A couple of very interesting tweet from Micheal Saylor: Michael Saylor (@michael_saylor) Tweeted: MicroStrategy is not an investment company (IC) per the 1940 Investment Co. Act. An IC is a co. that invests ≥ 40% of assets (less cash & govt securities) in “securities”. Per the SEC, #BTC isn’t a security. Ergo, holding BTC doesn’t cause MicroStrategy to become an IC.
https://twitter.com/michael_saylor/status/1337556620839165952?s=20MicroStrategy is not an ETF/ETP. ETFs & ETPs exist to invest in stocks, bonds or commodities – they’re investment companies per ’40 Act. Like Apple & Microsoft, MicroStrategy is an operating company traded on a stock exchange. We just happen to hold BTC in our treasury reserves.
https://twitter.com/michael_saylor/status/1337556890742624259?s=20This is a weird statement in my opinion. Who is the recipient of this message? The public? The regulators? Oh, speaking of regulators: they are a weird bunch of people. Regulators be like...  I think MicroStrategy is walking on a fine line. I don’t know if the first action will be taken by regulators of the shareholders, even assuming they can do anything with the 33% of voting powers. Anyway it will be interesting when BTC moons and the total BTC investment will be more than 40% of total assets.On this last point, Saylor is saying that because Bitcoin isn't a "security," MicroStrategy can never be an "investment company" no matter if it breaches 40% threshold or not. He's making an argument on the technical definitions under the Investment Company Act. I agree with him here. Security is a specific definition and the Supreme Court has even ruled on the test for what is and isn't a security, and Bitcoin doesn't fit the definition. |
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Joseph Robinette Biden
Lol, is that his middle name? I confess I don't watch the news and hate politics, but that's an interesting one if true. IMO Biden won't be any worse than Trump for business or anything else, although I don't know about his tax policies or how much he likes war. One thing that Trump didn't do was get the US involved in any massive conflicts. But in either case, I think Biden will be fine for the economy/business as long as his policies can get the coronavirus outbreak under control. That, I think, is the main variable as far as the economy is concerned. We can't keep businesses closed and people out of work and still expect to be a prosperous country. Time will tell. I'm just ecstatic that Trump is (almost) out of the White House. I was afraid we'd be in for another four years of that BS. One would argue that the tariff war with Europe and China was a massive economic conflict, and one we didn't fare well in for that matter. Also, raising tensions with Iran by withdrawing from the nuclear deal and assassinating one of their generals is anther conflict. Not all conflicts have to result in a traditional war. Otherwise, I agree the most consequential thing is getting COVID under control sot he economy can fully open up. |
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How only bitcoin? Doesn't this apply to stocks too? or any other job too? I don't understand why a few people feel that crypto can eradicate poverty from this world. My question is how? It's a new technology for payment mechanism and just like any other technology it offers you a certain amount of employment opportunities. Those who can take up the required skill for this can become successful those who can't grab the opportunity will most probably remain the same. But how on earth can crypto eradicate poverty from the lives of the people? Alternatively, the scarce supply of bitcoin would lead to the wide gap between rich and poor this is what I feel because until the time this class of Africa would get acquainted regarding bitcoin it would already be too late and big guns around the world would have already loaded everything and skyrocketed the price.
You're right, this is just a crypto fluff piece. There is nothing about the circumstances in the OP that make crypto inherently good for the poor, and the anecdote about the guy could have been done with literally any asset. More than anything, the guy just got lucky because he started trading crypto when it was in a larger bull run, and even active traders are likely to make money in a bull run because the overall motion of the price is up, so even if you're moving in and out you're statistically more likely to make money. (Statistically, you'd make more if you weren't trading and just holding, which is why the concept of the "poor making trading crypto" is pretty meaningless.) |
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There was a post by nullius inviting Trump to use Bitcoin. Though you'd have to be on something like Gab or any other platform that going to allow him to communicate. We all pretty much on one thing. These evil banks have no business declaring themselves suddenly on the right side by closing Trumps' account. As if they will do it for the millions of other entities they enable to maintain an iron-grip on the poor, raw material sources of the world and drain wealth towards their wealthy patrons. Bitcoin would never work for Trump because all wealth is tied to extreme use of leverage. That's not uncommon in the real estate industry, most real assets are highly levered. But Trump losing access to the banking system at large will be a death knell for him personally because he can't refinance his loans and he definitely doesn't have the cash to pay them off. He'll be forced into bankruptcy when his $340m Deutsche Bank loan is due, or else he'll be forced to sell a boatload of assets at fire sale prices to raise the money needed to pay the loan off. |
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I discovered that there are people whose comment or tweet could increase or decrease the price of Stock; one of them is Elon Musk. In two occasions, his tweets affected the price of some assets and entities. 1. During the early days of bitcoin bullrun, Elon Musk tweet about bitcoin, and the CEO of Micro Strategy responded. This contributed to the further rise of bitcoin. This also happened to Dodge coin. 2. During the WatsApp data piracy issue. Elon Said “use signal” . What happened was that the userbase of Signal increased exponentially. The question I want to ask and I would like us to discuss is this: Does popularity or fame has a positive correlation with wealth creation? Here are some of his tweets. https://twitter.com/elonmusk/status/1347165127036977153?s=20https://twitter.com/elonmusk/status/1340573003579617280?s=20What so you think? There's no evidence that Elon's tweets affected the price of bitcoin. He tweeted about Bitcoin during a bull run and the price was already rising. Any extra effect is likely to be for a limited duration because someone famous saying something about a company doesn't change the fundamentals of the company. Elon has an overarching feud with Zuckerberg, that's why he's blasting WhatsApp. Since Signal isn't a publicly traded company, there's also no correlation with a stock price move there. However, could someone famous touting a service lead to increased usage of that service? Yeah of course, that's literally what advertising is built off. |
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https://www.cnbc.com/2021/01/14/biden-calls-to-raise-the-federal-minimum-wage-to-15-per-hour.htmlThe federal minimum wage is poised to get its first update in more than a decade.
President-elect Joe Biden on Thursday said he will ask Congress to boost the federal minimum wage to $15 per hour from the current $7.25 per hour. The federal minimum wage has not been increased since 2009.
The call to raise the federal minimum wage is part of a larger $1.9 trillion coronavirus aid package called the American Rescue Plan aimed at helping boost the U.S. economy from the damage of the pandemic.
“There should be a national minimum wage of $15 an hour,” Biden said during a Thursday night speech. “Nobody working 40 hours a week should be living below the poverty line.” Will the US business suffer from the increased labor costs? Will Biden and the democrats keep their promise? Stupid question:Will the American working class buy more Bitcoin,if they have bigger salaries?  Some economists say that the current federal minimum wage is way lower than the labor productivity,so increasing the minimum wage will lower the profits of the business,while boosting the consumption of the working class. Biden doesn't have the ability to raise the federal minimum wage. It will take a new law passed by the Congress in order to do so. The best Biden can do is advocate for it and attempt to broker a deal to get enough Republican support to pass it. Although now that Democrats control both houses and the presidency, this is more likely than it was under Trump. |
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People will not have an incentive to HODL if they have to pay taxes on unrealized BTC capital gains yearly. They would have to sell to pay the taxes. This will not be a good development for Bitcoin and others imo. What do you think?
www(dot)wsj.com/articles/top-democrat-proposes-annual-tax-on-unrealized-capital-gains-11554217383
WASHINGTON—The top Democrat on the Senate’s tax-writing committee proposed taxing unrealized gains in investment assets every year at the same rates as other income, offering an idea that would transform how the U.S. taxes the wealthiest people.
The proposal from Sen. Ron Wyden of Oregon is the latest plan from Democratic lawmakers and presidential candidates for boosting taxes on the wealthy to address economic inequality and provide funding for their policy agenda. While this specific proposal has little chance of becoming law soon, such ideas could quickly gain momentum if the party succeeds in next year’s elections.
Under Mr. Wyden’s concept, capital gains would be taxed annually based on how much assets have gained in value. Now, by contrast, gains are taxed only when assets are sold and at a top rate of 23.8% instead of 37% for ordinary income.
“It would be a huge change,” said Lily Batchelder, who was a tax-policy aide to President Obama. “It would be a really big shift in our income-tax system.”
It would be bad for all investment classes, not just crypto. However, the way the tax code is now where you can defer taxes for decades (or entirely through estate planning) is not sustainable and the rich have absolutely raped the wealth of the nation as a whole by exploiting the tax loopholes in the system to never pay their fair share. Realistically, taxing unrealized gains isn't going to get passed, not for crypto, not for stocks. Not only because it will necessitate asset liquidations which will drive asset prices down, but because the rich don't want to pay more taxes and they get what they want. |
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Bitcoin having humanitarian qualities and helping the poor, is one of its most neglected and underappreciated aspects. ICOS were not perfect by any means. But they did allow the poor access to accredited investor level opportunities. Part of the crypto worlds success is due to it opening doors and giving opportunities to the poor, they might otherwise never have.  There is a good reason that the poor are excluded from the definition of accredited investors, and it's primarily because accredited investors are considered rich enough to afford the risks of losing a substantial amount, or all, of their investment. Investments that require at least accredited investor status are extremely speculative and much riskier than investments that are regulated fully by the SEC. The poor definitely do not fit this definition. |
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It is possible that there will be a few more bitcoins in the future, and there will be a possibility that the bubble will burst?
To answer the question in the subject of the post, considering how speculative bitcoin is as an asset, far below 1%. As for the possibility of bitcoin being a bubble that could burst, you can never rule it out. The history is nothing volatility based on speculation. |
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To me, Bitcoin seems to have included all of these investment types and is a mix of them.
Tech Analysis is used in trading of BTC to understand important buy/sell levels where high liquidity is available and that BTC could go towards in order to liquidate such areas.
Value and growth investing had been a part when people saw the old records of others buying it for very low and then they bought it even at highs because they believed in the technology and waited for the growth of the project as well as its value. So these 2 are correlated here.
And narrative economy? Ah, Bitcoin got its mass adoption through the power of word of mouth advertising and there are so, so many success stories available in the markets about people earning great returns through this investment.
Yes, you are correct in your analysis from my perspective, Bitcoin is a mixture of those 4 themes, but so are the rest. There's no true "black" and "white" in this world, therefore there's nothing entirely driven 100% by TA, value, growth or narrative investors. However, we can generalize and simplify in order to better analyze, otherwise we couldn't even come up with a unified GDP measure or P/E I would generally agree with your characterization between value and growth with the main emphasis being that value investing is primarily focused on stocks that are undervalued based on an analysis of their intrinsic value vs. what the market is paying for them, and growth stocks are primarily defined by not being concerned with earnings because all free cash flow is being deployed to grow revenues. However, none of the drug companies you listed are growth investments, those are all value plays. If there's one thing Warren Buffet likes, it's a a broad defensible moat around the business and high barriers to entry for competitors, and this pretty much sums up the biopharma market perfectly where there are high regulatory hurdles and the cost for new entrants in the field is incredibly high. Further, those PE ratios don't even suggest they're high growth companies, this was definitely a value play. Apple was definitely a value play when Buffet invested, and it was also only made after his younger portfolio managers kind of taught him how to value tech stocks. https://www.youtube.com/watch?time_continue=143&v=mOgAJnwQxzw&feature=emb_titleStoneCo is a Brazilian tech firm that deals in money transfers and I would characterize it as a growth company (I've followed the company closely, ironically because Berkshire invested in it), however a portfolio manager at Berkshire is responsible for this investment, not Warren Buffet. Buffett's Berkshire Hathaway invested $340 million to acquire 14,166,748 Class A shares of StoneCo, piggybacking on its IPO, at roughly $24 per share. The move raised eyebrows at the time, a departure from the type of company Buffett would typically choose. Reports later confirmed that it was one of Buffett's portfolio managers -- Todd Combs -- who had made the investment decision. - https://www.fool.com/investing/2020/03/03/warren-buffett-backed-fintech-company-stoneco.aspx Since Buffet and Munger are quite old, they have succession plans in place for when they leave the company. This has lead to more younger portfolio managers at Berkshire taking the reigns of ever larger swaths of the investment portfolio. I am quite confident that you will find that any investment in growth/tech stocks were due to the younger portfolio managers, and not Buffet or Munger. Again, read the Berkshire shareholder letters. It's a primary source. Buffet's own words tell you he's obsessed with intrinsic value, not growth. (Kind of a Buffet fanboy here. I've read a lot of his writing over the years.) Lol, yes I noticed that we got a Buffet fanboy here Which is alright, just don't idolize someone too much, learn from the greatest about their success in their times, and apply what is suitable to the changed time which might require a different approach (if we would follow old norms and methods - we still would be riding horses and thinking electricity is sent to us by Gods from the sky). As for drug companies and Apple, we will never reach a consensus, what is value to you or Buffet - growth for me, what is TA for me - narrative for others. In the end as they say "value of an asset depends on who is paying the valuer". Furthermore, we could even go on for a discussion of: - Intrinsic Value (IntV) - asset or security valuation by someone who has complete understanding of characteristics of the asset or issuing firm (used for most investment decisions); vs. - Fair Value (FV) - the price at which a hypothetical willing, informed, and able seller would trade asset to a willing, informed, and able buyer; vs. - Investment Value (InvV) - value of a stock to a particular buyer, depending on the buyer’s specific needs and expectations, as well as perceived synergies with existing buyer assets (usually for M&A and LBO); vs. - Equilibrium Value (EV) - any market price that clears the market at any point in time when there are no more buyers or sellers as no market inefficiencies exist (economic term and usually unachievable condition); vs. - Market Value (MV) - anything you observe on the market at any point in time for any asset; vs. - Discounted Present Value (PV) - all future expected cash flows discounted to current period of time (commonly, but not always equals to IntV); vs. - Book Value (BV) - book value of assets as per accounting records (sometimes equals to IntV). All above will change from person to person depending on own understanding, and depending on the valuation purpose, and "... who pays the valuer". And what is IntV or InvV to Buffet, won't be same to the "average Joe" from down the street. Because the fact that Buffet invested - is a game changer to the market, moreover, he personally can affect the company, but others - not so much. And, as you correctly noted, some of the investment decisions were made by younger investment managers, which deviated from Buffet's strategy, so that means: either 1) Buffet hired not so intelligent people who don't fully understand "value investment" theory, either 2) those people don't believe in "value investment" theory so much, or in it's future, either 3) We don't fully understand "value investment" theory (Snowflake P/E  ), or 4) We don't know the whole picture and truth. I believe the last reason is the most reasonable to assume. Therefore, I don't see too much point arguing around those here, as here we discuss a different thing, however, would be happy to share own opinions on that in a separate thread if you would like to I think we've reached the point, on this particular issue, where we agree to disagree (for lack of a better characterization). I think ultimately that the venn diagram of value investing and growth investing can have overlap, it's not necessarily that a value investment can't be made in a growth company. After all, all growth investors are eventually counting on profits if they're long term holders and not just momentum trading, which describes the Berkshire approach specifically and also mine, it's just that when they make the decision to invest they had a different thesis about how/why the stock is going to go up. But my whole entry into your response was just to rebut the notion that Munger and Buffet are anything other than value investors. |
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I was surprised the last two weeks that there has been no NFL betting on the site. There was for the regular season, and would have thought that the playoffs were bigger betting instances than the regular season. Will we get some the conference finals and the Super Bowl?
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which is what people who are valuing Netflix at 80 times earnings are doing
Its more to me like retail investors FOMO into popular stock rather than someone intentionally is accepting 80 P/E because in far future maybe competition will not overtake netflix (HBO GO, Amazon Prime), netflix will be able to cut spendings and current price will be relevant to fundamentials. There is definitely some truth to this, there is a great deal of momentum investing with tech stocks. Tesla is currently the best example of this, but other very high growth tech stocks are also in this boat, like Shopify, MercadoLibre, Jumia, and Twilio (just to name a few). These all have sky high PE ratios (or no PE ratio because they're not profitable yet) but the thesis is that the rapid growth will eventually fall to earnings when the rapid growth phase is done and the business won't have to spend so much to sustain it. Tesla even outperformed Apple for sure and the way they radiated their boundaries to every place is actually commendable. They even went to space lol and all those people who doubted them ever are now buying them. Tesla stock outperformed Apple, yes, but the company definitely didn't. Apple makes over 50 billion in profit per year and Tesla only just became profitable at all. Tesla revenue growth currently far outpaces Apple, but that's obviously easy to do when you're starting from such a insignificant base (relative to Apple). |
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The joke is on us, if we take this loser seriously. Buffet no longer rank among the top-10 richest people in the world. I have to agree that he was successful in the past, but a lot of factors contributed to his success. If others had the same amount of capital as he had, then we would have seen many others with much more good looking portfolios. My advice is to ignore this guy. He is not useful anymore and I hope that jokers such as Justin Sun realize this.
Oh, has he fallen out of the list of the top 10 richest people in world? Like all the way down to number 7? https://www.msn.com/en-gb/money/technology/10-richest-people-in-the-world-list-of-wealthiest-people-on-earth-as-elon-musk-knocks-jeff-bezos-off-top-spot/ar-BB1cAbGBBut let's pretend he had fallen out of the top ten richest people on the planet, like all the way down to 15. Or 20, oh the humanity! Let's pretend there were a ton of people who ranked above him now and the only thing he did was increase his wealth 22 billion dollars between March 2020 and January 2021. (True story! It was only 67.5 billion last March: https://en.wikipedia.org/wiki/The_World%27s_Billionaires#2020) I mean wow, what a loser, amirite? |
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Bitcoin isn't really very "alive" as a currency, considering the use case as a currency is negligible compared to its other uses. However, if you want to predict it will die as a crypto you have to answer why it won't survive as a store of value, which is currently the biggest problem with this statement.
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I'm just trying to understand why you think Munger and Buffet are growth investors. Your posts though lead me to believe you may not know the difference between value investing and growth investing, or else you just don't know much about Munger or Buffet as neither would be described as growth investors by themselves or anyone who knows anything about stock investing. Buffet's biography on wikipedia attests to this: "He went on to graduate from Columbia Business School, where he molded his investment philosophy around the concept of value investing pioneered by Benjamin Graham... He is noted for his adherence to value investing, and his personal frugality despite his immense wealth." A better example might be reading Buffet's own words though. You can read all of Berkshire's annual letters to shareholders on their website. In fact, if you start at the most recent and work your way backwards, you'll see they start nearly every letter with a discussion of "intrinsic value." It is universally at the top of every letter because intrinsic value is what Buffet and Munger care about because they're value investors to the core. Look for yourself: https://www.berkshirehathaway.com/letters/letters.htmlAs for Bitcoin in the above context, I wouldn't say anything about it because it's not applicable. Bitcoin doesn't produce income, so it can't be valued on fundamentals because there are no fundamentals. It's purely a speculative asset and as I stated, the ultimate example of narrative investing. Telsa, however, as much as the price is driven by speculation, will eventually have to produce profits to justify its valuation. If growth slows before turning big profits, the price will crash. Bitcoin and Tesla exist in two different universes, they aren't subject to the same rules. I really understand your point about why you think Buffet and Munger are value investors, but let's go point by point: Value stocks • Currently undervalued • Generally low P/E ratios • Generally high dividend yields • Expected to be appreciated by the market to the intrinsic value Growth stocks • Currently overvalued • Above-average P/E ratios • Usually low or no dividend • Expected to deliver outstanding growth which is not priced in current market price I believe you won't argue on the above, as those are pretty much the main points of difference between the two strategies. Now let's take a look at the latest investments of Buffet for example: • AbbVie (ABBV) P/E 23.8, Pfizer P/E 23.7, Eli Lilly P/E 31.3, Merck P/E 18.4, Johnson & Johnson P/E 19.9 (yes I know he invested in several others from this list too) • StoneCo (STNE) P/E 132.03 • Snowflake Inc. (SNOW) P/E negative (I'm sure you know when that happens "Since such a case is common among high-tech, high growth, or start-up companies, EPS will be negative producing an undefined P/E ratio (sometimes denoted as N/A)" source: https://www.investopedia.com/terms/p/price-earningsratio.asp) These are just few examples, but you can take a look and also analyze Amazon.com (AMZN), Apple (AAPL), Biogen (BIIB), among others. Do you think Apple or Amazon for example are undervalued? Furthermore, Buffet has always saying that you shouldn't touch industries you are not familiar with, but yet, exactly in 2020 he increased % of portfolio in BioTech & Tech - 1st deviation from own principles, these two areas are especially to be known either overvalued, either being growth areas - 2nd deviation from own principles, and the examples above are just an additional evidence of that. As I noted before, don't pay too much attention to what people say or write, but instead watch out for their real actions. As for Bitcoin and Tesla, as you said correctly - they follow different cases, yet both might be good examples of recent shift to narrative economy. However, I don't necessarily foresee crash of Tesla (possible, but not necessary), while both can be argued to be undervalued (value investing), to have fundamentals which we don't account for with old-school metrics, and to have huge growth potential (growth investing), and be heavily driven by their pop stories (narrative investing). But those are topics for a different discussion I guess. I would generally agree with your characterization between value and growth with the main emphasis being that value investing is primarily focused on stocks that are undervalued based on an analysis of their intrinsic value vs. what the market is paying for them, and growth stocks are primarily defined by not being concerned with earnings because all free cash flow is being deployed to grow revenues. However, none of the drug companies you listed are growth investments, those are all value plays. If there's one thing Warren Buffet likes, it's a a broad defensible moat around the business and high barriers to entry for competitors, and this pretty much sums up the biopharma market perfectly where there are high regulatory hurdles and the cost for new entrants in the field is incredibly high. Further, those PE ratios don't even suggest they're high growth companies, this was definitely a value play. Apple was definitely a value play when Buffet invested, and it was also only made after his younger portfolio managers kind of taught him how to value tech stocks. https://www.youtube.com/watch?time_continue=143&v=mOgAJnwQxzw&feature=emb_titleStoneCo is a Brazilian tech firm that deals in money transfers and I would characterize it as a growth company (I've followed the company closely, ironically because Berkshire invested in it), however a portfolio manager at Berkshire is responsible for this investment, not Warren Buffet. Buffett's Berkshire Hathaway invested $340 million to acquire 14,166,748 Class A shares of StoneCo, piggybacking on its IPO, at roughly $24 per share. The move raised eyebrows at the time, a departure from the type of company Buffett would typically choose. Reports later confirmed that it was one of Buffett's portfolio managers -- Todd Combs -- who had made the investment decision. - https://www.fool.com/investing/2020/03/03/warren-buffett-backed-fintech-company-stoneco.aspx Since Buffet and Munger are quite old, they have succession plans in place for when they leave the company. This has lead to more younger portfolio managers at Berkshire taking the reigns of ever larger swaths of the investment portfolio. I am quite confident that you will find that any investment in growth/tech stocks were due to the younger portfolio managers, and not Buffet or Munger. Again, read the Berkshire shareholder letters. It's a primary source. Buffet's own words tell you he's obsessed with intrinsic value, not growth. (Kind of a Buffet fanboy here. I've read a lot of his writing over the years.) |
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which is what people who are valuing Netflix at 80 times earnings are doing
Its more to me like retail investors FOMO into popular stock rather than someone intentionally is accepting 80 P/E because in far future maybe competition will not overtake netflix (HBO GO, Amazon Prime), netflix will be able to cut spendings and current price will be relevant to fundamentials. There is definitely some truth to this, there is a great deal of momentum investing with tech stocks. Tesla is currently the best example of this, but other very high growth tech stocks are also in this boat, like Shopify, MercadoLibre, Jumia, and Twilio (just to name a few). These all have sky high PE ratios (or no PE ratio because they're not profitable yet) but the thesis is that the rapid growth will eventually fall to earnings when the rapid growth phase is done and the business won't have to spend so much to sustain it. |
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Can someone explain to me if this is right? Everytime I roll a number, my achieved percentage for the next BTC reward decreases. Doesn't it need to increase instead until it reaches 100% and I get more BTC per roll? The thing is, I'm only rolling like 2-3 times a day, not every hour, maybe this could be the reason? Before the roll:  After the roll:  Free rolls diminish your percentage and betting rolls increase it. It's designed to reward wagering on the site since that's how the site makes money, and the free rolls are basically guaranteed losses for the site, which is why it decreases the gambling reward counter. |
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P/E ratio is only useful when comparing like companies. You can't compare high growth tech stocks like NVIDIA or Netflix to an entire index and generally conclude they're overvalued because the NASDAQ is such a broader base, and growth stocks are so speculative in general.
Thats part of current narrative. That 1 $ earned from selling tomatos is different from 1 $ earned from selling PCs. I could have agree with you if we were talking about P/E 10 from tomatos and P/E 30 from graphic cardas (nvidia) but we are talking about 10 vs 500-5000. Netflix has P/e around 500 and has around 200 mln registered users. To justify current valuation netflix should grow 20 times to 4 bilion users while "4.66 billion people were active internet users as of October 2020,". So netflix should sell its product to every person on earth that has internet to justify such evaluation (btw. you can share one account with others). People no longer take care of fundamentials and there is no super spacial force that may push evaluation of company back down to "fundamentals and profitability." since as you said by yourself "P/E (AKA fundamentals and profitability) ratio is only useful when comparing like companies. " First, NFLX's PE ratio is around 80, not 500, so there's nowhere close to 20x growth needed to justify the valuation or bring it down to more traditional PE levels. And why are you extrapolating users based on PE? That makes no sense because the PE ratio encompasses more inputs (earnings reflect revenues AND costs, not just revenues which is all you're accounting for in your example extrapolating user growth). You would extrapolate earnings, because you can reduce costs to increase earnings, which is what people who are valuing Netflix at 80 times earnings are doing when they judge that NFLX will eventually be more profitable than it is today, when they don't have to spend so much on content acquisition to fuel user growth. If that investment thesis doesn't pan out though and it doesn't become more profitable when revenue growth slows (for example because they have to keep spending the same amount to retain users), the valuation will fall. It is only because it is still in a high growth phase that people cut it a break on earnings, trusting that when the high growth phase is over, costs will rapidly fall to boost profitability. |
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Today we saw bitcoin hit an all time high of $23k while its traditional counterparts are suffering a decline in value. Historically, when someone desires financial stability, they naturally go for safe investment is, such as gold, stocks, real estate. But with the outbreak of the corona virus pandemic we have experienced a shift in global economy, countries are facing inflation. As a result many individuals are beginning to see Bitcoin as a safer investment than its counterparts. Countries are slowly adopting crypto as a means of payment. Will bitcoin eventually dominate the world economy and replace traditional currencies?
I don't think traditional currency will be replaced. Bitcoin and other cryptocurrency will be an option. Many of us see the future of bitcoin while other people do not even have the idea of what is crypto. It is not really safe so we have to be careful and learn first the security of accounts when using bitcoin. I think as a store of value, but not a currency. Currencies that are deflationary are bad for the economy because they disincentivize economic activity. It was a major reason for abandoning the gold standard. |
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Lol, Charlie Munger and Warren Buffet are two of the greatest value investors in history. What on earth would make you identify them as growth investors? Growth and value investing are completely antithetical to each other.
As for narrative investing, I don't agree. Eventually, fundamentals of the underlying business matters. The best example of this is Tesla. Tesla won't keep trading at this valuation indefinitely, no matter the narrative around it. Eventually, it's going to have to turn mega-insane profits to justify this valuation.
Ironically, bitcoin is only valuable because of narrative investing.
Okay, here we go: Do I need to provide more comments or arguments about who is the greatest investor? While Charlie Munger and Warren Buffet surely WERE the best investors of THEIR times, for now, I am not so sure they still remain so. We must recognize when the times and leaders and "greatest investor" title changes. Otherwise it's like observing Bitcoin, but still calling U.S. Dollar the greatest currency in the world. Well, I believe just a simple data of Charlie Munger vs Warren Buffet vs Bitcoin vs Tesla show my entire answer and argument, so I don't need to add more to that. As for why identiffying the aforementioned two as growth investors, you can take a look at their portfolios and latest investments. Some of their assets show clear "growth-investor"-like patterns, while they don't publicly disclose that. Irrespective of that - what people say in public is not always what they actually have in mind. And about Tesla, I gave a comprehensive explanation above why even if Tesla fails to deliver solid revenue in the near future, their narrative-driven market cap can turn the company and force it into a great business eventually. That's not something good or bad, that's just what it is. Using your own argument about "won't keep trading at this valuation indefinitely, no matter the narrative around it. Eventually, it's going to have to turn mega-insane profits to justify this valuation." - what would you say about Bitcoin in such context then? I'm just trying to understand why you think Munger and Buffet are growth investors. Your posts though lead me to believe you may not know the difference between value investing and growth investing, or else you just don't know much about Munger or Buffet as neither would be described as growth investors by themselves or anyone who knows anything about stock investing. Buffet's biography on wikipedia attests to this: "He went on to graduate from Columbia Business School, where he molded his investment philosophy around the concept of value investing pioneered by Benjamin Graham... He is noted for his adherence to value investing, and his personal frugality despite his immense wealth." A better example might be reading Buffet's own words though. You can read all of Berkshire's annual letters to shareholders on their website. In fact, if you start at the most recent and work your way backwards, you'll see they start nearly every letter with a discussion of "intrinsic value." It is universally at the top of every letter because intrinsic value is what Buffet and Munger care about because they're value investors to the core. Look for yourself: https://www.berkshirehathaway.com/letters/letters.htmlAs for Bitcoin in the above context, I wouldn't say anything about it because it's not applicable. Bitcoin doesn't produce income, so it can't be valued on fundamentals because there are no fundamentals. It's purely a speculative asset and as I stated, the ultimate example of narrative investing. Telsa, however, as much as the price is driven by speculation, will eventually have to produce profits to justify its valuation. If growth slows before turning big profits, the price will crash. Bitcoin and Tesla exist in two different universes, they aren't subject to the same rules. |
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