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So far, the market disagrees with Buffet and Munger. In 2018 Bitcoin's market cap was around $150B. Today it is around $300B. Maybe Charles and Munger might h

So far, the market disagrees with Buffet and Munger. In 2018 Bitcoin's market cap was around $150B. Today it is around $300B. Maybe Charles and Munger might have come up with interesting concepts long ago. But not during my adult life. They put all this work and research and expertise into their asset picking. But did anything come out of it in the last decades? If you invested into the NASDAQ 100 - no matter if it was 10 or 20 years ago - you would have had the same ROI Berkshire had over these timespans. There also is a huge blunder at 3:32:19 in the full video: https://youtu.be/sYiv4AMq9Tk?t=12739 https://youtu.be/sYiv4AMq9Tk?t=12739 Buffet saying that buying gold at the time of Christ and holding until today would not have been a great investment. To illustrate that non-productive assets are not good investments. He completely misses that most of gold has been mined after the time of Christ. If the amount of gold had been fixed (like Bitcoin), it would have been an insanely great investment.

CPLX 4y ago
Bitcoin doesn’t have a market cap. This is true because if you somehow could pay $300bn today and then possess all bitcoins you would have acquired literally nothing whatsoever. This, in fact, is exactly what these guys are pointing out.
- JonathanBeuys 4y ago
  First, you are confusing market cap with "value" or some other concept. Market cap is price of the last sale multiplied by stock. So every asset has it by definition. Second, how do you back up that statement of not being able to sell it? How do you know you couldn't sell those Bitcoins back to the market? Would you think the same about buying up all gold?
  - themitigating 4y ago
    This is what I was thinking. Anything that another person wants has value. Gold, water, btc. People make this big distinction for things like oil because it's used for something but I don't see how's thats relevant.
    - Eisenstein 4y ago
      It is relevant because if something has a use, there is a basis for the value. If something is only valuable because people believe it to be valuable, then you must maintain that belief in order to maintain that value. For instance a used stamp that is rare is valuable to collectors even though it has no use, but aside from a few collectors there is no market for that stamp. The problem with a huge market filled by people buying due to speculation is that as soon as something spooks the market it tanks and the value doesn't hold, because people don't actually want the thing they are holding, they just want to be able to sell it to someone else. This is why the crypto scene is very cultish -- it is all built on maintaining the belief, and the utility is secondary.
  - CPLX 4y ago
    It’s not a stock though. Just because you can buy or trade it doesn’t mean it has a market cap. What’s the market cap of gravel? It might be $1,000 a ton but you can’t multiply that by the amount of gravel in the world and get a meaningful number. OK so how about gold? How much of that is there? Are you counting ore, how about gold a mile underground? Same problem. The point is that market cap only applies when you’re talking about a security that represents a claim on a fraction of a whole asset that exists independently of the security itself. The concept of a market cap is meaningful when adding up all of the stock yields 100% of a defined thing. In that case you can surmise that the market cap represents some kind of representation of the value of that thing. The lower limit on market cap is generally considered to have a relationship to what that asset is worth. But Bitcoin doesn’t have intrinsic value. It’s not a thing at all. If you owned all of it you literally would have absolutely nothing at all. Someone else could just start using the same code and call it bitcoin. There’s no asset there. Hence, no market cap.
    - JonathanBeuys 4y ago
      "Stock" is the word used to describe the sum of an asset held by investors. Google "stock to flow" to see how "stock" is commonly used for assets in general and commodities like gold in particular. You will also find the answers to your questions about whether to count gold below ground.
- StingyJelly 4y ago
  If you could pay $300bn today, you wouldn't be able to possess all bitcoins.
  - oldgradstudent 4y ago
    And once you have them, you won't be able to sell them and get back $300B.
  - Nursie 4y ago
    Certainly, but then if you possessed all bitcoins, you wouldn't able to sell them for 300 billion either. The "market cap" metric has always been meaningless.
    - StingyJelly 4y ago
      My point is that it's meaningless both ways

CPLX 4y ago

Bitcoin doesn’t have a market cap. This is true because if you somehow could pay $300bn today and then possess all bitcoins you would have acquired literally nothing whatsoever. This, in fact, is exactly what these guys are pointing out.

JonathanBeuys 4y ago
First, you are confusing market cap with "value" or some other concept. Market cap is price of the last sale multiplied by stock. So every asset has it by definition. Second, how do you back up that statement of not being able to sell it? How do you know you couldn't sell those Bitcoins back to the market? Would you think the same about buying up all gold?
- themitigating 4y ago
  This is what I was thinking. Anything that another person wants has value. Gold, water, btc. People make this big distinction for things like oil because it's used for something but I don't see how's thats relevant.
  - Eisenstein 4y ago
    It is relevant because if something has a use, there is a basis for the value. If something is only valuable because people believe it to be valuable, then you must maintain that belief in order to maintain that value. For instance a used stamp that is rare is valuable to collectors even though it has no use, but aside from a few collectors there is no market for that stamp. The problem with a huge market filled by people buying due to speculation is that as soon as something spooks the market it tanks and the value doesn't hold, because people don't actually want the thing they are holding, they just want to be able to sell it to someone else. This is why the crypto scene is very cultish -- it is all built on maintaining the belief, and the utility is secondary.
- CPLX 4y ago
  It’s not a stock though. Just because you can buy or trade it doesn’t mean it has a market cap. What’s the market cap of gravel? It might be $1,000 a ton but you can’t multiply that by the amount of gravel in the world and get a meaningful number. OK so how about gold? How much of that is there? Are you counting ore, how about gold a mile underground? Same problem. The point is that market cap only applies when you’re talking about a security that represents a claim on a fraction of a whole asset that exists independently of the security itself. The concept of a market cap is meaningful when adding up all of the stock yields 100% of a defined thing. In that case you can surmise that the market cap represents some kind of representation of the value of that thing. The lower limit on market cap is generally considered to have a relationship to what that asset is worth. But Bitcoin doesn’t have intrinsic value. It’s not a thing at all. If you owned all of it you literally would have absolutely nothing at all. Someone else could just start using the same code and call it bitcoin. There’s no asset there. Hence, no market cap.
  - JonathanBeuys 4y ago
    "Stock" is the word used to describe the sum of an asset held by investors. Google "stock to flow" to see how "stock" is commonly used for assets in general and commodities like gold in particular. You will also find the answers to your questions about whether to count gold below ground.
StingyJelly 4y ago
If you could pay $300bn today, you wouldn't be able to possess all bitcoins.
- oldgradstudent 4y ago
  And once you have them, you won't be able to sell them and get back $300B.
- Nursie 4y ago
  Certainly, but then if you possessed all bitcoins, you wouldn't able to sell them for 300 billion either. The "market cap" metric has always been meaningless.
  - StingyJelly 4y ago
    My point is that it's meaningless both ways