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Warren Buffett: Bitcoin Is Pure FOMO

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Re: Warren Buffett: Bitcoin Is Pure FOMO

#141

Post by fivethree »

BoorishBears wrote: post #14
bcherny wrote: post #4

Earlier quoted context omitted.

> I can go to Africa right now and I can imagine that even some of the remoter parts will be aware of bitcoin. The Bay Area, ladies and gentlemen. In all seriousness, I doubt people in most of the world have heard of either.

As a person from (West) Africa, I can tell you they've not only heard of Bitcoin but they're mining it, even in villages.

You 6 days ago: >I lived in Downtown Hartford until last month, I don't recall many, if any bikes on roads. Then again, I do recall traffic being generally unsafe, I definitely would avoid riding a bike there.

Re: Warren Buffett: Bitcoin Is Pure FOMO

#142

Post by sumedh »

tedmiston wrote: post #129
thisisit wrote: post #106

Buffett has described investing as ability to find the right pitch to swing at. He invests in companies which are within his "circle of competence": https://www.cnbc.com/2017/02/02/warren-buffett-simplifies-in... This lesson is apparently lost on many people.

Buffett's whole approach to valuing companies to invest in doesn't really work for tech cos, especially software.

Why doesn't' it work for software?

Re: Warren Buffett: Bitcoin Is Pure FOMO

#143

Post by sumedh »

brndnmtthws wrote: post #13

It's interesting to note that most of the people who are pro-Bitcoin were born after 1980 or so. Could it be that Mr Buffett just doesn't get it?

> Could it be that Mr Buffett just doesn't get it?

People said the same thing in 1999 when he famously refused to invest in tech stocks and then you kno0w what happened.

Re: Warren Buffett: Bitcoin Is Pure FOMO

#144

Post by XR0CSWV3h3kZWg »

He didn't say that. That's what the author of the article said.

Of course Warren buffett doesn't like it. He has made his name on being able to tell if a stock's price is above or below it's fundamentals. Bitcoin doesn't have fundamentals and it doesn't pay dividends.

Re: Warren Buffett: Bitcoin Is Pure FOMO

#145

Post by alexanat »

JumpCrisscross wrote: post #28
adamnemecek wrote: post #8

Earlier quoted context omitted.

I don't live in the bay area. idk if you saw this but UN has previously used Ethereum to send aid to refugees. https://www.coindesk.com/united-nations-sends-aid-to-10000-s... You have to realize that in the US you have the luxury of stable (corrupt, but stable) government. A lot of other countries dont have that luxury. An international standard is a lot more enticing to someone from such a country than it is for you…

> A lot of other countries dont have that luxury The intersection of (a) countries with reliable Internet access and broadly-available Internet-connected devices, (b) a useless national currency and (c) effective controls on the use of cash hard currency is small. The GDP of that intersection certainly doesn't support anything close to Bitcoin's price.

I can't think of a national currency that is useful beyond faith.

Re: Warren Buffett: Bitcoin Is Pure FOMO

#146

Post by Clubber »

noncoml wrote: post #127
mholmes680 wrote: post #11

"Rather, dollars are a temporary store of value, a means of transmitting that value from one person to another. As Buffett says, valuing bitcoin is like trying to value a paper check drawn on a bank. Pointless." I agree with the premise of the article, but isn't this quote a jump from that? Whats preventing bitcoin from being a temporary store of value to transmit from one person to another; Isn't there a second argu…

> its a bad _currency_ The problems that I see are: 1. There is a finite number of bitcoins, which means you can never have inflation, or in other words the bitcoin price is only going up tomorrow. So it doesn't make sense for people to spend it. 2. Mining. It costs a lot to mine a bitcoin. Imagine if the US government had to spend 1 billion worth of energy to print 1 billion dollars. I think Bitcoin was designed to…

One of the main reasons we got off the gold standard is in fact the scarcity of it was a shackle. Imagine if, say China decided to hoard gold, how much of an influence that artificial scarcity would have on all the other economies that could only value things in gold?

The US has 75% of all the world's reserves.

http://www.usfunds.com/investor-library/frank-talk/top-10-co...

Also, there is finite value in the total amount of gold available, so at a point, there is no room for growth. If there is say 1 billion worth of gold on Earth, the value per weight of gold would go through the roof. buying everyday items would be valued in specs of gold (or 18ths of specs). It's probably really easy to lose a spec of gold.

Finally, without inflation, it doesn't make financial sense to buy anything. Why buy a truck for 1oz of gold today when I could buy two for the same amount next year?

Re: Warren Buffett: Bitcoin Is Pure FOMO

#147

Post by nostrademons »

sumedh wrote: post #142
tedmiston wrote: post #129

Earlier quoted context omitted.

Buffett's whole approach to valuing companies to invest in doesn't really work for tech cos, especially software.

Why doesn't' it work for software?

He's stated it's because he doesn't understand it, but unpacking that...

Buffett's investment strategy is to run a discounted cash-flow analysis on the stock's fundamentals to figure out its "true" value, and then only invest in it if this is significantly above its market price.

Most consumer software companies have cash-flow graphs where they spend 5-10 years with zero revenue just gaining users and building a monopoly, then they turn on the monetization strategy and instantly start making $10B/quarter or so, and then they continue to make massive profits until some younger, cooler software company comes along and takes all their users, and then they either buy that company for a good fraction of outstanding shares or they die. In other words, their cash flows are unpredictable and back-loaded, and depend upon a number of factors that are unknowable early in the company's life, like 1) is there a viable monetization strategy? 2) when will the founder/CEO turn it on? 3) will they run out of capital first? 4) how big will the userbase be at the time? 5) will they be replaced by further developments in technology?

For an investor who wants predictability and rationality in investing, these are anathema; it's like going to a casino where the house holds the information advantage and hoping you can play enough rounds that you win.

Re: Warren Buffett: Bitcoin Is Pure FOMO

#148

Post by tedmiston »

sumedh wrote: post #142
tedmiston wrote: post #129

Earlier quoted context omitted.

Buffett's whole approach to valuing companies to invest in doesn't really work for tech cos, especially software.

Why doesn't' it work for software?

The main argument for why value investing doesn't work in the tech sector is its basis on revenue trends over time.

The whole approach is based on figuring out when a good time to buy a stock is based on when it's cheap / undervalued. However, many techs cos are growth stage investments, and it's hard to predict which ones will (eventually) win / succeed in creating moats.

Determining the value of pre-revenue companies, for example recent tech IPOs, is just hard. You don't have the revenue history that you do for a company like Coca Cola. There's much more projection and extrapolation required.

https://www.quora.com/Is-there-such-thing-as-a-strategy-like...

https://www.mckinsey.com/business-functions/strategy-and-cor...

Re: Warren Buffett: Bitcoin Is Pure FOMO

#149

Post by adamnemecek »

Cacti wrote: post #111
adamnemecek wrote: post #107

Earlier quoted context omitted.

One of the main differences is the fact that the value of a currency is fundamentally based on who accepts it. All economic theory prior to this is...i dont want to say outdated but needs to be reprioritized.

Are you seriously suggesting that "currency is fundamentally based on who accepts it" is a new idea?

No?

Re: Warren Buffett: Bitcoin Is Pure FOMO

#150

Post by primrose »

Clubber wrote: post #146
noncoml wrote: post #127

Earlier quoted context omitted.

> its a bad _currency_ The problems that I see are: 1. There is a finite number of bitcoins, which means you can never have inflation, or in other words the bitcoin price is only going up tomorrow. So it doesn't make sense for people to spend it. 2. Mining. It costs a lot to mine a bitcoin. Imagine if the US government had to spend 1 billion worth of energy to print 1 billion dollars. I think Bitcoin was designed to…

One of the main reasons we got off the gold standard is in fact the scarcity of it was a shackle. Imagine if, say China decided to hoard gold, how much of an influence that artificial scarcity would have on all the other economies that could only value things in gold? The US has 75% of all the world's reserves. http://www.usfunds.com/investor-library/frank-talk/top-10-co... Also, there is finite value in the total am…

> Why buy a truck for 1oz of gold today when I could buy two for the same amount next year?

Because someone needs a truck now. Deflation makes people more fiscally responsible, not less.

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