Cryptocurrencies

[Luke]

Ok guys, do you recommend me to invest into bitcoin now? Should i sell Fairfax for it? Please explain your recommendation, thank you.

[james22]

6 minutes ago, TwoCitiesCapital said:

This is the informational edge @james22 is referring to - it's still easy.

 

21 hours ago, changegonnacome said:

BTC looks like a story where all the big catalysts have already played out.....

 

Bitcoin regulation (allowing bank holding), US strategic asset reserve, nation-state (game theory) and institutional adoption, fomo, etc.

 

We're still early.

[james22]

8 minutes ago, Luke said:

Ok guys, do you recommend me to invest into bitcoin now? Should i sell Fairfax for it? Please explain your recommendation, thank you.

 

I've never been a tracking position fan, but if a sliver incents you to further study, then take a tracking position.

 

Otherwise, you've time to study (again, we're early).

[Milu]

11 minutes ago, Luke said:

Ok guys, do you recommend me to invest into bitcoin now? Should i sell Fairfax for it? Please explain your recommendation, thank you.

I wouldn't recommend now and don't think you should sell any of your existing stock to do so. If you are not fully invested and maintain a cash or fixed income percentage then maybe you could look to buy a small amount (1% of portfolio position), but that should only be done after you have read some of the books listed previously (Bitcoin Standard, Broken Money) to get a general understanding of the potential of the technology. Nobody should ever buy something they don't believe in as they would be unlikely to hold on during bear markets.

Edited 11 hours ago by Milu

[TwoCitiesCapital]

19 minutes ago, Luke said:

Ok guys, do you recommend me to invest into bitcoin now? Should i sell Fairfax for it? Please explain your recommendation, thank you.

 

Yes. 

 

How you size it is up to your risk tolerance. What you sell to fund it is up to you as well. I hold both BTC and Fairfax. BTC is weighted far higher and Fairfax is by far my largest equity position. 

 

I recommend starting with a reasonable slug, committing to a DCA schedule either biweekly or monthly, and then have the patience to wait 3-5 years for a whole cycle to play out. The downdrafts are stomach turning, but acceptable with how quickly this compounds. 

 

I put $500-600 in every 2 weeks and have for most of the last 4-years. I put another 10-15k in during October to be opportunistic with the rally I expected shortly thereafter. I buy both BTC directly (via Coinbase and stored on a hard wallet) as well as BTC in my IRAs via the ETFs.

 

I don't try to time the tops and bottoms, but I do have targets for when I reduce/eliminate my DCA and targets I'd be willing to let go of a minority of the position in my IRAs go for. We didn't hit those targets last cycle - we may not hit them this cycle - and that's ok with me. Because we'll hit them next cycle and I'll have more BTC. 

 

 

Edited 11 hours ago by TwoCitiesCapital

[Longnose]

15 minutes ago, Luke said:

Ok guys, do you recommend me to invest into bitcoin now? Should i sell Fairfax for it? Please explain your recommendation, thank you.

IMO its up to you. 

 

I recommend everyone hold some. 

 

To RK's comments its still early. So if you're buying like me to hold & not trade. Then now is fine because the 4-40 year trajectory has a very high likely hood of going up and to the right. I was buying at the previous highs. I was buying at the previous lows.  If you're a guy who cant stomach volatility, then maybe wait for the next sell off. which will happen. If you're like me and you dont care about next months values. Then now is fine. 

 

 

[Milu]

5 minutes ago, TwoCitiesCapital said:

 

Yes. 

 

How you size it is up to your risk tolerance. What you sell to fund it is up to you as well. I hold both BTC and Fairfax. BTC is weighted far higher and Fairfax is by far my largest equity position. 

 

I recommend starting with a reasonable slug, committing to a DCA schedule either biweekly or monthly, and then have the patience to wait 3-5 years for a whole cycle to play out. The downdrafts are stomach turning, but acceptable with how quickly this compounds. 

 

I put $500-600 in every 2 weeks and have for most of the last 4-years. I put another 10-15k in during October to be opportunistic with the rally I expected shortly thereafter. I buy both BTC directly (via Coinbase and stored on a hard wallet) as well as BTC in my IRAs via the ETFs.

 

I don't try to time the tops and bottoms, but I do have targets for when I reduce/eliminate my DCA and targets I'd be willing to let go of a minority of the position in my IRAs go for. We didn't hit those targets last cycle - we may not hit them this cycle - and that's ok with me. Because we'll hit them next cycle and I'll have more BTC. 

 

 

That's a good approach and would have worked out well for you. I did all my buying over a 6 month period from April 2020 to November 2020 at prices of €7k-15k per bitcoin. Haven't made a trade since as I have a bit of a mental block about averaging up on an investment. Old habits die hard!

[Red Lion]

19 minutes ago, james22 said:

 

I've never been a tracking position fan, but if a sliver incents you to further study, then take a tracking position.

 

Otherwise, you've time to study (again, we're early).

 

I've had a tracking position since PayPal gave me $25 of bitcoin as a promotion. Obviously wishing I'd backed up the truck at basically any time previously since it would have been a good trade. Most of my positions have still managed to outperform over that same time frame, so I'm not broken hearted. 

 

BTC is one of those investments like TSLA that I never understood but sat by and watched people getting rich. I think there's something to be said for momentum trading since perhaps it helps people catch onto some of these ideas they don't even understand. 

 

I was listening to a recent interview with Druckenmiller, and it seems like he's been very successful with an essentially momentum strategy over the years. 

 

 

[changegonnacome]

39 minutes ago, james22 said:

Bitcoin regulation (allowing bank holding), US strategic asset reserve, nation-state (game theory)

 

Yeah these are increasingly outlandish with ever higher hurdles IMO....but totally understand.......BTC keeps confounding expectations.......like a growth stock with higher and higher multiples....what begins to be required for it move higher over time are increasingly ever more implausible scenarios.......but the holders think past is prologue cause a bunch of implausible things have ALREADY happened.

[Paarslaars]

59 minutes ago, Luke said:

Ok guys, do you recommend me to invest into bitcoin now? Should i sell Fairfax for it? Please explain your recommendation, thank you.

I recommend you sell some China positions.

[TwoCitiesCapital]

39 minutes ago, Milu said:

That's a good approach and would have worked out well for you. I did all my buying over a 6 month period from April 2020 to November 2020 at prices of €7k-15k per bitcoin. Haven't made a trade since as I have a bit of a mental block about averaging up on an investment. Old habits die hard!

 

Fortunately for me, I bought a slug @ $12k and DCA'd all the way down to $4k and bought all the way back up to $40k over that period. 

 

Back then $500-600 still bought an appreciable amount of BTC . Unfortunately, there were set backs like losing 0.5 BTC in the Celsius bankruptcy and diverting my attention away from BTC accumulation to DeFi and altcoins, but Bitcoin covers a multitude of portfolio sins. 

 

At this point, $500-600 is dropping pennies in, but pennies I expect to compound at 40+% per year. 

[SharperDingaan]

5 hours ago, 73 Reds said:

@ShaperDingaan:  How do you value BTC?  

 

One random post ..... !

 

Folks just can't get past that the price of BTC cannot be supported by DCF valuation; the reality is that it doesn't exist yet, 'cause it's just too early. Not much different to trying to value a relationship ... as many have pointed out.

 

We look primarily to where the puck is going, and try to position ourselves accordingly. Cut losses early; sell when the hot and heavy breathing is just about in our ear; quietly buy back in the aftermath of the big event ... little more than a different application of Agile Project Management.

 

Same as every other hard asset, BTC rises by at least the year-on-year increase in money print. But it rises by even more if/when level II/III use can displace some of the 2nd/3rd world use of USD bills (fiat cash), and/or some of the former monetary gold-standard is replaced with a monetary BTC standard. Each is a fundamental game changer, but it's not possible to accurately value either of them until it's commonplace. C'est la vie.

 

We hold our BTC via a BTC-ETF, and we hold in quantity. Similar to an emerging market fund; when we see extreme liquidity we try to exit, and in quantity .... buying back slowly at some future date, at lower prices and a deep liquidity discount. Low key version of market making, and price has little to do with it. 

 

Not for everyone, but it has worked out well for us.

 

SD

Edited 10 hours ago by SharperDingaan

[Buckeye]

I am here to learn….Charlie Munger has taught me that to truly grasp a subject, one should be able to understand the opposing side’s argument/viewpoint better than they can.  In just a few sentences, can one of the Bitcoin bulls please explain to me why Bitcoin possibly won’t work out as an investment?

 

Thank you! 

[SharperDingaan]

Just to demonstrate a potential 'valuation' ....

 

Assume the halving is every 4 years, and it doubles the price of BTC. The 4-year CAGR is 19%. Assume the money press prints 9% more over the next year (conservative?). Therefore, anytime that BTC rises by more than 28% (19%+9%) within the next 12 months, you're up. Compute the BTC rolling annualised X-week return for Y weeks/months, and assess; thereafter, it's just straight forward technical analysis. All judgement; zero DCF valuation.

 

SD

 

 

 

Edited 8 hours ago by SharperDingaan

[Luke]

1 hour ago, changegonnacome said:

 

Yeah these are increasingly outlandish with ever higher hurdles IMO....but totally understand.......BTC keeps confounding expectations.......like a growth stock with higher and higher multiples....what begins to be required for it move higher over time are increasingly ever more implausible scenarios.......but the holders think past is prologue cause a bunch of implausible things have ALREADY happened.

Well said.

[Buckeye]

46 minutes ago, SharperDingaan said:

 

One random post ..... !

 

Folks just can't get past that the price of BTC cannot be supported by DCF valuation; the reality is that it doesn't exist yet, 'cause it's just too early. Not much different to trying to value a relationship ... as many have pointed out.

 

We look primarily to where the puck is going, and try to position ourselves accordingly. Cut losses early; sell when the hot and heavy breathing is just about in our ear; quietly buy back in the aftermath of the big event ... little more than a different application of Agile Project Management.

 

Same as every other hard asset, BTC rises by at least the year-on-year increase in money print. But it rises by even more if/when level II/III use can displace some of the 2nd/3rd world use of USD bills (fiat cash), and/or some of the former monetary gold-standard is replaced with a monetary BTC standard. Each is a fundamental game changer, but it's not possible to accurately value either of them until it's commonplace. C'est la vie.

 

We hold our BTC via a BTC-ETF, and we hold in quantity. Similar to an emerging market fund; when we see extreme liquidity we try to exit, and in quantity .... buying back slowly at some future date, at lower prices and a deep liquidity discount. Low key version of market making, and price has little to do with it. 

 

Not for everyone, but it has worked out well for us.

 

SD

Hello SD I am here to learn. I can get past needing to perform a DCF on Bitcoin, mostly because I have never really performed a DCF on any of my investments

 

Carrying on, some of the other Bitcoin bulls have recently provided me with multiple options for valuing Bitcoin. You seem to be implying that the method to value Bitcoin does not yet exist. Have I understood you correctly? And if so, can we have it both ways?  Thank you! 

Edited 10 hours ago by Buckeye

[73 Reds]

27 minutes ago, SharperDingaan said:

 

One random post ..... !

 

Folks just can't get past that the price of BTC cannot be supported by DCF valuation; the reality is that it doesn't exist yet, 'cause it's just too early. Not much different to trying to value a relationship ... as many have pointed out.

 

We look primarily to where the puck is going, and try to position ourselves accordingly. Cut losses early; sell when the hot and heavy breathing is just about in our ear; quietly buy back in the aftermath of the big event ... little more than a different application of Agile Project Management.

 

Same as every other hard asset, BTC rises by at least the year-on-year increase in money print. But it rises by even more if/when level II/III use can displace some of the 2nd/3rd world use of USD bills (fiat cash), and/or some of the former monetary gold-standard is replaced with a monetary BTC standard. Each is a fundamental game changer, but it's not possible to accurately value either of them until it's commonplace. C'est la vie.

 

We hold our BTC via a BTC-ETF, and we hold in quantity. Similar to an emerging market fund; when we see extreme liquidity we try to exit, and in quantity .... buying back slowly at some future date, at lower prices and a deep liquidity discount. Low key version of market making, and price has little to do with it. 

 

Not for everyone, but it has worked out well for us.

 

SD

How will cash flow ever exist for BTC?  

 

Its not that DCF is the only way to measure value.  In fact, how many folks can accurately value anything using DCF?   For stocks like Berkshire or AAPL, future cash flows are highly unknowable because much of the future business activity of these companies is yet unknown.  Seems as if these stocks are bought not for the present but for what incredible brainpower can generate in the future.  Yet unlike BTC, that only requires a leap of faith on an already known success story.

 

Likewise, there are plenty of assets that can be valued by means other than DCF.  Take collectibles as one example.  Scarcity, uniqueness, historical perspective, beauty, appeal of the creator, appeal of the subject, to name a few.  Not sure how BTC possesses any of those qualities but the topic is now of interest to me and this forum has provided lots of material for future reading.    

[changegonnacome]

2 minutes ago, SharperDingaan said:

Similar to an emerging market fund; when we see extreme liquidity we try to exit, and in quantity

 

Guess one might classify the current Trump BTC rally as one of these moments!?!

 

[wachtwoord]

5 hours ago, 73 Reds said:

Who suggested that valuation need be in the form of DCF?  Your answer if I recall correctly was a comparison to gold.  Gold has been a TERRIBLE (emphasis added) investment over time.  

 

 

That REALLY depends on your metrics of valuing it as an investment and your timeline. I'd argue gold's been the best store of value on the planet. Been .... until Bitcoin came along.

 

Also wrt intrinsic value: please define it. I consider anything which value is based on fiat currency cashflows to have zero intrinsic value. Bring in the Zimbabwean and Weimar Republic's wheelbarrows with cash! I guess you have nearly the opposite definition of me so a discussion using this term would go nowhere.

Edited 9 hours ago by wachtwoord

[SharperDingaan]

25 minutes ago, Buckeye said:

I am here to learn….Charlie Munger has taught me that to truly grasp a subject, one should be able to understand the opposing side’s argument/viewpoint better than they can.  In just a few sentences, can one of the Bitcoin bulls please explain to me why Bitcoin possibly won’t work out as an investment?

 

Thank you! 

 

You are a portfolio analyst.

You would like BTC to be one of the assets in your portfolio. Bonus depends upon it.

To optimise the portfolio you use the asset correlation coefficients and Black-Litterman. Easily computed using the last 60 months of data. The optimal portfolio weighting is 22% to BTC, and executed.

 

BTC falls 25%, the portfolio is underwater and under review.

Correlations are recalculated, the optimal BTC weighting is found to be 12%; you're fired. Why? You hadn't realised that with BTC in the universe, the correlations weren't stable enough; the BTC should have been ejected.

 

The PM keeps his/her job, and simply hires another portfolio analyst. Sentiment changes; 6 months later BTC is added to the portfolio again. Did it work out as as an investment? ask the portfolio analyst who got fired.

 

SD

 

 

 

Edited 9 hours ago by SharperDingaan

[SharperDingaan]

20 minutes ago, Buckeye said:

Hello SD I am here to learn. I can get past needing to perform a DCF on Bitcoin, mostly because I have never really performed a DCF on any of my investments

 

Carrying on, some of the other Bitcoin bulls have recently provided me with multiple options for valuing Bitcoin. You seem to be implying that the method to value Bitcoin does not yet exist. Have I understood you correctly? And if so, can we have it both ways?  Thank you! 

 

There are other methods ... they are just proprietorial and not public.

When you have the cure for cancer ... only an idiot would make it public 

 

SD

[Masterofnone]

16 minutes ago, SharperDingaan said:

 

There are other methods ... they are just proprietorial and not public.

When you have the cure for cancer ... only an idiot would make it public 

 

SD

Think about what you just wrote. Is that truly how you would act if you found the cure for cancer?

[Buckeye]

20 minutes ago, SharperDingaan said:

 

There are other methods ... they are just proprietorial and not public.

When you have the cure for cancer ... only an idiot would make it public 

 

SD

So then you do agree that there are methods to value Bitcoin? Because it seemed to me like you saying “Folks just can't get past that the price of BTC cannot be supported by DCF valuation; the reality is that it doesn't exist yet, 'cause it's just too early. Not much different to trying to value a relationship” implies to me that the valuation method for Bitcoin does not yet exist.  
 

So which is it? Or am i misunderstanding your quote?  Thank you! 

Edited 9 hours ago by Buckeye

[Buckeye]

43 minutes ago, SharperDingaan said:

 

You are a portfolio analyst.

You would like BTC to be one of the assets in your portfolio. Bonus depends upon it.

To optimise the portfolio you use the asset correlation coefficients and Black-Litterman. Easily computed using the last 60 months of data. The optimal portfolio weighting is 22% to BTC, and executed.

 

BTC falls 25%, the portfolio is underwater and under review.

Correlations are recalculated, the optimal BTC weighting is found to be 12%; you're fired. Why? You hadn't realised that with BTC in the universe, the correlations weren't stable enough; the BTC should have been ejected.

 

The PM keeps his/her job, and simply hires another portfolio analyst. Sentiment changes; 6 months later BTC is added to the portfolio again. Did it work out as as an investment? ask the portfolio analyst who got fired.

 

SD

 

 

 

Hello SD, thank you for your reply. And thank you for making me a portfolio analyst in your example!
 

However, I am just Buckeye, the boner of the Midwest, but I am beholden to no one. 
 

If I were to buy 1 Bitcoin with plans to hold for the next 5-10 years, what are some of the reasons (if any) why my Bitcoin investment would not work out? 

Certainly with the 100’s of hours you and the other Bitcoin bulls have spent reading up on this subject, there should be some reasons, correct?
 

If so, can you please help me understand one or two of them?

 

And any other Bulls please feel free to add your reasons. 

 

Thank you! 

Edited 9 hours ago by Buckeye

[73 Reds]

51 minutes ago, wachtwoord said:

 

 

That REALLY depends on your metrics of valuing it as an investment and your timeline. I'd argue gold's been the best store of value on the planet. Been .... until Bitcoin came along.

 

Also wrt intrinsic value: please define it. I consider anything which value is based on fiat currency cashflows to have zero intrinsic value. Bring in the Zimbabwean and Weimar Republic's wheelbarrows with cash! I guess you have nearly the opposite definition of me so a discussion using this term would go nowhere.

Well, in that sense I'm not sure what you mean by "store of value".  I'd argue real estate trumps (sorry) gold by miles.  Equities, for as long as they've been in existence.  Just about anything that generates a return.  If you've owned gold for (pick a time period) what do you have to show for it?  And I own gold [coins] but for reasons entirely unrelated to a store of value.