Cryptocurrencies

[Dave86ch]

Warren and Charlie exploited a completely different environment,

 

their approach was amazing for their time,

 

A time where the United State was an hegemonic power able to growth without limits thanks to

 

motivated people,

 

a population in good shape to exploit through huge marketing campaign and the economy of scale,

 

globalisation,

 

the status of reserve currency which permitted the US to devalue its currency and accumulate a huge debt pile.

 

Many industries gained traction but in the meantime ruined and exploited the citizen at the point that they become ill (obesity trend is frightening, the trick of use tons of sugar to destabilise insulin and force people to eat more has reached its limit),

 

and exploited the planet at the point that we exhausted our physical resources.

 

The idea that the price of something is dependent on the value it brings is also correct (according to Aesop). not so obvious which society we are talking about and the terms of this value.

 

Now we have internet platforms with half the population of the world on board, the more the time passes the more ppl identity and social graph are tied to a new metaphysical reality which has no border where the concept of production is not necessarily physical and the concept of identity neither.

 

We still need scarcity because scarcity brings incentives and we need custody because in a fully interconnected world, giving a single person or a single entity the power to own the data of an entire planet is a real threat to our survival.

 

Other than that we need a tool to collaborate in a trustless way in this unbounded digital world.

 

"Sapiens can cooperate in extremely flexible ways with countless numbers of strangers. That's why Sapiens rule the world, whereas ants eat our leftovers and chimps are locked up in zoos and research laboratories"

 

Sapiens, Harari

 

As the ants when the resources in a place are depleted they look for new places and new resources, the same holds true for investors.

 

Edited November 14, 2022 by Dave86ch

[dealraker]

As value investors with something like Facebook we have this elaborate discussion here.  Some of us, me especially, whine like stuck pigs about Zuck and his seemingly crazy use of our money.  Parsad does his rational dance and behind the scenes we tend to buy more stock the more it plummets and the more "value" we think is there........that one day will show back up.  Yep, value investors!

 

Then with something like BTC?  Oh my!  We use the current quote as the value!  Why?  I sure as hell don't know.

 

And those who are bullish or whatnot say, "This is just the beginning...it is going to millions and maybe more!"  And my simple reply is that blockchain/crypto and such tech is likely a part of the future.  And what is also likely is that the price of such things as BTC will just as likely be $20 as a mil or bil or whatever the current price.

 

I love posts about crypto that are paragraph after paragraph of wording that I can read 20 times and not understand one word of it.  The average Joe investor thinks of that as expertise and investment genius while I would think those of us here on a value website would think of it as completely worthless sideline lazy twitter and lack of any model of value.

 

And I thought the value of something was the discounted such and such.  Heck it is the current quote!!!!!!  Really???

Edited November 14, 2022 by dealraker

[dealraker]

When my nephew Justin was 4 years old he came down from Richmond to stay a couple weeks.  He was a very bright kid.  Entertaininly we were going to the Bar-B-Q festival with two lawyer friends and they had a son who was pure genius the same age as Justin named Austin.

 

Austin at four?  Well give a year and he would tell you the pres of the US at that time!  Yep, bright-bright-bright.

 

So we buy this funnel cake at the BBQ festival and Justin, who is already feeling very threatened (and we all were laughing out loud) by Austin begins to place it on the ground and squat over it.

 

You know what we adults did?  We called the funnel cake "THE MOST VALUABLE ASSET IN THE WORLD."  And the two boys spent a few hours jousting for control of the cake while the adults laughed hysterically!

 

BTC, let's hoard and squat over the stuff 'cause baby it is the value of the future...now and forevermore!  Are there any adults in room here?

[Gregmal]

4 hours ago, Charlie said:

An asset is worth the discounted cash flows.

See this is something that I think people get too married to when it comes to investing.
 

Is it generally true? Absolutely. Is it always true? Idk, gold, Carolina Panthers, 52 Topps Mantle…..where’s the cashflow analysis? 

[dealraker]

So Justin says, "It is mine...and we are making no more of it thus it has tremendous value that's going up and up...dollars will chase us for all eternity."

Austin, "My buddies are coming Justin...they all have funnel cakes."

 

 

[widenthemoat]

30 minutes ago, Gregmal said:

See this is something that I think people get too married to when it comes to investing.
 

Is it generally true? Absolutely. Is it always true? Idk, gold, Carolina Panthers, 52 Topps Mantle…..where’s the cashflow analysis? 

I think you’re confusing investing and speculating. If you’re investing you should be able to tell me how much you would be willing to pay if you had to hold the asset for the rest of your life. Your examples (with the exception of the Panthers) would all have zero value in that situation. 

[Gregmal]

4 minutes ago, widenthemoat said:

I think you’re confusing investing and speculating. If you’re investing you should be able to tell me how much you would be willing to pay if you had to hold the asset for the rest of your life. Your examples (with the exception of the Panthers) would all have zero value in that situation. 

I’ve long been of the belief gold is worthless. It’s not a speculation, it’s just useless. Spare the jewelry usage because sea shells and fake diamonds work for that too. But people have and continue to hold it religiously, many bearish value investors actually. 

[widenthemoat]

8 minutes ago, Gregmal said:

I’ve long been of the belief gold is worthless. It’s not a speculation, it’s just useless. Spare the jewelry usage because sea shells and fake diamonds work for that too. But people have and continue to hold it religiously, many bearish value investors actually. 

That’s true, I guess my definition of “investor” is different in that case. I would probably call them “bearish value speculators”. I’ll probably miss out on “free money”, but it certainly helps keep one out of trouble. 

[UK]

10 minutes ago, Gregmal said:

I’ve long been of the belief gold is worthless. It’s not a speculation, it’s just useless. Spare the jewelry usage because sea shells and fake diamonds work for that too. But people have and continue to hold it religiously, many bearish value investors actually. 

 

I think even Munger already aknowledged, that BTC is like gold. At the same time they are saying similar things about gold as of Bitcoin. Also on art etc. Since those are not productive assets, Buffett an Munger is probably right in a very long term. Even super art items have lousy long term returns vs productive things. But that does not mean one can not make some money speculating them. But as Dealraker said it is quite difficult to understant difference between 20 or 1 M USD? What is a good price for BTC?

[Gregmal]

I think it’s important to stay grounded and just remember that just because you have an idea of something or believe in a specific philosophy, that alone doesn’t make it true. People spend years and even decades holding onto opinions that aren’t correct, accurate, or the proper way to make money simply because they refuse to be open minded or see differing viewpoints. 
 

So on one end,  you need to have framework, on the other it needs to be malleable. The purpose of investing is to make money. Not check boxes on an economic theory. Is a 99 share odd lot tender investing? Speculating? Or just a way to make a buck?

 

 

[widenthemoat]

3 minutes ago, Gregmal said:

I think it’s important to stay grounded and just remember that just because you have an idea of something or believe in a specific philosophy, that alone doesn’t make it true. People spend years and even decades holding onto opinions that aren’t correct, accurate, or the proper way to make money simply because they refuse to be open minded or see differing viewpoints. 
 

So on one end,  you need to have framework, on the other it needs to be malleable. The purpose of investing is to make money. Not check boxes on an economic theory. Is a 99 share odd lot tender investing? Speculating? Or just a way to make a buck?

 

 

I would call a 99 share odd lot tender a way to make a buck. I’m not saying there is anything wrong with it or that I wouldn’t want to make a buck capitalizing on a market discrepancy. I just think it’s important to recognize the difference and be aware of when you’re investing and when you’re not. Many people thought they were investing in bitcoin and it was (and still is) pretty obvious that they were not. 

[Dalal.Holdings]

5 hours ago, Charlie said:

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.

 

The arguments supporting bitcoin: “it went up a lot for a long time” can be used for Tulips and Beanie Babies. 
 

I’m gonna listen to the guys who have successfully compounded money for over 70 years. Other folks will listen to a guy who throws a football (Tom Brady) on investing.
 

I’m just gonna keep it simple and buy cheap cash flows the bear market provides.

[Gregmal]

Psychological 

 

bitcoin is kinda interesting

true in 2015, 2018, 2020 and today 

 

bitcoin is impossible to value and very likely worthless but also holds similar characteristics to a lot of other things experts have been wrong about 

true in 2015, 2018, 2020, and today

 

i really like bitcoin

no opinion in 2015, true in 2017, not true in 2018, not true at certain points in 2020 but true in others, not true today

 

i really hate bitcoin

no opinion in 2015, false in 2017, true in 2018, true and false in 2020, true today

 

see how these things work? More than being married to investing dogma, simple awareness and disciplined compartmentalization of the various aspects is crucial. What is the difference between BTC today and in 2021? Honestly, just sentiment. Nothing else. The price has come down and some bad actors got caught with their pants down. None of these things should be something folks were naive to all along. They didn’t come out of nowhere. But they also aren’t more significant today than they should have been last year. People just react differently.

 

 

Edited November 14, 2022 by Gregmal

[SharperDingaan]

Like it or not, the crypto meltdown is proving the value of BTC and ETH under hostile conditions; they haven't gone to 'zero', and most would also argue that they are unlikely to. That reality is being rubbed in our faces, and we don't like what we see; BTC and ETH clearly have 'value' - and we can't calculate it !!! 

 

The crypto ecosystem is going through its first real shakedown, and there will be failures/collapses - good! We all find out just how robust the various 'pegs', 'tethers', digital-dollar, and BTC/ETH futures/options actually are. Proof of concept under hostile conditions; and a material de-risking that is long overdue.

 

CBDC, and re-plumbed securities trade/confirm/settlement is in the wings, waiting to go. Most would also think that once the futures/options market pass the test, CB's will be in the market - doing a little stress test 'nudging' here and there. There is a reason why regulatory oversight is reactive, and not proactive. 

 

BTC is the Yin to CBDC Yang. Venereal disease (BTC) has been with mankind since the beginning of time, and despite every effort known to man - it is still with us today. BTC is not going away!

 

SD

 

 

Edited November 14, 2022 by SharperDingaan

[Gregmal]

I mean Charlie has a lot of awesome advice. He and his followers also got nailed on BABA? Why is losing tons of money on baba different than losing money on BTC? Is it just because we have a greater comfort level with the framework needed to lose money on baba?

[Ulti]

https://economictimes.indiatimes.com/markets/stocks/news/3-investing-lessons-from-a-mistake-by-charlie-munger/articleshow/95247954.cms

 

Read #2.. I think the type of  psychological bias is the same...I had a similar bias in 2000 and learned my lesson the hard way.

9 minutes ago, Gregmal said:

the framework needed to lose money on baba?

 

The steadfast belief, a form of narrative fallacy bias, in the superior “Chinese system” that Munger kept alluding to in many of his talks probably blindsided him. Any autocratic system provides great results but only as long as the
 

Read more at:
https://economictimes.indiatimes.com/markets/stocks/news/3-investing-lessons-from-a-mistake-by-charlie-munger/articleshow/95247954.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

The steadfast belief, a form of narrative fallacy bias, in the superior “Chinese system” that Munger kept alluding to in many of his talks probably blindsided him. Any autocratic system provides great results but only as long as the
 

Read more at:
https://economictimes.indiatimes.com/markets/stocks/news/3-investing-lessons-from-a-mistake-by-charlie-munger/articleshow/95247954.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

The steadfast belief, a form of narrative fallacy bias, in the superior “Chinese system” that Munger kept alluding to in many of his talks probably blindsided him. Any autocratic system provides great results but only as long as the
 

Read more at:
https://economictimes.indiatimes.com/markets/stocks/news/3-investing-lessons-from-a-mistake-by-charlie-munger/articleshow/95247954.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

[widenthemoat]

10 minutes ago, Gregmal said:

Psychological 

 

bitcoin is kinda interesting

true in 2015, 2018, 2020 and today 

 

bitcoin is impossible to value and very likely worthless but also holds similar characteristics to a lot of other things experts have been wrong about 

true in 2015, 2018, 2020, and today

 

i really like bitcoin

no opinion in 2015, true in 2017, not true in 2018, not true at certain points in 2020 but true in others, not true today

 

i really hate bitcoin

no opinion in 2015, false in 2017, true in 2018, true and false in 2020, true today

 

see how these things work? More than being married to investing dogma, simple awareness and disciplined compartmentalization of the various aspects is crucial. What is the difference between BTC today and in 2021? Honestly, just sentiment. Nothing else. The price has come down and some bad actors got caught with their pants down. None of these things should be something folks were naive to all along. They didn’t come out of nowhere. But they also aren’t more significant today than they should have been last year. People just react differently.

 

 

Thanks, just want to provide some clarity on my end. Over the entire timeframe you mentioned the value has been zero. The price could go to $1.0 million tomorrow and the value would still be zero. The psychological aspect is clearly associated with the speculative aspect. The price has changed dramatically over the years and bitcoins have changed hands constantly because people thought they could buy it and sell it to the next person at a higher price. That is textbook speculation. It’s fine if people want to do that, but it is not investing. All I’m trying to do is view the world as it really is. No value has been created and bitcoin as an asset has zero value if you hold it forever. We can agree to disagree but that isn’t a dogma, it’s just the reality of the situation. 

[Ulti]

sorry for the goofup post

[Gregmal]

I think investors are wise to generally stay within their circle of competence. But they're also foolish never to leave. If I stayed in my circle of confidence I'd have underperformed woefully, like Paulson/Eihnorn/Watsa style, from 2013-2019. That doesnt mean I abandoned a core investment strategy, but folks should always be evolving. Markets stay the same and they change at the same time. You can make lots of money with both. 

[TwoCitiesCapital]

6 hours ago, Charlie said:

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.

 

 

Said differently - 

 

Every commodity is worthless since it doesn't produce cash flows AND the only thing of value in this world is the legal corporate structures. 

 

 

Ex. My personal residence produces no cash flows and thus anyone willing to pay more than 0 for it is insane. 

 

Got it.

Edited November 14, 2022 by TwoCitiesCapital

[Gregmal]

2 minutes ago, TwoCitiesCapital said:

 

Said differently - 

 

Every commodity is worthless since it doesn't produce cash flows AND the only thing of value in this world is the legal corporate structures. 

 

Got it.

Bingo. Its something a lot of investors just cant grasp. They ultimately NEED to quantify everything. They CANT be bothered to do real work, so instead they must jam it all into the ti-83 or Excel sheets with cute formulas. Its the ultra sophisticated version of looking for simple answers to complex issues.

[Castanza]

11 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. 
 

 

 

"Just around the corner."  

[rkbabang]

1 hour ago, Gregmal said:

I mean Charlie has a lot of awesome advice. He and his followers also got nailed on BABA? Why is losing tons of money on baba different than losing money on BTC? Is it just because we have a greater comfort level with the framework needed to lose money on baba?

 

Do the Charlie & Warren worshipers who say things like "It always surprises me that when Buffett and Munger say that cryptocurrencies are worthless, there are thousands of intelligent people arguing otherwise," even acknowledge that it is possible for them to be wrong about something?   Are they even human?   I wouldn't be surprised to see a cult form after their deaths and every word they've ever spoken published as the cults gospel.   No one is always correct.  Einstein made mistakes too, he even admitted to them later on.   The fact is that whether it has been colorful shells from far away or rare shiny metals, the free market has always used the hardest thing to create, find, or duplicate as money, as long as it was also easily transported, divided, and fungible.  That was gold for centuries, but right now on planet Earth it is Bitcoin.

 

[Castanza]

6 hours ago, Dave86ch said:

Warren and Charlie exploited a completely different environment,

 

their approach was amazing for their time,

 

A time where the United State was an hegemonic power able to growth without limits thanks to

 

motivated people,

 

a population in good shape to exploit through huge marketing campaign and the economy of scale,

 

globalisation,

 

the status of reserve currency which permitted the US to devalue its currency and accumulate a huge debt pile.

 

Many industries gained traction but in the meantime ruined and exploited the citizen at the point that they become ill (obesity trend is frightening, the trick of use tons of sugar to destabilise insulin and force people to eat more has reached its limit),

 

and exploited the planet at the point that we exhausted our physical resources.

 

The idea that the price of something is dependent on the value it brings is also correct (according to Aesop). not so obvious which society we are talking about and the terms of this value.

 

Now we have internet platforms with half the population of the world on board, the more the time passes the more ppl identity and social graph are tied to a new metaphysical reality which has no border where the concept of production is not necessarily physical and the concept of identity neither.

 

We still need scarcity because scarcity brings incentives and we need custody because in a fully interconnected world, giving a single person or a single entity the power to own the data of an entire planet is a real threat to our survival.

 

Other than that we need a tool to collaborate in a trustless way in this unbounded digital world.

 

"Sapiens can cooperate in extremely flexible ways with countless numbers of strangers. That's why Sapiens rule the world, whereas ants eat our leftovers and chimps are locked up in zoos and research laboratories"

 

Sapiens, Harari

 

As the ants when the resources in a place are depleted they look for new places and new resources, the same holds true for investors.

 

 

[james22]

10 minutes ago, rkbabang said:

The fact is that whether it has been colorful shells from far away or rare shiny metals, the free market has always used the hardest thing to create, find, or duplicate as money, as long as it was also easily transported, divided, and fungible.  That was gold for centuries, but right now on planet Earth it is Bitcoin.

 

Exactly.