Official Cryptocurrency Thread: Skepticism to Speculation

Discussion in 'The Mainboard' started by Nantucket, Jan 29, 2017.

  1. user15000

    user15000 Well-Known Member

    This does a decent job summarizing Buffett's gold play and why he's far from the oracle some make him out to be.

    News broke late Friday that Warren Buffett’s Berkshire Hathaway made some big investment decisions during the second quarter of 2020. This shouldn’t be that shocking given the market volatility and a significant shift in the macro environment due to the COVID-19 crisis. However, what was surprising was the specific investments that Berkshire and Buffett decided to enter and exit.

    Here is a quick summary of the most notable decisions:

    • Berkshire bought 20.9 million shares in Barrick Gold, a Toronto-based gold miner, which was a $563.6 million investment at the time it was reported

    • Berkshire sold 85.6 million shares of Wells Fargo, which is approximately 26% of the previous ownership position

    • Berkshire sold 35.5 million shares of JPMorgan, which was approximately 60% of the previous ownership position

    • Berkshire completely divested of their financial stake in Goldman Sachs

    • Berkshire continued to invest in Bank of America and now owns almost 12% of the financial services company, which is worth about $28.2 billion
    Warren Buffett and his team have essentially decided to dump bank stocks and start gaining exposure to gold. This is a complete U-turn from the perspective Buffett has publicly stated for many years, which downplayed the value of gold and boasted of the banks’ future prospects. So what exactly is driving this change of opinion?

    [​IMG]
    Many people are speculating that changes in the macro environment are to blame. That thought process would include the following:

    • COVID-19 created a public health crisis

    • Governments had to respond, so they forced everyone to sit in their homes

    • The velocity of money drastically slowed while everyone was sheltering in place

    • Governments realized that they could mitigate the short term pain if they intervened

    • That intervention was produced in the form of trillions of dollars in quantitative easing

    • If governments are printing trillions of dollars, there will be high levels of inflation in the future

    • Gold will be a great inflation hedge asset to put in your portfolio, so that is what Buffett did
    This thought process has many valid arguments, but there is only one major problem — Warren Buffett and Berkshire Hathaway did not buy gold. They bought equity in Barrick Gold, which is a gold miner. This is an investment in a cash producing business, rather than an investment in the precious metal. Now before everyone freaks out, yes, the future prospects of Barrick Gold are partially dependent on the future performance of gold. But it is important to call out that the investment Buffett made was in a business, not a commodity.

    So if he is not actually buying the commodity itself, why would Buffett be buying into a gold miner?

    An easy first place to look is the poor performance of Berkshire Hathaway’s top 10 stock holdings. As of August 10th, here they are ranked by portfolio percentage (largest to smallest) and their financial performance year-to-date:

    • Apple +54.4%

    • Bank of America -23.6%

    • Coca-Cola -12.3%

    • American Express -17.3%

    • Kraft Heinz +10.8%

    • Wells Fargo -52.0%

    • Moody’s +14.7%

    • JPMorgan -25.9%

    • U.S. Bancorp -35.4%

    • Bank of New York Mellon -22.8%
    According to Yahoo! Finance, “the seven financial stocks have an average year-to-date total return of -23.2%, 40 basis points less than Bank of America’s total return so far in 2020. The three non-financial stocks have an average total return of 17.6%, primarily on the back of a fantastic performance by the maker of iPhones.” The quick takeaway is that Buffett has been invested in a number of old-school businesses that have not been able to convince the public markets of their technology prowess.

    In fact, the most technologically innovative business that Berkshire is invested in has been their best performer — shocker! When your portfolio is being crushed this bad, it forces people to reevaluate their strongest held beliefs. I have no doubt that the investment team at Berkshire Hathaway has been discussing what they can do to mitigate the potential risk from high inflation in the coming years. If that conversation has been occurring, the natural conclusion in the conservative world of Wall Street is to gain exposure to gold.

    Buffett has preached for decades about his disdain for non-cash producing commodities, so it makes sense that they would get indirect exposure to gold through a gold miner. But ultimately this is still a less superior decision than the one that Paul Tudor Jones made just a few weeks ago. Warren Buffett and Berkshire Hathaway have chosen to gain exposure to gold in the fcae of potential inflation and Paul Tudor Jones chose to get exposure to Bitcoin because it is likely to be the “fastest horse.” So what exactly is the difference between gold investors and Bitcoin holders?

    The good news is that both groups have a general agreement on the myriad of issues related to quantitative easing, central banks, and future inflation. They each also agree that sound money principles are the best solution to not only protecting one’s wealth, but also benefitting from the devaluation of the US dollar. But that is where most of the agreeing stops.

    Gold bugs and Bitcoiners are both incredibly staunch in their belief that each respective asset provides the best application of sound money principles moving forward. Yes, you read that right. Even though each group agrees on sound money, they are actually disagreeing on the application of those sound money principles as the vehicle for people to use. It is important that I call out my bias here — I’m a relatively young guy who is excited about innovation and technology.

    It is no secret that I’m strongly in the Bitcoin camp on this debate, but I’m going to do my best to provide an honest assessment of the two assets. First, gold has been around for thousands of years and Bitcoin is only approximately 11 years old. The Lindy Effect is much more in gold’s favor, but Bitcoiners would argue that every great innovation was young at some point too. This difference of time in existence has much more of an effect on confidence levels, rather that actual properties of the assets themselves.

    Here is a quick rundown of each aspect to consider:

    • Scarcity – It is becoming abundantly clear that Bitcoin has provable scarcity and gold does not. There are 21 million Bitcoin in the total supply (hard cap on that number) and there are just over 18.4 million Bitcoin in the circulating supply. These numbers are provable in the Bitcoin code base and by simply syncing a Bitcoin node to the network and querying for the data. Gold has an estimated total supply and circulating supply, but no one knows the exact numbers of each. They also can not prove either gold number either.

    • Portability — Gold is heavy and difficult to move in any serious size. Bitcoin is a fully digital asset, so it can be moved anywhere globally almost effortlessly.

    • Divisibility — Gold is difficult to divide into smaller amounts than you are currently holding. You could shave some off or have your gold bar professionally broken down, but it would be nearly impossible to do risk-free yourself. A single Bitcoin, on the other hand, is divisible by 100,000,000 fractional units called satoshis. This makes it infinitely easier for someone to use Bitcoin for transactional purposes compared to gold.

    • Physical applications — Gold is well known for it’s resistance to corrosion and rust, while also serving as a great conductor of heat and electricity as well. Bitcoin has none of these elements, nor does the Bitcoin community believe these properties are important for determining superior money.
    So in a short sentence, Bitcoin is superior to gold in almost every facet except how long people have accepted the asset as money and any physical applications around corrosion and conduction. But as I previously stated, Bitcoin wins against gold when presented side-by-side for any comparison that involves true importance for money.

    This game doesn’t have to be zero sum though. In fact, I believe that Bitcoin and gold are both going to do well in the coming years as we see high levels of inflation and investors look for inflation-hedge assets. With that said, I’m with Paul Tudor Jones. I believe Bitcoin will be the fastest horse and investors will be upset if they have zero exposure to the asset. It is not lost on me that many investors are now going to look at gold because Warren Buffett’s exposure has essentially de-risked the asset for other investors. No one will get fired for copying one of the greatest investors of our lifetime.

    Here is my word of caution though — Warren Buffett is probably not the person you want to be copying based on his performance over the last decade. He has struggled mightily to beat the S&P 500 annual returns. He also recently sold his airline stocks near the market bottom in a panic, while choosing to buy gold near it’s all-time high. Maybe the airline stocks go lower and gold goes higher, but these two investment decisions go against everything Buffett has ever taught us about value investing. The game is to buy low and sell high, not sell low and buy high.

    I am a big fan of what Warren Buffett has done over the past few decades. He not only displayed one of the greatest investment track records in history, but he educated an entire generation in his well-known pragmatic fashion. My belief is that Warren Buffett and Berkshire Hathaway should have taken 5-10% of their entire cash position and purchased Bitcoin. It would likely serve as their best investment coming out of this economic crisis.

    That scenario is nearly impossible to imagine though — Buffett has made his thoughts on Bitcoin clear. We shouldn’t be surprised when we see 89-year-olds resisting technological innovation. On the bright side, this just leaves more Bitcoin for the rest of us :)
     
  2. dblplay1212

    dblplay1212 Well-Known Member
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  3. dblplay1212

    dblplay1212 Well-Known Member
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  4. Chumbolone

    Chumbolone Well-Known Member
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    I’m no investment guru, but isn’t “invest in those who pull it out of the ground over the actual commodity” like a basic investing philosophy?
     
  5. user15000

    user15000 Well-Known Member

    Why's that? There's inherent risk associated with investing in a mining company or multiple companies (trusting its operations, management, etc.) that doesn't come with holding actual gold.
     
  6. dblplay1212

    dblplay1212 Well-Known Member
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    Warren Buffett - meh, not as good as people make him out to be

    Any 2 bit Bitcoin schill - Wizard

    :laugh:
     
  7. user15000

    user15000 Well-Known Member

    He's underperformed the S&P 500 for the last decade, but don't let facts get in the way of your strawman narrative.
     
  8. Baseballman86

    Baseballman86 Well-Known Member

    No dog in this fight, but isn’t the whole thing with Buffet that during purely bull markets, others outperform him, but during bear-bull cycles or longer periods that include both he does better? If so, it’s not surprising he has underperformed the last decade being that it was 99% bull.

    Of course he’s also 113 years old so he may not be at the top of his game any more either.
     
  9. Harrison Beck

    Harrison Beck Hi, I'm Harrison Beck
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    This is exactly why I don't hold it against Buffett for not understanding bitcoin or even calling it rat poison. He's 113 years old why would he care to understand it? He'll be dead in 5 years.
     
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  10. dblplay1212

    dblplay1212 Well-Known Member
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    Yea guy sucks at investing. I'm sure your portfolio will look like his one day.
     
  11. user15000

    user15000 Well-Known Member

    Straw. Man.
     
  12. user15000

    user15000 Well-Known Member

  13. HuskerGuy99

    HuskerGuy99 Above Average Member

    Well screw Buffet I'm all-in after reading about that small restaurant owner going all-in on Bitcoin.
     
  14. dblplay1212

    dblplay1212 Well-Known Member
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    :laugh:
     
  15. HuskerGuy99

    HuskerGuy99 Above Average Member

  16. user15000

    user15000 Well-Known Member

    Shocker.

    You’re Mr. traditional finance guy. Does Raoul Pal count as a credible investor? Give his podcast a listen and then explain why he’s a moron for being “irresponsibly long” btc and having more than 25% of his net worth in it. I’ll wait.
     
  17. dblplay1212

    dblplay1212 Well-Known Member
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    :laugh:
     
  18. user15000

    user15000 Well-Known Member

    Move along dummy. I don’t, and never have, given a shit what Portnoy does.

    Your hard-on for me is hilarious though.
     
  19. dblplay1212

    dblplay1212 Well-Known Member
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    You don't give a shit what he does but you posted what he had to say when it was pro-Bitcoin. Weird how that works.
     
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  20. user15000

    user15000 Well-Known Member

    :roll:

    am I doing that right? Portnoy is a racist short attention span idiot. Why don’t you go back and check the first time I posted about his Winklevoss request? He bought LINK for fucks sake. It is a net win that he mentioned btc at all given his following. Beyond that, who cares. I don’t value investing advice from davey day trader global global.

    Awfully weird how you ignore Raoul Pal though.

    In unrelated news, Bob Voulgaris basically quit sports betting as largely recognized the best nba bettor in the world to transition into btc and take some low paying analytics job with the mavs. He’d like to bet $5m on btc’s performance.

     
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  21. dblplay1212

    dblplay1212 Well-Known Member
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    I find it hilarious that you didn't say all of this until he turned anti-Bitcoin.
     
  22. user15000

    user15000 Well-Known Member

    1. I did but you're fucking stupid, so I'll spell it out for you with receipts.

    2. Btc will do just fine without Portnoy's $200k. He has substantially less in it than I do, and I'm sure as shit not driving the market. It will also do whatever it is going to ultimately do with or without Buffett and Ray Dalio. Not sure how many times that point has to be made.
    3. Still waiting on your explanation for why the US "fedcoin" changes anything with respect to the btc investment thesis. "The vast majority are going to trust the fed to maintain value of their asset." Those are your words. Look at a price of the purchasing power of the dollar over idk let's call it the last 100 years. Then evaluate how your comment makes any sense whatsoever. The federal reserve does not even attempt to maintain the value of the US dollar; it explicitly tries to create inflation at a target of 2%. Your entire starting point is simply wrong.
    4. While we're at it, go ahead and explain why you think that Satoshi (whose btc has never moved) is responsible for manipulation of the btc price since you've argued that stupid point before too.
    5. And I'm still waiting on you to post all of the anti-bitcoin articles and podcasts in this thread. Or you can continue following me around like a puppy to post your stupid rolling emoji.

    HuskerGuy99 all of page 199 is you acting like a fedcoin quick payment system is a "rut-roh." Harrison Beck asked you to explain that multiple times. I've asked you to explain multiple times how the fed could "buy up all the btc." Why no answers on those? Why don't you walk me through how the fed could buy up all the btc? And then when you finish that, explain why fedcoin (which is basically venmo with the fed's same monetary inflation system) will make btc go to $0.
     
    Harrison Beck likes this.
  23. Harrison Beck

    Harrison Beck Hi, I'm Harrison Beck
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    Most of huskguy98 "rut roh's" are actually bullish for btc. I know I'll be celebrating when the US officially announces a digital currency.
     
    user15000 likes this.
  24. user15000

    user15000 Well-Known Member

    The fed just announced to the entire country that it is entering the digital currency space? 330m people are now more likely aware of digital currency and onboarded into the space? Rut roh.

    Warren Buffett just made a play in the gold industry after thinking it was trash for decades? Rut roh.

    The fed prints trillions of dollars and could magically use it to buy btc that (1) isn't for sale, and (2) gets distributed to miners? Rut roh.

    Paul Tudor Jones says bitcoin reminds him of gold in the early 1970s? Rut roh.
     
    Harrison Beck likes this.
  25. southside

    southside Well-Known Member
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    I would like to know how many of the assholes that come in here with flaming takes can define what stock to flow means
     
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  26. Harrison Beck

    Harrison Beck Hi, I'm Harrison Beck
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    I think my favorite huskguy gotcha was when he posted about people going around government censorship by using vpns. His self owns are what keep me coming back.
     
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  27. Wee Bey

    Wee Bey Well-Known Member
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    I think it’s hilarious husky and double play come in here under the guise of protecting TMB members. Chodes.

    The nonsense y’all spew doesn’t affect any decision making. Short it and shut the fuck up.
     
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  28. dblplay1212

    dblplay1212 Well-Known Member
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    "I dont like him but he's on my team today so here's his shill post"

    "THAT NO GOOD PIECE OF SHIT DOESN'T KNOW SHIT"
     
  29. HuskerGuy99

    HuskerGuy99 Above Average Member

    Link to that post, user15000?
     
  30. HuskerGuy99

    HuskerGuy99 Above Average Member

    "Nonsense"

    Just refute anything that has been said, buddy!
     
  31. dblplay1212

    dblplay1212 Well-Known Member
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    Fwiw I'm not anti crypto.

    I just find it funny that user15000 is a massive shill for Bitcoin but gets offended when labeled that. He's "just posting info!" I also find it funny that he can't see a world where something other than Bitcoin is the dominant asset. I also find it funny that this is his 2nd huge shill itt. He changed his name after the first one. So yea I laugh a lot itt.
     
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  32. HuskerGuy99

    HuskerGuy99 Above Average Member

    Forget Warren Buffett, here is a very well-known degenerate gambler on Twitter to prop up my argument for why Bitcoin is not virtual ones and zeroes with no use case other than speculation.
     
  33. AHebrewToo

    AHebrewToo Albino Hebrew Extraordinaire
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    Why?

    It's not like you're arguing his take on bitcoin is bad and dbl is using his success vs. yours as a strawman. You're literally arguing he's an overrated investor and dbl is pointing you to the scoreboard.
     
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  34. HuskerGuy99

    HuskerGuy99 Above Average Member

    He changed his name and logged onto his other account to give himself likes lol. Funny shit.

    I would almost call what he is doing a troll job but the lashing out he does reveals that he is 100% serious.
     
  35. HuskerGuy99

    HuskerGuy99 Above Average Member

    Scoreboard reads $150 Billion to effectively $0. Blowout.
     
  36. Houndster

    Houndster $25 Standard Unit
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    GatorfromIowa did lose a lot of people, and himself, money with his Factom shilling a few years back
     
  37. Harrison Beck

    Harrison Beck Hi, I'm Harrison Beck
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    If you're taking investment advice from anon twitter acts or dudes on tmb it's probably not the best investment strategy. Anyone that held alts back then lost a lot of money. Literally pick any one of them. PS alts are back.
     
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  38. Harrison Beck

    Harrison Beck Hi, I'm Harrison Beck
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  39. HuskerGuy99

    HuskerGuy99 Above Average Member

    "I think my favorite huskguy gotcha was when he posted about people going around government censorship by using vpns."

    I posted an article which you are free to read and come to your own conclusions. It would seem that -- once again -- you are the one that is bullshitting by putting words into my mouth.
     
  40. Harrison Beck

    Harrison Beck Hi, I'm Harrison Beck
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    I’d love to know how to take it any other way? Use your words
     
  41. user15000

    user15000 Well-Known Member

    1. I'm a btc maximalist.
    2. You want me to be a shill, but I'm not. For the thousandth time, I don't give a single fuck whether anyone in this thread buys btc. Like your thousand dollars will move the market? A public company bought $250m worth to serve as a reserve asset a week ago. Consider me unconcerned whether anyone here spends a penny on it.
    3. Your stupidity is the only thing that offends me.
    4. You know exactly why my name was changed, yet you keep acting like it has anything to do with this thread. It doesn't. When dipshits on here threaten fucking with people's jobs, it is cause to delete an account. You have been told this multiple times yet continue to lie about it. Why?

    Still waiting on these too:

    --Still waiting on your explanation for why the US "fedcoin" changes anything with respect to the btc investment thesis. "The vast majority are going to trust the fed to maintain value of their asset." Those are your words. Look at a price of the purchasing power of the dollar over idk let's call it the last 100 years. Then evaluate how your comment makes any sense whatsoever. The federal reserve does not even attempt to maintain the value of the US dollar; it explicitly tries to create inflation at a target of 2%. Your entire starting point is simply wrong.
    --While we're at it, go ahead and explain why you think that Satoshi (whose btc has never moved) is responsible for manipulation of the btc price since you've argued that stupid point before too.
    --and I'm still waiting on you to post all of the anti-bitcoin articles and podcasts in this thread. Or you can continue following me around like a puppy to post your stupid rolling emoji.
    He literally did exactly what you said he didn't: "I'm sure your portfolio will look like his one day." Me not being worth $150B has absolutely nothing to do with whether Buffett is wrong on btc. I'm not arguing how much money I have; I'm arguing that he is wrong.

    The answer is none.
    He'll never short it. He'd rather run in here with zero skin in the game posting moronic takes no matter how many posters, like you, tell him his white knighting is stupid. He's afraid to do anything else.
    And I posted back then about buying btc (when it was in the $2-3k range), and I bought xrp at like $.20-.30 and got out around $2.70. More importantly, if anyone is taking investment advice from anonymous posters on tmb, they deserve to lose money. Look no further than the penny stock thread and investing thread for daily posts that would lose people money.
     
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  42. dblplay1212

    dblplay1212 Well-Known Member
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    lol if you think I'm reading all that
     
  43. dblplay1212

    dblplay1212 Well-Known Member
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    "You want me to be a shill, but I'm not." did make me laugh though.
     
  44. HuskerGuy99

    HuskerGuy99 Above Average Member



    All anybody needs to see since shill15000 is such a good shill that he knows how to slide the thread away from the most pertinent stuff.
     
  45. HuskerGuy99

    HuskerGuy99 Above Average Member

    Does anyone remember the Blackberry? Are you old enough to know what the Blackberry was, user15000? Ray Dalio hits it out of the ballpark. Clearly there have been many conversations about Bitcoin and crypto at Bridgewater. $150 billion AUM. You know they only hire the brightest and smartest people. Instead, we should listen to people doing podcasts and randoms on Twitter and clowns that want to sell us crypto loans.
     
  46. user15000

    user15000 Well-Known Member

    Like the guy with over 126k posts here has anything better to do. Nice cop out though to avoid the questions you never answer: “those are just too many words.”

    HuskerGuy99 lol at the blackberry comparison. It’s impressive that you guys keep getting dumber. It’s also reassuring how early btc is that you could post something like that. Still waiting on the answers to the “buy all the btc” and “fed coin kills btc” nonsense. With the blackberry comparison, we can add another assignment for you: why hasn’t btc already failed if this is about tech adoption and improvement? And now that you’ve added your daily “Buffett and Dalio haven’t publicly bought any yet,” let’s add why do you ignore Paul Tudor Jones’ position? And why don’t you think for yourself? How much btc do you buy if Dalio changes his tune? And doesn’t that kind of make you someone incapable of forming his own opinions? Or will you find some other billionaire who hasn’t bought it yet?
     
  47. user15000

    user15000 Well-Known Member

    My outlook on btc has not changed before or after people like Raoul Pal, Paul Tudor Jones, etc. became bullish. It will not change if Buffett or Dalio buy it.

    HuskerGuy99 What would happen for you if Dalio took a public bullish position tomorrow? Best I can tell, your opinion of it seems to be “I will not believe in it until Dalio and/or Buffett buy it.” If that’s wrong, then explain. If it’s right, maybe we can both agree that I’ll just tag you if they ever buy any.
     
  48. Harrison Beck

    Harrison Beck Hi, I'm Harrison Beck
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    lol
     
  49. user15000

    user15000 Well-Known Member

    Another company holding it as a reserve asset. Probably a beanie baby blackberry though.