Cryptocurrencies

[james22]

You are a admittedly conservative investor, Reds, I get that.

 

But re-read Buffett's Superinvestors essay, specifically:

 

I’m convinced that there is much inefficiency in the market.  . . .

 

I would like to say one important thing about risk and reward. Sometimes risk and reward are correlated in a positive fashion.

 

The exact opposite is true with value investing. If you buy a dollar bill for 60 cents, it’s riskier than if you buy a dollar bill for 40 cents, but the expectation of reward is greater in the latter case.

 

The greater the potential for reward in the value portfolio, the less risk there is.  . . .

 

You also have to have the knowledge to enable you to make a very general estimate about the value of the underlying businesses.

 

But you do not cut it close. That is what Ben Graham meant by having a margin of safety. 

 

And then again consider Amazon and bitcoin.

 

Amazon has proven its usefulness in a way that bitcoin has not yet (to you), but as an investment which is riskier?

 

Mature (fully adopted), Amazon trades around its fair value. You are buying a dollar for a dollar.

 

OTOH, Bitcoin (like ~2000 Amazon) is immature and trades, I believe, for something closer to 40 cents on the dollar.

 

Sure seems like it'd be worth trying to gain the knowledge to enable you to make a very general estimate of bitcoin's value.

 

Especially if you are risk-averse.

 

OTOH:

 

One sidelight here: it is extraordinary to me that the idea of buying dollar bills for 40 cents takes immediately to people or it doesn’t take at all. It’s like an inoculation.

 

If it doesn’t grab a person right away, I find that you can talk to him for years and show him records, and it doesn’t make any difference. They just don’t seem able to grasp the concept, simple as it is.

 

I’ve never seen anyone who became a gradual convert over a ten-year period to this approach. It doesn’t seem to be a matter of IQ or academic training. It’s instant recognition, or it is nothing.

[73 Reds]

33 minutes ago, james22 said:

You are a admittedly conservative investor, Reds, I get that.

 

But re-read Buffett's Superinvestors essay, specifically:

 

I’m convinced that there is much inefficiency in the market.  . . .

 

I would like to say one important thing about risk and reward. Sometimes risk and reward are correlated in a positive fashion.

 

The exact opposite is true with value investing. If you buy a dollar bill for 60 cents, it’s riskier than if you buy a dollar bill for 40 cents, but the expectation of reward is greater in the latter case.

 

The greater the potential for reward in the value portfolio, the less risk there is.  . . .

 

You also have to have the knowledge to enable you to make a very general estimate about the value of the underlying businesses.

 

But you do not cut it close. That is what Ben Graham meant by having a margin of safety. 

 

And then again consider Amazon and bitcoin.

 

Amazon has proven its usefulness in a way that bitcoin has not yet (to you), but as an investment which is riskier?

 

Mature (fully adopted), Amazon trades around its fair value. You are buying a dollar for a dollar.

 

OTOH, Bitcoin (like ~2000 Amazon) is immature and trades, I believe, for something closer to 40 cents on the dollar.

 

Sure seems like it'd be worth trying to gain the knowledge to enable you to make a very general estimate of bitcoin's value.

 

Especially if you are risk-averse.

 

OTOH:

 

One sidelight here: it is extraordinary to me that the idea of buying dollar bills for 40 cents takes immediately to people or it doesn’t take at all. It’s like an inoculation.

 

If it doesn’t grab a person right away, I find that you can talk to him for years and show him records, and it doesn’t make any difference. They just don’t seem able to grasp the concept, simple as it is.

 

I’ve never seen anyone who became a gradual convert over a ten-year period to this approach. It doesn’t seem to be a matter of IQ or academic training. It’s instant recognition, or it is nothing.

@James22 I think Buffett and Munger had it right all along.  Which is the reason why the argument that BTC is a "store of wealth" (whether right or wrong) is simply immaterial.  Consider that when I purchased my first share of BRK, one would need another 7 or 8 shares of BRK equivalent to buy a moderately priced new car and at least 40 shares worth of BRK to purchase a moderately priced new home.  Today that same single share buys at least 10 new cars and a decent new house, both of which are of much higher quality.  Not to mention that as the conservative investor I am, the day I purchased my first share of BRK the company's greatest time of growth had arguably already passed.

[james22]

28 minutes ago, 73 Reds said:

Consider that when I purchased my first share of BRK, one would need another 7 or 8 shares of BRK equivalent to buy a moderately priced new car and at least 40 shares worth of BRK to purchase a moderately priced new home.  Today that same single share buys at least 10 new cars and a decent new house, both of which are of much higher quality.

 

 

[james22]

34 minutes ago, 73 Reds said:

@James22 I think Buffett and Munger had it right all along.  Which is the reason why the argument that BTC is a "store of wealth" (whether right or wrong) is simply immaterial.  

 

You understand I'm not interested in bitcoin as a store of value, right?

 

I'm interested in it only as a growth investment.

 

But it is as a store of value that we are able to make a very general estimate of its value.

 

So until it (at least) matches gold's market size (because it's better), I'll consider it undervalued.

 

What have you got that might grow ~12X (<$2T to ~$23T) in the next five years or so?

[73 Reds]

3 minutes ago, james22 said:

 

You understand I'm not interested in bitcoin as a store of value, right?

 

I'm interested in it only as a growth investment.

 

But it is as a store of value that we are able to make a very general estimate of its value.

 

So until it (at least) matches gold's market size (because it's better), I'll consider it undervalued.

 

What have you got that might grow ~12X (<$2T to ~$23T) in the next five years or so?

12X in 5 years?  Nothing that I know of.  But like some here, it really wouldn't matter that much at this stage.  Life's been good having done it the old fashioned way.  

[james22]

9 hours ago, 73 Reds said:

But like some here, it really wouldn't matter that much at this stage.  Life's been good having done it the old fashioned way.  

 

I was very comfortably retired before last year as well.

 

But last year, instead of +10%, I managed +130%.

 

Don't kid yourself, it matters.

[wachtwoord]

10 hours ago, james22 said:

 

You understand I'm not interested in bitcoin as a store of value, right?

 

I'm interested in it only as a growth investment.

 

But it is as a store of value that we are able to make a very general estimate of its value.

 

So until it (at least) matches gold's market size (because it's better), I'll consider it undervalued.

 

What have you got that might grow ~12X (<$2T to ~$23T) in the next five years or so?

 

The reason it's been, and stil is, a growth investment is because of its amazing properties as a store of value and the fact that the market/society at large hasn't (fully) absorbed this reality yet. The more it does, the less growth's left.

[Milu]

2 hours ago, james22 said:

 

I was very comfortably retired before last year as well.

 

But last year, instead of +10%, I managed +130%.

 

Don't kid yourself, it matters.

Crazy returns. Have you historically had large returns and lots of volatility throughout your pre retirement investing history or did you just have conservative 10% compounding and then decide to go balls to the wall in retirement? 

[Dave86ch]

21 hours ago, jfan said:

Will Durant's book - The lessons of history Chapter 9: Economics and history

 

"History is inflationary, and that money is the last thing that a wise man will hoard"

 

"The men who can manage men, manage men who manage things. The men who manage money, manage everything"

 

Paraphrasing the remainder of the chapter:

 

- It is often military strength competing with other communities that allow it to develop economic policies that usually rely on the profit motive to spur productivity. And from this productivity, grows culture and the opportunity for liberty.

 

- However, as with most of history, the most productive abilities are often concentrated in the few people, who if in a democracy (the most liberty), thrive and have the ability to concentrate wealth. This may be slowed by more despotic rule, but the development of wealth inequality is "natural" over time.

 

- when the inequality is too great, and the strength of the poor many, start rivaling the strength in the abilities of the wealth few, and through mechanisms of re-distribution that range from peaceful legal/political maneuvers (redistributing wealth) to violent revolution (redistributing poverty). 

 

- Will Durant then describes the interplay between the family structure and competition for survival within a broader community and between communities. The family structure (if large, and strong) helps protect the individual from the challenges of competition. But it would be detrimental if this were extrapolated to the broader community, as competition is inevitable, and gives individuals and individual communities the opportunities to meet new challenges, adapt, and innovate which is particularly important for survival and for the survival and security as the community competes with other communities. Without security, there can be no liberty.

 

This might not be fully applicable to the discussion of bitcoin and cryptocurrencies, but I thought I would share Durant's perspective here. 

 

+1 for the Will Durant reference.

I’m reading through all his work—currently at the Renaissance chapter.

He laid out a complete framework for understanding and navigating our environment.

Edited May 1, 2025 by Dave86ch

[Dave86ch]

17 hours ago, 73 Reds said:

I know, I know.... that's the narrative.  The difference is how hard BTC proponents have to push others and to push for adoption.  I don't care if anyone adopts ownership of my investment holdings - they do well on their own.

No one’s buying the products from the companies you own if no one’s marketing them.

People need to know what a tool is for before they'll actually use it.

We humans are tool inventors, and we memetically copy each other — that’s the power of our species.

 

Edited May 1, 2025 by Dave86ch

[james22]

54 minutes ago, Milu said:

Crazy returns. Have you historically had large returns and lots of volatility throughout your pre retirement investing history or did you just have conservative 10% compounding and then decide to go balls to the wall in retirement? 

 

The latter. 

 

And only because bitcoin is such a unique opportunity.

[73 Reds]

4 hours ago, james22 said:

 

I was very comfortably retired before last year as well.

 

But last year, instead of +10%, I managed +130%.

 

Don't kid yourself, it matters.

Actually it doesn't.  But I enjoy the challenge of making money.

[Paarslaars]

It may matter for your offspring. 

[73 Reds]

1 hour ago, Dave86ch said:

No one’s buying the products from the companies you own if no one’s marketing them.

People need to know what a tool is for before they'll actually use it.

We humans are tool inventors, and we memetically copy each other — that’s the power of our species.

 

The products/services are mostly essential.  I was referring to ownership of these companies, not what they sell.  BTC needs new, and more owners all the time.  

[73 Reds]

3 minutes ago, Paarslaars said:

It may matter for your offspring. 

Again, self-serving statements like that (even said in jest) assume non BTC owners won't do as well or better than you.  Those of us who don't own BTC don't care what you own and don't need anyone to "adopt" our ideas.

[Paarslaars]

It is wrong of me to assume you won't outperform BTC? So you outperformed it up until now? Wow impressive. 

[Milu]

2 hours ago, james22 said:

 

The latter. 

 

And only because bitcoin is such a unique opportunity.

Nice work, congrats. 

[73 Reds]

2 minutes ago, Paarslaars said:

It is wrong of me to assume you won't outperform BTC? So you outperformed it up until now? Wow impressive. 

It is wrong to assume anything about anyone you don't know.  

[james22]

1 hour ago, 73 Reds said:

Actually it doesn't.  But I enjoy the challenge of making money.

 

How many investors here are in the same position?

 

Zero, I'd guess.

 

Why should anyone take the advice of such an outlier?

 

1 hour ago, 73 Reds said:

BTC needs new, and more owners all the time.  

 

As does every other investment.

 

Why do you naysayers imagine bitcoin differs in this way?

 

1 hour ago, 73 Reds said:

Again, self-serving statements like that (even said in jest) assume non BTC owners won't do as well or better than you.  Those of us who don't own BTC don't care what you own and don't need anyone to "adopt" our ideas.

 

Again, what do you believe the purpose of this board is?

 

Do you believe Gregmal is pumping JOE?

 

Sharing ideas in exchange for feedback is how this works.

 

Criticizing something because it doesn't meet your (admittedly very conservative) investing style isn't that helpful.

 

I appreciate you believe you are protecting some innocent babes, but why not warn them against debt (which you are also opposed to)? Many more have mortgages than own bitcoin.

 

38 minutes ago, 73 Reds said:

It is wrong to assume anything about anyone you don't know.  

 

Again, you'd be quite the outlier. 

[Santayana]

7 minutes ago, james22 said:

As does every other investment.

Nope.

[Paarslaars]

1 hour ago, 73 Reds said:

It is wrong to assume anything about anyone you don't know.  

There is an old Japanese saying: "Every person wears 3 masks. One you show to the world, one you show to your closest friends and family and the third one you don't show to anyone but yourself."

 

Rest assured that most you think you know about people, is still based on the assumption they show you who they really are.

 

That said, I don't think it is wrong to make the assumption that someone did not beat the 60% CAGR of BTC, as even 99.9% of this board did not beat that.

Edited May 1, 2025 by Paarslaars

[thepupil]

I don't think the fact that you're dependent on someone wlese to sell to is a good argument against owning any BTC or Gold or Porsche 911's or Old Masters paintings or sports teams for that matter as stores of value. It is true that for those to make a return, you need to sell to another (well i guess you could rent out the Porsche or painting but let's ignore that). You can make money on things that you sell to others and it doesn't entirely discount them as worthwhile. 

 

But it is a valid distinction. If my whole portfolio went private tomorrow and I couldn't sell, I'd still derive tremendous benefit from the dividends and distributions. investment assets throw off cash which is not dependent on the sale of the asset to realize the economic return therefrom. 

 

But part of gold/BTC's appeal as a store of value is that they don't do that, because if they did, they'd be dependent on some form of economic activity which may or may not endure for decades or centuries. Things that offer no "intrinsic value" as represented by a DCF but have "intrinsic appeal"  such as gold**/diamonds**/bitcoin/etc have value independent of some business value which is a positive attribute that makes them different "stores of value" than investments meant to generate cash. If i lived in the congo and owned 10 houses that I rented out, they'd have a greater DCF value than gold or BTC, but that doesn't mean I'd prefer to store my wealth in congolese real estate. mobile value has benefit. I'd want the gold/BTC/diamonds/physical cash etc. 

 

So I'm trying to perhaps pointlessly thread a needle here of 

1) it is absolutely not true that "every other investment" requires sale to realize economic return. 

2) it is true of gold/bitcoin / non cash generating assets

3) both types of assets can offer value to a portfolio but one should be clear minded about the distinction. 

 

 

**that of course doesnt' make these risk free. you can have huge discoveries of gold (many times in history) increase supply, you can have lab grown diamonds destroy the value of your diamonds, you can have something that breaks BTC in 10,20,50 years...who knows. all investments have different types of risks. 

 

Edited May 1, 2025 by thepupil

[73 Reds]

2 hours ago, james22 said:

 

How many investors here are in the same position?

 

Zero, I'd guess.

 

Why should anyone take the advice of such an outlier?

 

 

As does every other investment.

 

Why do you naysayers imagine bitcoin differs in this way?

 

 

Again, what do you believe the purpose of this board is?

 

Do you believe Gregmal is pumping JOE?

 

Sharing ideas in exchange for feedback is how this works.

 

Criticizing something because it doesn't meet your (admittedly very conservative) investing style isn't that helpful.

 

I appreciate you believe you are protecting some innocent babes, but why not warn them against debt (which you are also opposed to)? Many more have mortgages than own bitcoin.

 

 

Again, you'd be quite the outlier. 

Perhaps, but unlike you and others, I'm not here offering advice.  Sharing an opinion that is good for me personally is not a suggestion or recommendation for you to follow.

[73 Reds]

1 hour ago, Paarslaars said:

There is an old Japanese saying: "Every person wears 3 masks. One you show to the world, one you show to your closest friends and family and the third one you don't show to anyone but yourself."

 

Rest assured that most you think you know about people, is still based on the assumption they show you who they really are.

 

That said, I don't think it is wrong to make the assumption that someone did not beat the 60% CAGR of BTC, as even 99.9% of this board did not beat that.

Of course not but how many folks here owned BTC since day one?  You also assume out-performance vs. everything else will continue.  Good luck.  

[73 Reds]

2 hours ago, james22 said:

 

How many investors here are in the same position?

 

Zero, I'd guess.

 

Why should anyone take the advice of such an outlier?

 

 

As does every other investment.

 

Why do you naysayers imagine bitcoin differs in this way?

 

 

Again, what do you believe the purpose of this board is?

 

Do you believe Gregmal is pumping JOE?

 

Sharing ideas in exchange for feedback is how this works.

 

Criticizing something because it doesn't meet your (admittedly very conservative) investing style isn't that helpful.

 

I appreciate you believe you are protecting some innocent babes, but why not warn them against debt (which you are also opposed to)? Many more have mortgages than own bitcoin.

 

 

Again, you'd be quite the outlier. 

@James22 Explain why Warren Buffett cares whether anyone buys shares of Berkshire.  Taken to an illogical conclusion, if is there is not one new buyer for the rest of eternity, all current owners and their heirs will sooner or later share in the company's profits.  Same with any other company worth owning.