Charlie Munger says buying crypto is investing in nothing | Hacker News Reader

Charlie Munger says buying crypto is investing in nothing

markets.businessinsider.com

31 pointspseudolus14 comments

The eye never has enough of seeing, nor the ear its fill of hearing. What has been will be again, what has been done will be done again; there is nothing new under the sun.

I.e. there is still hope for your Beanie Babies to appreciate again, if you just hold them long enough.

In other breaking news - Britain's First Sea Lord and Chief of the Naval Staff says that the North Atlantic is rather salty, cold, and wet.

Bitcoin is holding around $20,000. Plenty of believers remain, not that I am one of them.

>"He added that stocks, which represent pieces of real businesses and claims to their profits, are a far superior investment."

The line between some internet company stock and certain crypto projects is beginning to blur:

Many no longer have a physical store or office.

Both employ skilled devs producing code.

Both have a spectrum of success (including some outright frauds)

Both aspire to become profitable and produce value for share/token-holders.

To claim that one is worthwhile while the other isn't seems to indicate a misunderstanding of the governance tokens and the ownership that those provide.

The famous Munger, Buffet, Graham adage is to only invest in a quantity that you understand, with the implication being that you understand how its operations are going to make you money. Munger might also advise against investing in internet companies that are difficult to distinguish from crypto projects. You can, of course, due to your misunderstanding call something nothing when it is really something, and thereby miss out on the windfall. But the other adage of the Munger, Buffet, Graham school of investing is that there are no called strikes in investing.

Yeah, lots of scummy businesses out there that’ll never have profit, never do dividends (or its modern friend, buybacks), but businesses at least have assets to distribute to investors in case of bankruptcy

after paying the creditors

Beanie Babies, tulip bulbs, Pokémon cards, paintings, and gold have the advantage of being physically usable for something even if the sales market collapses.

NFTs tied to game items might potentially be usable as well even if they lose all collecting value.

US dollars are generally considered a currency rather than an investment or collectable, but they are useful for paying taxes in the US if nothing else.

> claim that one is worthwhile while the other isn't seems to indicate a misunderstanding of the governance tokens and the ownership that those provide

Here's the acid test: if you buy the whole thing, does it have value? If so, we can talk about fundamental value. If you can't, the concept of intrinsic value fails to hold. Not all value is intrinsic. But ephemeral value is, well, ephemeral. That's what Munger is getting at.

Well USD doesn't pass that acid test. If a single person gained all the USD why would people want it? The US military would be foolish to accept a salary in it, the nation would quickly move to some other currency.

Pretty hypocritical for Munger to hold so much USD, perhaps extrinsic value actually matters.

Well as I see it putting money into stock exchange is just playing game with numbers. Will they go up or down? How much should I leverage?

People does not care what those numbers represent. They are gambling in this casino to make money. Simple.

His point would apply equally to people who do that except for one problem. Whether or not the player understands it, every game is either rigged for or against the player. Betting on real stocks randomly you will on average not lose money because that house is rigged in your favor, on average real investments have real growth.

Does not matter, stocks go up.

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