An era ends today. A new era starts today.

Sunday, 16 March, Year 6 d.Tr. | Author: Mircea Popescu

To quote Warren Buffett, from his most recent letter to shareholders :

Charlie Munger, Berkshire’si vice chairman and my partner, and I believe both Berkshire’s book value and intrinsic value will outperform the S&P in years when the market is down or moderately up. We expect to fall short, though, in years when the market is strong – as we did in 2013. We have underperformed in ten of our 49 years, with all but one of our shortfalls occurring when the S&P gain exceeded 15%.

[...]

Late in 2009, amidst the gloom of the Great Recession, we agreed to buy BNSF, the largest purchase in Berkshire’s history. At the time, I called the transaction an “all-in wager on the economic future of the United States.

That kind of commitment was nothing new for us: We’ve been making similar wagers ever since Buffett Partnership Ltd. acquired control of Berkshire in 1965ii. For good reason, too. Charlie and I have always considered a “bet” on ever-rising U.S. prosperity to be very close to a sure thing. Indeed, who has ever benefited during the past 237 years by betting against America? If you compare our country’s present condition to that existing in 1776, you have to rub your eyes in wonder. And the dynamism embedded in our market economy will continue to work its magic. America’s best days lie ahead.

[...]

During the extraordinary financial panic that occurred late in 2008, I never gave a thought to selling my farm or New York real estate, even though a severe recession was clearly brewing. And, if I had owned 100% of a solid business with good long-term prospects, it would have been foolish for me to even consider dumping it. So why would I have sold my stocks that were small participations in wonderful businesses? True, any one of them might eventually disappoint, but as a group they were certain to do well. Could anyone really believe the earth was going to swallow up the incredible productive assets and unlimited human ingenuity existing in America?

[...]

With this tailwind working for us, Charlie and I hope to build Berkshire’s per-share intrinsic value by constantly improving the basic earning power of our many subsidiaries; further increasing their earnings through bolt-on acquisitions; benefiting from the growth of our investees; repurchasing Berkshire shares when they are available at a meaningful discount from intrinsic value; and making an occasional large acquisition. We will also try to maximize results for you by rarely, if ever, issuing Berkshire shares.

[...]

Most investors, of course, have not made the study of business prospects a priority in their lives. If wise, they will conclude that they do not know enough about specific businesses to predict their future earning power. I have good news for these non-professionals: The typical investor doesn’t need this skill. In aggregate, American business has done wonderfully over time and will continue to do so (though, most assuredly, in unpredictable fits and starts). In the 20th Century, the Dow Jones Industrials index advanced from 66 to 11,497iii, paying a rising stream of dividends to boot. The 21st Century will witness further gains, almost certain to be substantial.

Needless to say, I do not agree. I am not going to blather on the topic of just how wrong all this exceptionalist, jingo nonsense is. Instead, I will make it short and sweet :

Click me!

Click me!

To better understand each other : it's not the case that a proposition bet in the millionsiv is either rare or exceptional on Bitbetv. It may be a rare thing in Vegas, and generally for the fiat worldvi, but we're rich, and we're powerful, and this sort of stuff is both common and unremarkable over here.

What's remarkable, however, is that the yearly compensations of such luminaries as Kenneth Chenault, chairman, CEO and chief-everything of American Express (a company with gross revenue of 33 billion dollars over 153 billion in assets) comes to about fifteen million all told. That's going to be 1k BTC if he's lucky.

So, dear people who go around in buggies, clad in pelts, washing your hands in ash : you come home and tell the missus you're "an investment banker" ? You tell girls in bars you "work on Wall Street" ? How much do you make ? When is the last time you landed a multi million dollar bonus ? What are your odds of landing a multi million dollar bonus this year ?

Here it is.

lions

This beautiful painting was made by Stuart Herod, who accepts comissions. Originally I was going to close with a shot of Alec Baldwin in Glengarry Glen Ross, but the lions won.

The lions always win.

PS. To make it perfectly clear : I didn't buy Berkshire shares to hedge this bet. I sold them.

———
  1. Here's an interesting footnote for the student of Bitcoin :

    Moreover, we will always maintain supreme financial strength, operating with at least $20 billion of cash equivalents and never incurring material amounts of short-term obligations. As we view these and other strengths, Charlie and I like your company’s prospects. We feel fortunate to be entrusted with its management.

    If, according to Buffett, "supreme executive power" derives from owning 20 billion of cash equivalents, not from some "farcical aquatic ceremony", then it would appear a fraction of 0.1% of the 20 trillion monetary mass is what supremacy is all about.

    The much more modest Bitcoin monetary mass is about 10 million. The application of the same proportion would seem to indicate that 10`000 Bitcoin in cash and cash equivalents counts as supreme. Good to know, wouldn't you say ? []

  2. Perhaps worthy of note, in a majority of letters to shareholders since then, the man has deplored the execrable financials of that original purchase. I suppose the rosy pixie dust of senility makes even bed wetting accidents of 50 years ago appear delightful in retrospect. At least back then, they were accidents. []
  3. It's not a matter of Bitcoin surpassing a century of DJI growth in but five short years. It's a matter of Bitcoin surpassing any business in the aggregate history of business, including all the pink sheet pump and dump scams. That's right : nobody, never, nowhere came even close, which is to say within a degree of magnitude. That's what we're talking about here. Now go short it. []
  4. Consider that the market is currently pricing Bitcoin over 10k as a 114.19/73.69 sort of proposition. That's right : the open market valuation of the notion that Bitcoin will go over 10`000 USD this year is not so much worse than even odds. []
  5. 1`886.91 BTC bet over difficulty, 1`689.80 BTC bet over product delivery and so on. []
  6. Yeah, since we're talking of this, when's the last time Vegas took a million dollar bet on anything ? []
Category: Bitcoin
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37 Responses

  1. Anonymous`s avatar
    1
    Anonymous 
    Sunday, 16 March 2014

    "...the open market valuation of the notion that Bitcoin will go over 10`000 USD this year is not so much worse than even odds."

    What you see on BitBet is not a meaningful open market valuation. If the market expected that a bitcoin would be valued at over 10`000 USD within one year with even a probability as low as 25%, then the current price of a bitcoin would be 2`500 USD at minimum.

  2. Mircea Popescu`s avatar
    2
    Mircea Popescu 
    Sunday, 16 March 2014

    Not really. A spot market is not a futures market.

  1. [...] Having covered a couple betable sports and some basic expectations of what one might get out of sports betting. Before getting much deeper into this exploration though it is important to bring up a critical point concerning the relationship between sports betting and Bitcoin, that there really isn't much of one. This thing seemed timely since the announcement that everyone's favorite Bitcoin Barron is wagering serious money that Bitcoin outperforms Berkshire Hathaway. [...]

  2. 4
    Bitcoin Vs. Berkshire: The $630,000 bet | Bitcoinx (via Pingback)
    Monday, 17 March 2014

    [...] Mircea Popescu doesn’t agree. The controversial owner of MPEx is, if nothing else, a true believer in the [...]

  3. [...] has been in the news of late after MP bet 1,000 BTC that bitcoin would outperform Berkshire-Hathaway A shares. You can bet against him at some seriously [...]

  4. [...] Having covered a couple betable sports and some basic expectations of what one might get out of sports betting. Before getting much deeper into this exploration though it is important to bring up a critical point concerning the relationship between sports betting and Bitcoin, that there really isn't much of one. This thing seemed timely since the announcement that everyone's favorite Bitcoin Baron is wagering serious money that Bitcoin outperforms Berkshire Hathaway. [...]

  5. [...] lacks is the absence of any sort of medium sized enterprises. Businesses are either very small or very large. The small stick to very well defined structures with little variation. Restaurants might try out [...]

  6. [...] they could have heard ahead of time if only they were following the proper channels. And yes the Buffett bet was also lead there, and the OpenBSD story literally happened there, and so did everything else. [...]

  7. [...] up on the front page of slashdot and everything else in January, and then twice in March - both the Berkshire 1k Bitcoin beti and the SEC emails attracting ample [...]

  8. [...] Bitcoin interpretation of reality, come hell or high waterix. It's that I've put millions into fighting their various Goliaths in open fieldx, it's that I've tried (if failed) to create Bitcoin's very own legal system, it's [...]

  9. [...] #1 : The largest bet in the history of Bitcoin, pitting a dead lion against a live if somewhat ethereal one, is terribly, terribly underwater. To wit, the Berkshire end of it finally breached 200k, to trade [...]

  10. [...] collapse into eternal night of that particular novelty shop. Speaking of which, did you know one of Warren Buffett's more important investments of the 70s was Blue Chip Stamps, a discount stamp company ? It was [...]

  11. [...] closing, let's quote senor Bluffett : If you compare our country’s present condition to that existing in 1776, you have to rub your [...]

  12. [...] don't realise it, all gravy. Right ? [↩]And it doesn't stop there, either. Take Buffett, the dead lion. Guy's not paying himself a salary, because why would he ? I don't pay myself a salary either, why [...]

  13. [...] end of the evil and corrupt government that spawned Goldman Sachs. Not just the end of the country that was once great and is today a rotten stump. It is the end of the very possibility of the "justice system" as you presently know [...]

  14. [...] actually valuable, that could totally buy Russia, right ? You actually believe Warren Buffett couldn't find anyone with short positions on his Berkshire [...]

  15. [...] trilema.com/climax coming from nowhere and claiming to be running Chromei. At 9:23:25 it loads An era ends today. A new era starts today. coming from http://trilema.com/ which is a place it's never been. A second later it tries to post a [...]

  16. [...] could a gate fall when the falling wouldn't gate ?! [↩]Ah, what a trek we've trekked since 2014. [↩]The usual stuff blocking maturation in little girls, as discussed in Spies in Berlin, [...]

  17. [...] has come quite a ways since the days back in 2014, when Buffett was still daring to pretend "there are no shorts" ; the Republic stands ever closer to its goal of crushing the Empire and salting the land where it [...]

  18. [...] over a debt of ... 25btc, accumulated from a "massive" 2500 comments. i on the other hand paid out 1k btc on a whim. so yes - there'd be need for either 40 reddits ; or else you know, for less amphibian [...]

  19. [...] words there's no guarantee it'll spit it back at you, or before you go broke. [↩]See also An era ends today. A new era starts today : Moreover, we will always maintain supreme financial strength, operating with at least $20 [...]

  20. [...] luck with that Great Again and things. [↩] Category: SUA care este Comments feed : RSS 2.0. Leave your own comment below, or [...]

  21. [...] thought the World Series happens in fucking Idaho (World famous potatoes!) ; be it the never-to-be-great-again -- for as long as there's a corpse to eat, someone somewhere will be announcing shocking GDP growth [...]

  22. [...] great again before absolutely everyone absolutely moves on already ? It's 11:59:50something, you understand ? [↩] Category: S.NSA Comments feed : RSS 2.0. Leave your own comment below, or send a [...]

  23. [...] could a gate fall when the falling wouldn't gate ?! [↩]Ah, what a trek we've trekked since 2014. [↩]You know that ancient story on "cooperation" whereby in a post-war village a soldier [...]

  24. [...] a thing. A thing like cancer, if you will. ———That delusional notion that, to quote, Could anyone really believe the earth was going to swallow up the incredible productive assets [...]

  25. [...] then, when did that country end ? When did the magic cease, when did the VHS player hit tension and proceed to rewind the tape ? Was it when some crazed orcs [...]

  26. [...] so on. No, the "unlimited ingenuity" isn't impressing anyone in lit hum, because "better" agricultural treatises that aren't actually [...]

  27. [...] rather than substantive discussion. [↩]Something piously & affectionately referred to by Fanboi Buffett as "unlimited", though evidently unlike the Republic America actually has borders, try as it might [...]

  28. [...] bit about US Presidents being destitute mongrels wasn't some sort of a joke, you understand ? The "VHS America" hallucinated in the Eastern bloc (through the offices of miserable shitheels) existed on VHS tapes [...]

  29. [...] no difference between Fred Wilson and Dan Voiculescu, between Mark Cuban and Dragos Stanca, between Warren Buffett and Sorin Ovidiu Vantu etcetera etcetera etcetera. They're all exactly the same and identical cargo [...]

  30. [...] I think" moron into some kind of captivity in a web of real events, "if you knew she wasn't coming why didn't you bet". Not that this does anything, from experience, the lost stay lost, there on a stage in Omaha [...]

  31. [...] Popescu states his disagreement with Warren Buffett's optimism regarding the future of the US and sets his money by it too, through a bet on Bitcoin surpassing Berkshire as an investment. [...]

  32. [...] problem is that socialism is incapable of creating faith in the future -- all it can do is eat the credit amassed by previous generationsviii. As that credit dwindles away the survival engine kicks on, and endures for as long as the "so [...]

  33. [...] according to mutually-advantageous, afore-established terms ? I leave the matter open to the unlimited ingenuity and etcetera allegedly existing in an old man's fancy of a place that's long gone, that really was [...]

  34. [...] in touch. As the short guy once saidiii, Let's have the intelligence, let's have the decency to sign the death certificate, collect the insurance, and invest in something with a future. ———And I [...]

  35. [...] the greatest competition in human history. What "World Series" in Chiraq* or whatever backwater. "Omaha", pshaw, get real. ___ ___ *known as Chicago before America ended. [↩]Hash means to chop [...]

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