Buffett bashes Bitcoin as nonproductive, thriving on mystique

Post by hndamien » Tue, May 08, 2018, 12:42 AM UTC

dharma1 wrote: post #79

radoslawc wrote: post #68

'Billionaire investor Warren Buffett on Monday said buyers of bitcoin, which he has characterized as “rat poison squared,” thrive on the hope they’ll find other people who will pay more for it.' isn't this in a nutshell stock market form 'normal person' perspective? Or antiques market, or any other from thousands 'buy cheap - sell for more' types of market?

To some degree, but the valuation of shares is (in theory) based on fundamentals - price to earnings ratio for instance - as well as speculation of how well it will be doing in the future. Companies can also choose to pay dividends if they have made a lot of cash, and choose to issue some of it to shareholders. Valuation of Bitcoin to a large degree is purely based on market psychology, and it doesn't pay dividends.

Post by mercutio2 » Tue, May 08, 2018, 1:05 AM UTC

hndamien wrote: post #159

fixermark wrote: post #46

Earlier quoted context omitted.

Question regarding the list of "fundamental properties of money": Should "liquid" (easy to spend and trusted to be exchangeable for goods or services) be on that list? I wonder if it's generally left off because it's assumed, but BTC is not currently what I would consider "liquid;" the average time to confirm a transaction ranges from 30 minutes to (sometimes) over 16 hours [source: https://coincentral.com/how-long-d…

Compare how liquid it is to real-estate. I'd say it is pretty liquid.

Post by coralreef » Tue, May 08, 2018, 4:47 AM UTC

beefield wrote: post #144

coralreef wrote: post #43

Earlier quoted context omitted.

Quantity of demand is equal to quantity supplied

And what makes them equal? Wishful thinking does not count. I know no law of nature nor economics that says that demand of money is stable. And if you allow fractional reserve bitcoin banking without regulation[1], money supply would be completely chaotic. [1] I guess the question is how would you prohibit fractional reserve bitcoin banking? It's not like there exists any regulatory authority that could do that...

Post by tim333 » Tue, May 08, 2018, 8:50 AM UTC

jhall1468 wrote: post #94

bmcusick wrote: post #85

Earlier quoted context omitted.

Bingo. He's also a value investor. He understands cash flows. Bitcoin produces no cash flow. Also, Buffet is the insider's insider. Banks work for him. He has exactly a 0.00000% chance of having his accounts frozen. The US Congress would hesitate to pick fights with his companies. When you have those kind of connections and power, you're not well placed to understand the benefits decentralized sources of authority pr…

I think he understands it better than you give him credit for. He just doesn't see a future for it. To most investors the promise of Bitcoin is the same promise of snake oil. Everything about Bitcoin is new and untested and most institutional investors abhor anything they can't quantify. Bitcoin is a huge gamble, and people like Gates and Buffet don't gamble.

Post by tim333 » Tue, May 08, 2018, 8:58 AM UTC

panarky wrote: post #141

berberous wrote: post #109

Earlier quoted context omitted.

Your link is broken. What makes Buffet's annual letters so great though is the quality of his writing, so rather than fix your link I'll post his position on gold in his own words: "The second major category of investments involves assets that will never produce anything, but that are purchased in the buyer’s hope that someone else – who also knows that the assets will be forever unproductive – will pay more for them…

Fascinating, thanks for posting this. Buffett thinks it's irrational to pay $1750 for one ounce of gold when he could own 22 shares of Exxon Mobil for the same price. Let's assume he's correct. Since the value of Exxon Mobil should compound over the decades much faster than gold, it should be worth more today, right? But markets are already discounting those future cash flows, isn't that already built in to the curre…