fundamentals! 
 

Of course Wall Street lost its ass on GameStop and AMC but was still “right” in their own heads despite losing shit tons of money and being directionally off by football fields….but now in reverse they “knew all along” crypto was crapolla and the retail idiots were all gambling fools even though many of those fools are still many bags ahead while the smart money said short at $1000 or simply sat on their hands and did nothing but take their grievances to Twitter.
 

IDK or really have a strong opinion but I think context is important and as always, giving little credence to broken records or people who exist simply to claim “they called it”. Kudos to anyone investing with conviction or trading and making money. Fuck everyone else.

[LC]

Bitcoin has been around for 10 years+ now. Forget as a currency- I still haven’t seen a popularized use case for blockchain in general. 
 

 

[Gregmal]

Kinda like this whole climate thing

 

 

[tede02]

32 minutes ago, LC said:

Bitcoin has been around for 10 years+ now. Forget as a currency- I still haven’t seen a popularized use case for blockchain in general. 
 

 

 

I was thinking something very similar this weekend. Aside from being a token for speculation (and illicit activity), has cryptocurrency proven itself to have any utility? I continue to wonder if all the cryptocurrencies will ultimitely be $0 but the underlying tech survives. 

 

Blockchain is interesting and people make interesting points about potential applications, but that too has yet to materialize. I try to keep an open mind because people like Buterin and Hoskinson are obviously HIGHLY intelligent, but it seems like we're a long way off from widespread application.

 

[alxcii]

49 minutes ago, LC said:

Bitcoin has been around for 10 years+ now. Forget as a currency- I still haven’t seen a popularized use case for blockchain in general. 
 

 

 

1 minute ago, tede02 said:

 

I was thinking something very similar this weekend. Aside from being a token for speculation (and illicit activity), has cryptocurrency proven itself to have any utility? I continue to wonder if all the cryptocurrencies will ultimitely be $0 but the underlying tech survives. 

 

Blockchain is interesting and people make interesting points about potential applications, but that too has yet to materialize. I try to keep an open mind because people like Buterin and Hoskinson are obviously HIGHLY intelligent, but it seems like we're a long way off from widespread application.

 

 

If the internet was nothing more than an improved version of the postal service, it would still be a tremendous invention. If all we get with blockchains are uncensorable and transparent payment rails (like they are now), it would still be a tremendous invention.

 

As we know now, thinking that the internet was nothing more than an improved version of the postal service would have been a colossal mistake. It turns out that a global messaging system can upend entire industries from transportation to hospitality. Could you have convinced the average person living in the AOL era that in the future it would be perfectly normal to take a ride with a random stranger to stay at another random stranger's log cabin in the woods?

 

The internet's birthday is considered to be 1983 when TCP/IP was invented. What year did you get online? People don't realize just how early we still are - blockchains are still in their infancy. We haven't even coalesced around a standard protocol for blockchains to talk to each other, not to mention all the other infra that still needs to be built out.

 

Stretch your imaginations just a little bit. Open, trustless, permissionless networks of value aren't going to zero.

[LC]

I’ve got an open mind for sure and I wish blockchain would solve some obvious problems (property title is one that always jumps to mind- title insurance is such a racket). 

 

But the flip side is it’s not 1983 and technology disperses at a much faster pace today. 
 

Perhaps an era of high interest rates will focus efforts towards productive/realistic use cases, rather than pipe dreams.

[TwoCitiesCapital]

1 hour ago, LC said:

I’ve got an open mind for sure and I wish blockchain would solve some obvious problems (property title is one that always jumps to mind- title insurance is such a racket). 

 

But the flip side is it’s not 1983 and technology disperses at a much faster pace today. 
 

Perhaps an era of high interest rates will focus efforts towards productive/realistic use cases, rather than pipe dreams.

 

The same technology that powers NFTs of monkey pics has the ability to be what displaces title insurance. It just hasn't yet. 

 

Just like in 2017 the primary use-case for Ethereum was collectible cats and online games, but 5 years later you have decentralized exchanges, peer-to-peer lending, insurance products, etc all operating on that network (many doing admirably well compared to centralized peers). 

 

2 hours ago, LC said:

Bitcoin has been around for 10 years+ now. Forget as a currency- I still haven’t seen a popularized use case for blockchain in general. 
 

 

 

10-years ago it was a pipedream to consider BTC a widely accepted currency or payments network and was primarily traded by hobbyists. 

 

Today? Two countries have adopted it with others considering doing so. The lightning network facilitates faster/cheaper transactions still secured by the underlying BTC protocol. Payment processors like Square now allow BTC to be paid and/or received in any transaction they process. Billionaires like Jack Dorsey have devoted their entire attention to BTC and decentralized networks. Banks/wealth management/insurance companies now consider it a separate asset class and devote a percentage of portfolios to it. You have countries like Russia investigating BTCs use in international trade settlements to circumvent USD sanctions. The US has clarified tax policy on it legitimizing it for institutional investment. 

 

The list goes on and on. Snowballs get bigger as they roll down hill. BTC is getting bigger and the network/adoption/use cases are still generally in a secular uptrend. That's why it's still the best performing asset class of the last decade even after an 80% decline. 

Edited November 14, 2022 by TwoCitiesCapital

[Parsad]

5 hours ago, Gregmal said:

Yea I just mean the guys who said BTC was rat poison and total crap many years ago, had it go up like 20 fold, and now seem to think they’re validated! Happens everytime. Even here during March 2020 I think.

 

Beanie Babies mania lasted about 10 years...prices went up more than 20 fold.  Manias have no set time limit...they blow when they blow.  Not saying that BTC is a Beanie Baby Bubble or Tulip Mania, but it certainly hasn't proven to be a real replacement for fiat currency at this point either.  If anything, it's proven that it isn't a useable replacement.  Cheers!

[Charlie]

It always surprises me that when Buffett and Munger say that cryptocurrencies are worthless,

there are thousands of intelligent people arguing otherwise.

 

Buffett and Munger have a very, very high success rate with these predictions.

The counter argument is always that Buffett doesn't understand crypto.

That's like saying Einstein doesn't understand the relativitaets theory.

 

An asset is worth the discounted cash flows.

Since crypto doesn't produce anything, they are worthless....

Crypto people always come up with elegant theories, but investing is simple.

The elegant theories are probably made from the people who are selling or

profiting from high crypto prices or are technology people, which like the

technology aspects of crypto.

 

Investing is simple, but not easy.

 

Edited November 14, 2022 by Charlie