Subject: Re: OT: Bitcoin FOMO
I intrude on the happy consensus here with trepidation. In the spirit of the late Mr. Munger, invert, always invert! So here goes. Please limit any fruit thrown to the overripe variety.

I consider crypto to be the most significant bubble since tulip mania.

Tulips reproduce. The supply is potentially infinite. Bitcoin is a mathematical invention with a finite supply.

We have all heard the bull case. But the reality is crypto is being bought because it’s going up and people love volatility and get rich quick endorphins.

Each time you read or hear the phrase "the reality is," substitute "in my opinion." Certainly, animal spirits contribute a great deal to the buying in any asset rising rapidly in price, but anyone even vaguely familiar with cryptoworld knows there are numerous, not necessarily irrational, cases for a store of value with a finite supply in the context of unprecedented levels of debt associated with fiat currencies.

Just this morning, the U.S. national debt swept past the $36 trillion mark (balloons, party hats, we love round numbers). Nobody else comes close (USA! USA!), although China, at $14.7 trillion, and Japan, at $13.7 trillion, are doing their best to compete. The U.S. public debt is growing at a rate in excess of $2 trillion per year. As sober a judge as Jay Powell, chair of the Federal Reserve, has repeatedly called this trajectory unsustainable.

As far back as Plato, thinkers have observed that one pronounced weakness of democracy as a governing system is that prudent financial management is likely to be unpopular. Today, Elon Musk's extra-governmental DOGE project notwithstanding, both major political parties pander to the desires of the electorate for higher spending and lower taxes. In other words, there is no present indication of any change to the trajectory Mr. Powell calls unsustainable.

The dollar has been the world's reserve currency since 1944. This is the store of value the world believes in. Treasury bill auctions are now treated as sporting events on CNBC. Mr. Tea Party himself grades the demand and interest rate for each tranche to judge the market for the latest addition to the massive global pile of U.S. I.O.U.s.

If bitcoin is so great, why do the whales like Microstrategy have to keep buying it on an industrial scale to drive the price up.

Microstrategy identifies itself as the first Bitcoin development company. It holds approximately 1% of all Bitcoin outstanding. Its average cost per coin stands currently at a little more than $42,000. It has been issuing convertible bonds, essentially the first securitization of Bitcoin, to an eager market willing to accept negligible interest rates for the optionality of converting to equity, generally at a price some 30% higher than the BTC price at time of purchase. All of these people may be fools, the world has no shortage, but they are increasingly institutional money managers inaugurating small allocations through relatively harmless instruments.

I read that Saylor has been selling his personal shares in Microstrstegy. Shouldn’t that be a concern. He is promoting something to you and selling it himself!

Elon Musk is selling Tesla shares! Jeff Bezos is selling Amazon shares! Mark Zuckerberg is selling Meta shares! Billionaires will billionaire. You would too if you needed a new jet.

I am among the least sophisticated, least knowledgeable Bitcoin investors in the world. If it is a pyramid scheme, I will be among the last to know. But being one of the least sophisticated investors in the world has its advantages. I have made so many mistakes, so many egregious decisions, over the 40 or so years I have been investing, that I have no illusions about my abilities. So I read lots of different cases for lots of different things, take small stakes in a relatively wide array, and then try to keep up and manage them from there.

When my son, who works in fintech, became interested in blockchain technology a few years back, I read up just so I could participate in the conversation with him. I bought a small amount of Ethereum because of the use case then being made for the blockchain platform, and an even smaller amount of Bitcoin to track the price of the market leader.

On Jan. 11 of this year, the first Bitcoin ETFs began trading in the U.S. This occurred despite a highly Bitcoin-skeptical regime at the SEC. I thought this might be an important development. On that day, I bought small positions, between 0.5% and 1% of my investment portfolio, in one of the new ETFs and also in Microstrategy. I considered these as I would sports bets. I was psychologically prepared to lose all of the capital I invested. And, indeed, both Bitcoin and MSTR proceeded to fall in the subsequent days and weeks.

As I type, ten months later, the Bitcoin ETF (BTCO) is up 95%. MSTR is up 540%. A parade of analysts point to this asymmetry as nonsensical. And it is -- unless you buy Mr. Saylor's thesis as the first Bitcoin development company. Block, Semler Scientific and Stone Ridge Holdings Group are other firms that have made corporate treasury allocations to Bitcoin.

I bought my positions in taxable accounts, so I am two months from being able to sell at a long-term capital gains rate. Assuming the bottom has not fallen out by then, I will withdraw my initial investment, maybe twice my initial investment, depending on my outlook and news developments at that time, and then I will let the remainder ride.

This is similar to my strategy with Lumen Technologies, which I mentioned here sometime back, as it was taking off. It was priced for bankruptcy earlier this year. I was of the contrarian opinion that this was an unlikely outcome and loaded up. Today, at about $8.50, it's a six-bagger over a few months. I've taken out roughly twice my initial investment and am letting the rest ride.

I view these investments as similar -- both long shots, both products of my own peculiar reasoning process. Both winners (for now), a rather unusual outcome for me among my long shot bets. Lest you think I'm boasting, please feel free to ask about my cannabis investments.

Most of my portfolio is devoted to more conservative fare, but I've always enjoyed having a relatively small, speculative wing. Maybe that's all it is -- having fun.

My fundamental view on all this is a vast learned humility about all the things I don't know. The world is changing more rapidly than my father could ever have imagined. Everything -- all knowledge, all corporate processes -- is being digitized, a verb that did not exist when he died. Why wouldn't digital assets develop? I am doing my best to keep up.