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- Manlobbi
Investment Strategies / Falling Knives
No. of Recommendations: 0
No. of Recommendations: 24
"Berkshire Hathaway was built atop a system that Bitcoin was created to destroy"
Sounds right.
To wit, the rational allocation of capital to productive and profitable uses in order to earn a return.
There is much to be said for allocating capital to productive uses, both for the individual and for society as a whole.
"It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest." - one Adam Smith
They might succeed or they might not, but their mere attempt fills the stomachs.
Jim
No. of Recommendations: 0
"It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest." - one Adam Smith
Love that quote, one of my all time favorites!
No. of Recommendations: 1
The chances of crypto winning the fight are 0.000%.
Could be wrong on the last decimal.
No. of Recommendations: 0
Good morning, at this point it's fair to say that both Munger and Buffett have made their opinions very clear , with respect to the crypto space. Why revisit the issue, how will this benefit brk partners? I don't own any coins but, I did a little due dili this morning. If this info is true, and since it appears a huge percent on these ,coins, are in strong hands, the truth is Munger has no idea where bit coin will trade in the near term. Why be so involved and outspoken? ''How Many Bitcoins are Left to Mine?
How many of the 21 million Bitcoins are left?
There are 2.3 million Bitcoin left to be mined. Surprisingly, even though 18.6 million Bitcoin were mined in just over 10 years, it will take another 120 years to mine the remaining 2.3 million.''
No. of Recommendations: 7
Yes the price is going up or holding up. As long as it does people will rationalize.
When I was in 9th grade I went on a hiking trip with an incredibly smart and "rebel without a cause" type friend. As we drove uphill on a curvy road in a CJ5 V-6 Jeep in western North Carolina my friend and I got behind two slow moving 18 wheelers.
After a short time going slow my friend pulled over in the left land and gave the ole V-6 some serious gas. We passed both trucks after a while of uphill progress in the left lane. I was speechless; not my brilliant friend though. He said: "Left lane? It is just as flat as the right."
The only thing that will stop the rationalization of Bitcoin is a price wreck. Until then? The left lane is just as flat as the right.
No. of Recommendations: 0
Best of luck to your friend 🙏. If Munger intends to continue his demonization of the crypto space, he should resign from the Bod, of brk. Going to war with big money players,offers no upside for brk shareholders.
No. of Recommendations: 30
If Munger intends to continue his demonization of the crypto space, he should resign from the Bod, of brk. Going to war with big money players, offers no upside for brk shareholders.
At this point in his life, I think Munger is entitled to express whatever opinions he wishes on financial matters.
It's not like he hasn't done so before on issues not directly related to BRK.
I'm glad he didn't feel he had to resign back then to do so. We're better off having him around as long as possible.
No. of Recommendations: 20
Yes the price is going up or holding up. As long as it does people will rationalize.
Sounds reasonable.
FWIW, my line of reasoning remains unchanged. Stop at the step whose assumption you're uncomfortable with.
(1)
Say what they will, almost everyone holding crypto assets hold them for one reason: they think the price will go up.
If they're honest.
(2)
As it is a capital good rather than an earning asset, the price is determined solely by supply and demand.
(3)
For any capital good (rather than earning asset), the price will go up only if there is an increasing population of buyers.
(technically just an increasing aggregate number of coins people want to hold, but it amounts to the same thing).
(4)
The number of such people is infinite.
(5)
The price will therefore stop rising when the number of new players tops out, as there will be no increased demand.
(6)
With no increase in demand, price history will no longer have an uptrend, per #3.
(7)
With no visible up-trend, at some point people will lose their prime motivation for holding: anticipating future price rises.
Some will give up quickly, others will hold on for a long time, but with enough years of history of no up-trend, demand will peak and start falling.
(8)
If aggregate demand starts falling, prices will fall somewhat.
This will give a positive feedback loop to #6-7.
It could turn into a fire sale, or just a long heat death.
(9)
Eventually only the die-hards will hold it, and prices will likely bounce around wildly, with no net change, within some low range, indefinitely.
There is still trading in Beanie Babies. Just not a lot. The prices aren't zero, they just aren't high and there isn't an uptrend to ride.
The number of people interested isn't zero, it just isn't big enough to warrant anyone's attention.
When was the last time you saw a headline about rampant speculation on silver prices or bubblegum cards?
Jim
No. of Recommendations: 0
Do we really need crypto bulls going to war with brk over our core holdings? I'm not giving an opinion on crypto values, would you like to defend our core positions when half our country is obese, pre diabetic, diabetic, and worse? He made his point, last year, if he wants to beat a drum , he should do it as a private citizen, not as a brk board member. Is brk now a regulatory body, or a division of the CFTC? It's not brks business, let the Feds deal with it, going forward.
No. of Recommendations: 3
A couple of things.
First: a) I strongly admire Mr Munger; b) he's generally right ("Think about it for a minute and you'll agree with me, because you're smart and I'm right" - great quote); c) he is, I think, entirely correct wrt cryptocurrencies.
-------------------------
With that stipulated, his editorial last week in the WSJ cherry-picks history:
"....early 1700s, England reacted to a horrible depression that followed the blow up of a promotional plan to get vast profits by using slow-moving sailing ships to trade with very poor people halfway around the world.
What the English Parliament did in its anguish when this crazy promotion blew up, was direct and simple: It banned all public trading in new common stocks and kept this ban in place for about 100 years. And, in that 100 years, England made by far the biggest national contribution to the march of civilization as it led strongly in both the Enlightenment and the Industrial Revolution"
All of that is literally true as regards the South Sea Company (SSC).
But, the British East India Company (EIC) was the prototypical "plan to get vast profits by using slow-moving sailing ships to trade with very poor people halfway around the world." And, a generation before the South Sea Bubble (1720) the EIC -- trading with India -- "[t]he prosperity that the officers of the company enjoyed allowed them to return to Britain and establish sprawling estates and businesses, and to obtain political power. The company developed a lobby in the English parliament. Under pressure from ambitious tradesmen and former associates of the company (pejoratively termed Interlopers by the company), who wanted to establish private trading firms in India..."(Wikipedia)
The point being: yes, SSC shares offered to the public in 1718 were a sucker bet, a bubble. But, the South Sea Company was modeled on a currently-functioning highly successful public-private partnership wherein only the ruling elite took part (1), and who had made enormous fortunes...all by using slow ships to "trade" with poor people halfway around the world.
AND that resultant national wealth was a nontrivial factor in England proceeding to make "by far the biggest national contribution to the march of civilization" during the Industrial Revolution.
There was nothing intrinsically wrong with South Sea Company business model; it was not a lot different on the surface than the EIC. It was the hucksterism that ruined so many of the aspiring middle class (2).
Mr Munger certainly knows this. I'm a little disappointed in the disingenuousness of his editorial (3).
- sutton
(1): excepting the purely clerical and/or bloodshed parts. For those, the hoi polloi were welcomed with open arms.
(2): among many others, e.g. a certain alchemist and occultist named I Newton.
(3): OK, I'll say it. A much better thesis for his editorial: The EIC was to the SSC as nationally-backed and regulated fiat monies are to cryptocurrencies
No. of Recommendations: 5
Bitcoin has for the most part become one of the, if not t-h-e, focus of every investment forum. There's nowhere to go to discuss business that doesn't get infiltrated by those needing some release of their crypto narrative.
It is the byproduct of an upwards to the right price chart that at least for some period "beats" the the performance of the topic that the board was created to discuss. Hot popular stocks, particularly the ones with significant speculation, can play this role too.
I've been on a Berkshire boards now getting close to 30 years and this one-upping facet, which I consider very childlike, has been very consistent and follows the obvious choices of each particular time frame. Again, it is always something the forum board was designed partly to escape such discussion.
I'm not at all a special investor but I am reasonably old and have held some stocks that I inherited (they were in a trust, my parents died when I was very young) plus bought some others that have had fabulous success, some even today are still producing crazy success such as AJ Gallagher. Yet I've found that there are few if any who are here who have any interest in these business, so I simply mostly don't bring them up.
I wish the crypto/Bitcoin crowd would follow such an example. But that won't happen! LOL!
For my entertainment on another board, I sort of snuck around and pryed open the "story" of a crypto poster, the dominant attention grabber there. The board is pretty much some knowledable intelligent types and many are dealing with significant money. The crypto poster who had gained a lot of control of the entire investment forum atmosphere? He had $5,000 invested in Bitcoin...and he stated emphatically that thought he would have one million by 2025 and certainly before 2035.
For a short period there was little crypto posting. But then it was right back where it had been!
No. of Recommendations: 0
"For a short period there was little crypto posting. But then it was right back where it had been!"
The summer of 2007 began a sustained period (13-14 years?) of falling interest rates. We always seemed to have cheaper money to capitalize big ideas and fix systemic problems - financial, public health, etc. When the alpha from cheap money is no longer there, the allure of fast money crack (crypto) moves in for its parasitic lap dance.
Is the era of wealth entitlement coming to an end? P.T. Barnum wouldn't bet a bitcoin on it.
CmoreBmore
No. of Recommendations: 19
If Munger intends to continue his demonization of the crypto space, he should resign from the Bod, of brk. Going to war with big money players,offers no upside for brk shareholders.
Who are the big players? Google tells me the largest Bitcoin owner is Satoshi Nakamoto with ~1.1 million BTC. However, those have not moved from his wallet in over 12 years, so he's likely dead. At a minimum, no one knows where he is, or if he even existed. So I don't think he is a player. Next up are the the Winklevei Twins with 70,000 BTC. That's about $1.5 billion. Which is a lot of money, but it is in a form that is not very liquid. And they got tied up in the Genesis bankruptcy, so they might have lost some personal money there.
Berkshire on the other hand, BRK has about $30 billion in cash, and generates about $300 billion/year in revenue. Warren and Charlie are the big players.
No. of Recommendations: 32
"Bitcoin has for the most part become one of the, if not t-h-e, focus of every investment forum. There's nowhere to go to discuss business that doesn't get infiltrated by those needing some release of their crypto narrative."
This is how I feel about TSLA. If you haven't been back to the old board on MF, you will find that DIVI has become the dominant poster and there are really only two topics you will see on the board - TSLA resurgence and how dollar cost averaging into S&P beats BRK in every time period and will in the future.
I am so grateful to have this board and to have a place where BRK is once again the focus of discussion.
No. of Recommendations: 1
> (3) For any capital good (rather than earning asset), the price will go up only if there is an increasing population of buyers.
or
- if existing buyers become willing to allocate an increasing percentage of their wealth to the asset (e.g. sunk-cost effect, lured in by returns) - we often see this in ponzi schemes
- if the group of buyers become more wealthy / higher income over time (e.g. young people) supplying a continual stream of new money to the asset
Ultimately, all this does is extend the time before we reach (9), but it's the process that generates the die hards and it can keep a bubble rising even as new buyers disappear.
lux
