Monday, 3 May 2021

Bitcoin, Berkshire, Betfair and Bromley

As mentioned last week, it was the Berkshire Hathaway Annual General Meeting in Los Angeles on Saturday, with Warren Buffett and Charlie Munger giving their opinions on a number of topics. 

While Buffett dodged a question on Bitcoin saying:
"The truth is, I’m going to dodge that question, because the truth is, we’ve probably got hundreds of thousands of people that are watching this that own Bitcoin. And we’ve probably got two people that are short. So we’ve got a choice of making 400,000 people mad at us and unhappy, and making two people happy. And it’s just a dumb equation."
Munger didn't hold back however, in fact quite the opposite.
"Of course I hate the Bitcoin success," he said. "And I don’t welcome a currency that’s so useful kidnappers and extortionists and so forth. Nor do I like shoveling out a few extra billions and billions and billions of dollars to somebody who just invented a new financial product out of thin air. So I think I should say modestly that the whole damn development is disgusting and contrary to the interest of civilization."
Well, that escalated quickly. My opinion is that Munger's argument is simply wrong. As the Irrelevant Investor Michael Batnick put it:
This argument from Munger is quite common and quite silly. Law enforcement would love nothing more than for criminals to use a financial instrument whose history can clearly be traced, like Bitcoin. You know what criminals use to launder money that doesn’t leave so clean a path? U.S. dollars. And Berkshire Hathaway is currently sitting on $145 billion of them.

A circle of competence is one of the core principles of Buffett and Munger, so I understand why they haven’t bought any Bitcoin. I have a harder time understanding why Munger feels so strongly about something that is clearly outside of his circle.
When asked about the moral issue of investing in the oil and gas industry, Chevron specifically, Buffet had this to say:
"I don't like making the moral judgments on stocks in terms of actually running the businesses, but there's something about every business that you knew that you wouldn't like," he added. "If you expect perfection in your spouse or in your friends or in companies you're not going to find it."
I suspect my wife has no idea how lucky she is. 

Munger and Buffet had conflicting opinions on whether the S&P 500 Index or Berkshire Hathaway stock was the better investment. Readers will know that Buffett put his money where his mouth was to the tune of $500,000 several years ago and has long been a fan of passive investing and this fund in particular.
"I recommend the S&P 500 index fund … I’ve never recommended Berkshire to anybody because I don’t want people to buy it because they think I’m tipping them into something," he said. "On my death there's a fund for my then-widow and 90% will go into an S&P 500 index fund."

"I do not think the average person can pick stocks," he added. "We happen to have a large group of people that didn't pick stocks but they picked Charlie and me to manage money for them 50, 60 years ago. So we have a very unusual group of shareholders I think who look at Berkshire as a lifetime savings vehicle and one that they don’t have to think about and one that they'll, you know, they don't look at it again for 10 to 20 years."
Charlie Munger, on the other hand, had a different perspective.
"I personally prefer holding Berkshire to holding the market," he said in response to the same question. "I’m quite comfortable holding Berkshire. I think our businesses are better than the average in the market."
I've been invested in the S&P 500 Index for many years but only added Berkshire Hathaway as an individual holding in December last year. It's already up 22.82%, which is not too shabby, but my investments in individual stocks are a small percentage (9.2%) of my total investments. While no one ever knows what the future holds, it does look like the US economy is positioned for an excellent couple of years. For example, Moody's Analytics said this yesterday:
"We are revising up our outlook for real GDP growth this year to nearly 7% and to over 5% next year. If we are right ... this will be the strongest two years of growth since 1950-1951 at the height of the post-World War II economic boom."

That's a big 'if', but fingers crossed. 

Another month is now in the books, and the NHL System continued its record of profitable months with the basic system adding another 18.23 units (ROI 23%).
The NBA Overs System had a 17-9-1 record in April, taking the season record to 63-35-2 after exactly 100 selections.
April was the opening month for baseball and the T-Bone System is up by the smallest of margins, 0.23 units and an ROI of 0.6%

Backing 'hot favourites' hasn't been profitable which is a bad sign given that the early games of a season usually offer value (see image right) although backing the 'really hot' favourites is 3 for 3.

There have been a few comments about Betfair recently, and while I don't have any specific details, it appears that some people are having trouble depositing funds, even if they are long term winners, or at least they claim to be, falling victim to Betfair supposedly ensuring the account holder can afford the amount being deposited.

Once you have established an edge, I'm not sure why anyone needs to make further deposits. As I've said before, I made one deposit of £98.50 back in 2004, and that's been it. I'll make withdrawals, but never leaving the account at a level where it will need topping up again. If that day ever comes, then I'll accept that my edge has gone and it's time to move on to something else. Ian Erskine of FTS actually mentioned this in his blog at the time, although the page no longer seems to be there:
Over time we will break down the myths of what is required but my starting point today is bank. I bet long before Betfair and lost fortunes. My first deposit into Betfair was £50. My initial starting cash to get where I am today is less than £1000. You can believe that or not believe it. I will give you a further example Cassini who operates Green All Over which is an entertaining blog started with I believe £98 and has never made another deposit, went down to £20 odd quid and now pays 60% Premium charge, focusing mainly on American sports betting and trading.

My Premium Charge percentage is 'only' 50%, but his point that with an edge, you can build up from just a small amount, is correct.  In fact, starting with a large bank and little to no experience is a very bad idea as this Tweet from last night illustrates:

The month of May sees the NBA and NHL Regular Seasons come to an end and for the NBA the new Play-In Tournament starts on the 18th, followed by the traditional playoffs. The NHL playoffs are scheduled for May 11th concluding in early July. 

Overall, including the more traditional financial investments, April was the third best month in spreadsheet history with a 4.71% increase. $TSLA was up 6.2%, S&P 500 index was up 5.24%, the FTSE100 was up 3.23% while $BTC lost 1.98%

It's no secret that I love myself a good spreadsheet, tracking finances, health and exercise, football, betting, postcards and family history records to name a few, but a certain Gareth Wild from Bromley has found another use, and I'm a little sorry I didn't think of this myself. You can
read the full thread here but it opens with:
For the last six years I’ve kept a spreadsheet listing every parking spot I’ve used at the local supermarket in a bid to park in them all. This week I completed my Magnum Opus!

I live in Bromley and almost always shop at the same Sainsbury’s in the centre of town, here’s a satellite view of their car park. It’s a great car park because you can always get a space and it is laid out really well. Comfortably in my top 5 Bromley car parks.

After quite a few years of going each week I started thinking about how many of the different spots I’d parked in and how long it would take to park in them all. My life is one long roller coaster.
There's more, and worth a read as are the comments which include:
I love spreadsheets (4 open right now and track 3 daily) but this is a bit much even for me

have you considered an autism diagnosis? this very cool experiment is something we would absolutely do and lots of my also-aut friends have commented on how cool this is

I love this sort of thing. I have logged all my 883 fights and mapped all the airports, hotels and sports arenas I have visited. Not sure why but it could come in handy if I ever needed to prove to the police where I was...

While spreadsheets, like sports betting, remain only a hobby for me, there's apparently good money to be made these days as a 'spreadsheet influencer'. 

Continuing the light hearted theme, I would also like to recommend the Wikipedia page for Rube Waddell, a baseball Hall of Famer from the turn of the 20th century. To describe him as 'eccentric' would be an understatement. A sample:
Waddell's career wound through a number of teams. He was notably unpredictable; early in his career, he once left in the middle of a game to go fishing. He also had a longstanding fascination with fire trucks and had run off the field to chase after them during games on multiple occasions. He would disappear for months at a time during the offseason, and it was not known where he went until it was discovered that he was wrestling alligators in a circus. He was easily distracted by opposing fans who held up puppies, which caused him to run over to play with them, and shiny objects, which seemed to put him in a trance.

1 comment:

Cats of Oxford said...

The question is, if Bitcoin is so easily traceable by law enforcement, why have we not been able to track down and stop the ransomware attackers who take payment in Bitcoin, nor even to work out who is behind the number of high profile "Bitcoin thefts" int he currency's history...