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Paradoxically, reading Buffett's essays on investing was one of the major inspirations for me to invest in crypto in the first place. Buffett typically only inv

Paradoxically, reading Buffett's essays on investing was one of the major inspirations for me to invest in crypto in the first place. Buffett typically only invests in things he understands well, that produce a solid return, and that are undervalued. These are good principles for anyone to follow. But when he buys, he either buys all of a company, or enough of it to have some level of control over it, and that's only possible these days if you're wealthy as he is. The rest of us are pretty much just betting on horses. I think I would agree with him about crypto if I was an older person who already had enough wealth to purchase a significant stake in a real business. For investors like that, the world is their oyster. For people who are young, familiar with technology and largely without any wealth, Bitcoin is much more attractive. It's risky, sure, but to many of us, the entire economy looks just as risky, and with lower growth potential. This statement would sound insane to someone like Buffett, but it's the reason why Bitcoin exists in the first place. Edit: I'm not advising people make any investments in Bitcoin. Just providing a counterpoint. Invest in what you know.

pmyteh 9y ago
> But when he buys, he either buys all of a company, or enough of it to have some level of control over it, and that's only possible these days if you're wealthy as he is. A lot of that is simply that he now has too much money to be able to efficiently buy bits of companies. His early career was still based on value investing, but mainly consisted of regular stock purchases. Berkshire Hathaway still has decent-sized chunks of Coca Cola and various other companies on its books.
- rmrm 9y ago
  Correct. His mindset or sugguestion is to only buy shares in a company you would wish to own entirely, and forever. Buffett stresses the ownership of the underlying business, rather than securities speculation.
  - deleted 9y ago
    [deleted]
- workthrowaway27 9y ago
  And he employs a couple of people to make those sorts of investments for him.They're quite good at at it too. I can't remember their names, but it should be easy to look them up. I think they're mentioned in all the recent annual reports.
charlesdm 9y ago
I'm not saying he's wrong, but he's notoriously bad at investing in technology. He just does not get it, for the most part. He would probably have never invested in Netflix, or Facebook, or Google. Yet any investor who did made a killing. Now, I'm pretty sure everyone is aware at some point the music has to stop (at least I hope they do). A major correction will happen at some point. But no one knows when. It could be tomorrow, or it could be 3 years from now.
- csomar 9y ago
  More importantly, tech investors have definitively netted lots of profit even if the music stops. For example, if you are making x50-100 gains on tech investments, you are not rolling the dice full again but netting out some of that profit. Which is still a plenty and more profitable than traditional investment channels. Sure it can't work for everyone and the market is very heated right now but we should not incorrectly assume that the tech industry didn't create enormous amounts of wealth.
- tc313 9y ago
  > He would probably have never invested in Netflix, or Facebook, or Google. Yet any investor who did made a killing. Buffett's strategy is to avoid losses -- not to worry about missing out on possible gains. He believes you avoid losses by investing in companies with a long, successful track record of doing the same thing for many years and that are likely to continue doing that same thing for many years into the future. So, it's not that Buffett doesn't "get" technology, he just can't make intelligent guesses about what tech companies will be earning 10 years from now. He sticks to his circle of competence and it works.
  - charlesdm 9y ago
    Which is fine. He's a great investor on his own terms. But the complete counterexample to Buffet is George Soros -- a different way of thinking and operating. Both lines of thinking clearly work for some people.. your investment style is tied pretty closely to your personality. There is no perfect solution, and everyone has to find their own way. I would never put money in a railroad or an oil company, because I can't properly assess what drives the stock price and which unexpected issues might pop up. I can more easily do that with tech.
short_sells_poo 9y ago
Could you please explain succinctly why do you think that Bitcoin is undervalued, why should it produce solid future returns and why do you think it is a good investment for someone with (comparatively) little investable cash?
- tboyd47 9y ago
  1. I came to see it as undervalued in early 2017 (when I started buying it) because I saw the price curve, read the whitepaper, observed the community governance at work, tried it out, and reasoned that it has the potential to take a significant, long-lasting role in the global economic system. So I bought a small amount that I can afford to lose. 2. I didn't say Bitcoin produces returns, and don't believe it will. It's a currency, not a business. Like I said, I don't have the wealth to get a significant share in anything that produces a return. It's a class of assets I just don't have access to yet (in my mind, and for many other reasons I haven't mentioned). 3. I would advise anyone to only invest in what they know. I wasn't recommending anyone invest in Bitcoin specifically, and in fact, I myself haven't bought any in 2018. I was only explaining why I did consider it a good investment in 2017, and why many people might have felt that way and still feel that way.
  - rullelito 9y ago
    What is it that Bitcoin has that any other cryptocurrency doesn't, or is unlikely to have in the future?
  - sanderjd 9y ago
    > it has the potential to take a significant, long-lasting role in the global economic system. What role, and why is it uniquely well suited for that role? Speaking for myself, back in 2013, I was excited by what I saw as its potential for micropayments on the internet. That is (and was) clearly wrong - it can't do the transaction volume, is too hard to safely acquire and use for most people, and is too volatile. Its current role is "hype-y speculative security". I don't see a significant and long-lasting need for such a thing, or how bitcoin is uniquely qualified to be that thing. > I would advise anyone to only invest in what they know. What is it to "know" a thing? Put another way, what exactly makes it such that you "know" bitcoin? Put another way, what useful information is there to know about it? I understand the details of the whitepaper and the block-chain concept at a technical level, because I find them innovative and fascinating, but I think any translation of that technical with knowledge of its value as a security is illusory. I'm honestly curious about this: I've gone from very bullish to very bearish over the last 5 years or so, while I've watched the population at large take an opposite course from indifferent and unaware to very bullish, and I'd really like to understand what I'm missing.
bluedevil2k 9y ago
> For people who are young, familiar with technology and largely without any wealth, Bitcoin is much more attractive. This is a crazy way for young people to think though and the opposite of how they should be thinking. If they don't have much wealth, they certainly shouldn't put it in something so incredibly risky as Bitcoin. They would be really hurt if/when BTC tanks. Someone who's rich wouldn't really notice 10% of their net worth gone. > It's risky, sure, but to many of us, the entire economy looks just as risky, and with lower growth potential. The entire economy is definitely not as risky as BTC. The economy doens't see 50% swings in value week-to-week.
- christophilus 9y ago
  I have a friend who's been investing loads of cash into BTC and doing well. My advice to him (and others) is to take a certain % out every time it spikes and transfer it to a more stable currency, while leaving enough in that it can continue to snowball. This is doable. For instance, he took $2k and turned it into $12k in a few months. I told him, "Take 4k out and put it into an index fund." That way, he comes out ahead no matter how you slice it, even if he loses the rest of what he has in BTC. If what he has remaining in BTC goes up to $18K, I'd take another $4K out and move it into an index fund. Rinse and repeat. It's not as risky if you run it that way.
  - mrep 9y ago
    Except you are assuming it will just magically go up. If you are the unlucky person to do that at the peak, then you will lose most if not all of your money.
    - charlesdm 9y ago
      Which is why you put $2k in, and don't bet your house on it. Or if you do bet the house, be aware you could lose it all (or be set up for life, of course)
      - antisthenes 9y ago
vm 9y ago
Check out Bill Miller's investor letter where he discusses the "certainty" of storied investors that Bitcoin will fail. Miller is the most successful mutual fund manager in history. https://millervalue.com/certitude-not-test-certainty/ https://millervalue.com/certitude-not-test-certainty/ Also a good read is Miller's letter on Bitcoin from 2015. He put 1% of his fund into Bitcoin (now 50% of his fund due to the meteoric rise in price): https://millervalue.com/a-value-investors-case-for-bitcoin/ https://millervalue.com/a-value-investors-case-for-bitcoin/
- robterrin 9y ago
  Check out Bill Miller's track record to see what a wild ride he takes his investors on: https://www.cnbc.com/2017/05/10/legendary-investor-bill-miller-is-killing-it-thanks-to-bet-on-apple.html https://www.cnbc.com/2017/05/10/legendary-investor-bill-mill...
  - mcguire 9y ago
    Something like this? https://finance.yahoo.com/quote/LMOPX/chart?p=LMOPX#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 https://finance.yahoo.com/quote/LMOPX/chart?p=LMOPX#eyJpbnRl...
s1mpl3 9y ago
spot on.
jbob2000 9y ago
Buffet is first and foremost a reader and an investor second. He reads A LOT! If he does't like bitcoin it's because techies have failed to explain it or he truly thinks it's not valuable (perhaps he has knowledge of money/currency/banking that most of us dont?). Not only does he invest in things that are undervalued but they also must provide value. Crypto currencies themselves do not provide value. The companies that make the hardware for mining provide value. Power generation companies that make the electricity for mining provide value. But a crypto currency provides no value by itself, it's just bits and bytes on a harddrive.
hooande 9y ago
"This is all I could afford" is not a valid reason to make a bad investment

pmyteh 9y ago

> But when he buys, he either buys all of a company, or enough of it to have some level of control over it, and that's only possible these days if you're wealthy as he is. A lot of that is simply that he now has too much money to be able to efficiently buy bits of companies. His early career was still based on value investing, but mainly consisted of regular stock purchases. Berkshire Hathaway still has decent-sized chunks of Coca Cola and various other companies on its books.

rmrm 9y ago
Correct. His mindset or sugguestion is to only buy shares in a company you would wish to own entirely, and forever. Buffett stresses the ownership of the underlying business, rather than securities speculation.
- deleted 9y ago
  [deleted]
workthrowaway27 9y ago
And he employs a couple of people to make those sorts of investments for him.They're quite good at at it too. I can't remember their names, but it should be easy to look them up. I think they're mentioned in all the recent annual reports.

charlesdm 9y ago

I'm not saying he's wrong, but he's notoriously bad at investing in technology. He just does not get it, for the most part. He would probably have never invested in Netflix, or Facebook, or Google. Yet any investor who did made a killing. Now, I'm pretty sure everyone is aware at some point the music has to stop (at least I hope they do). A major correction will happen at some point. But no one knows when. It could be tomorrow, or it could be 3 years from now.

csomar 9y ago
More importantly, tech investors have definitively netted lots of profit even if the music stops. For example, if you are making x50-100 gains on tech investments, you are not rolling the dice full again but netting out some of that profit. Which is still a plenty and more profitable than traditional investment channels. Sure it can't work for everyone and the market is very heated right now but we should not incorrectly assume that the tech industry didn't create enormous amounts of wealth.
tc313 9y ago
> He would probably have never invested in Netflix, or Facebook, or Google. Yet any investor who did made a killing. Buffett's strategy is to avoid losses -- not to worry about missing out on possible gains. He believes you avoid losses by investing in companies with a long, successful track record of doing the same thing for many years and that are likely to continue doing that same thing for many years into the future. So, it's not that Buffett doesn't "get" technology, he just can't make intelligent guesses about what tech companies will be earning 10 years from now. He sticks to his circle of competence and it works.
- charlesdm 9y ago
  Which is fine. He's a great investor on his own terms. But the complete counterexample to Buffet is George Soros -- a different way of thinking and operating. Both lines of thinking clearly work for some people.. your investment style is tied pretty closely to your personality. There is no perfect solution, and everyone has to find their own way. I would never put money in a railroad or an oil company, because I can't properly assess what drives the stock price and which unexpected issues might pop up. I can more easily do that with tech.

short_sells_poo 9y ago

Could you please explain succinctly why do you think that Bitcoin is undervalued, why should it produce solid future returns and why do you think it is a good investment for someone with (comparatively) little investable cash?

tboyd47 9y ago
1. I came to see it as undervalued in early 2017 (when I started buying it) because I saw the price curve, read the whitepaper, observed the community governance at work, tried it out, and reasoned that it has the potential to take a significant, long-lasting role in the global economic system. So I bought a small amount that I can afford to lose. 2. I didn't say Bitcoin produces returns, and don't believe it will. It's a currency, not a business. Like I said, I don't have the wealth to get a significant share in anything that produces a return. It's a class of assets I just don't have access to yet (in my mind, and for many other reasons I haven't mentioned). 3. I would advise anyone to only invest in what they know. I wasn't recommending anyone invest in Bitcoin specifically, and in fact, I myself haven't bought any in 2018. I was only explaining why I did consider it a good investment in 2017, and why many people might have felt that way and still feel that way.
- rullelito 9y ago
  What is it that Bitcoin has that any other cryptocurrency doesn't, or is unlikely to have in the future?
- sanderjd 9y ago
  > it has the potential to take a significant, long-lasting role in the global economic system. What role, and why is it uniquely well suited for that role? Speaking for myself, back in 2013, I was excited by what I saw as its potential for micropayments on the internet. That is (and was) clearly wrong - it can't do the transaction volume, is too hard to safely acquire and use for most people, and is too volatile. Its current role is "hype-y speculative security". I don't see a significant and long-lasting need for such a thing, or how bitcoin is uniquely qualified to be that thing. > I would advise anyone to only invest in what they know. What is it to "know" a thing? Put another way, what exactly makes it such that you "know" bitcoin? Put another way, what useful information is there to know about it? I understand the details of the whitepaper and the block-chain concept at a technical level, because I find them innovative and fascinating, but I think any translation of that technical with knowledge of its value as a security is illusory. I'm honestly curious about this: I've gone from very bullish to very bearish over the last 5 years or so, while I've watched the population at large take an opposite course from indifferent and unaware to very bullish, and I'd really like to understand what I'm missing.

bluedevil2k 9y ago

> For people who are young, familiar with technology and largely without any wealth, Bitcoin is much more attractive. This is a crazy way for young people to think though and the opposite of how they should be thinking. If they don't have much wealth, they certainly shouldn't put it in something so incredibly risky as Bitcoin. They would be really hurt if/when BTC tanks. Someone who's rich wouldn't really notice 10% of their net worth gone. > It's risky, sure, but to many of us, the entire economy looks just as risky, and with lower growth potential. The entire economy is definitely not as risky as BTC. The economy doens't see 50% swings in value week-to-week.

christophilus 9y ago
I have a friend who's been investing loads of cash into BTC and doing well. My advice to him (and others) is to take a certain % out every time it spikes and transfer it to a more stable currency, while leaving enough in that it can continue to snowball. This is doable. For instance, he took $2k and turned it into $12k in a few months. I told him, "Take 4k out and put it into an index fund." That way, he comes out ahead no matter how you slice it, even if he loses the rest of what he has in BTC. If what he has remaining in BTC goes up to $18K, I'd take another $4K out and move it into an index fund. Rinse and repeat. It's not as risky if you run it that way.
- mrep 9y ago
  Except you are assuming it will just magically go up. If you are the unlucky person to do that at the peak, then you will lose most if not all of your money.
  - charlesdm 9y ago
    Which is why you put $2k in, and don't bet your house on it. Or if you do bet the house, be aware you could lose it all (or be set up for life, of course)
    - antisthenes 9y ago

vm 9y ago

Check out Bill Miller's investor letter where he discusses the "certainty" of storied investors that Bitcoin will fail. Miller is the most successful mutual fund manager in history. https://millervalue.com/certitude-not-test-certainty/ https://millervalue.com/certitude-not-test-certainty/ Also a good read is Miller's letter on Bitcoin from 2015. He put 1% of his fund into Bitcoin (now 50% of his fund due to the meteoric rise in price): https://millervalue.com/a-value-investors-case-for-bitcoin/ https://millervalue.com/a-value-investors-case-for-bitcoin/

robterrin 9y ago
Check out Bill Miller's track record to see what a wild ride he takes his investors on: https://www.cnbc.com/2017/05/10/legendary-investor-bill-miller-is-killing-it-thanks-to-bet-on-apple.html https://www.cnbc.com/2017/05/10/legendary-investor-bill-mill...
- mcguire 9y ago
  Something like this? https://finance.yahoo.com/quote/LMOPX/chart?p=LMOPX#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 https://finance.yahoo.com/quote/LMOPX/chart?p=LMOPX#eyJpbnRl...

s1mpl3 9y ago

spot on.

jbob2000 9y ago

Buffet is first and foremost a reader and an investor second. He reads A LOT! If he does't like bitcoin it's because techies have failed to explain it or he truly thinks it's not valuable (perhaps he has knowledge of money/currency/banking that most of us dont?). Not only does he invest in things that are undervalued but they also must provide value. Crypto currencies themselves do not provide value. The companies that make the hardware for mining provide value. Power generation companies that make the electricity for mining provide value. But a crypto currency provides no value by itself, it's just bits and bytes on a harddrive.

hooande 9y ago

"This is all I could afford" is not a valid reason to make a bad investment