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You are probably invested in Bitcoin now

Posted: Tue Sep 15, 2020 8:49 pm
by bogivan
For those that are new, welcome to the cryptocurrency club! :sharebeer

MicroStrategy, Inc, a NASDAQ-listed business intelligence company, has now exchanged over $400 million cash into bitcoin to hold as a primary treasury reserve - nearly a third of the market cap of the company. “This is not a speculation, nor is it a hedge,” said Saylor, the CEO, “I want something that I could put $425 million into for 100 years”

Vanguard Total Market Index holds MicroStrategy, so you - yes, even you bitcoin haters - now own something like 0.001% bitcoin for every dollar in VTSAX if I'm doing my very quick math correctly. I look forward to celebrating our bitcoin gains together in the next bitcoin bull market! :mrgreen:

Re: You are probably invested in Bitcoin now

Posted: Tue Sep 15, 2020 8:59 pm
by lgs88
Sacrebleu!! Heresy!!! A capital crime!!!!

I'm on the phone with Edward Jones moving my money this very moment. Indexing is toast, if indexing means owning Bitcoin.

In all seriousness -- this is no sillier than the phenomenon of a few years ago, when iced tea manufacturer microcaps would "pivot to blockchain" and spike 200% overnight. Glad I've got my 0.00001% exposure, for better or for worse.

Re: You are probably invested in Bitcoin now

Posted: Tue Sep 15, 2020 9:03 pm
by Random Musings
You can put $425MM in a lot of things for 100 years, or even longer. Gold is one good example. However, there are no guarantees that it will pan out.

RM

Re: You are probably invested in Bitcoin now

Posted: Tue Sep 15, 2020 9:07 pm
by nisiprius
Yep, there it is in VTI:
Image

Re: You are probably invested in Bitcoin now

Posted: Tue Sep 15, 2020 9:11 pm
by Tingting1013
There’s much higher exposure via NVDA, which counts crypto miners as a core customer segment.

Re: You are probably invested in Bitcoin now

Posted: Tue Sep 15, 2020 9:15 pm
by David Jay
Serious disconnect here -

1. MSTR has a market cap of $30 Million

2. MSTR claims to hold $400 Million worth of Bitcoin

Perhaps the bitcoin holding has a “discounted valuation”?

Re: You are probably invested in Bitcoin now

Posted: Tue Sep 15, 2020 9:20 pm
by tooluser
bogivan wrote: Tue Sep 15, 2020 8:49 pm Vanguard Total Market Index holds MicroStrategy, so you - yes, even you bitcoin haters - now own something like 0.001% bitcoin for every dollar in VTSAX if I'm doing my very quick math correctly. I look forward to celebrating our bitcoin gains together in the next bitcoin bull market! :mrgreen:
Indeed, that's what total market index investing is all about. MicroStrategy will earn or lose profits by the quality of its business strategies and the merits of its corporate actions. Index funds will profit or lose proportionately accordingly. I hope they do well.

Re: You are probably invested in Bitcoin now

Posted: Tue Sep 15, 2020 9:20 pm
by Tingting1013
David Jay wrote: Tue Sep 15, 2020 9:15 pm Serious disconnect here -

1. MSTR has a market cap of $30 Million
$1.5B

And you’ll note the stock skyrocketed on this announcement

Re: You are probably invested in Bitcoin now

Posted: Tue Sep 15, 2020 9:30 pm
by bogivan
lgs88 wrote: Tue Sep 15, 2020 8:59 pm In all seriousness -- this is no sillier than the phenomenon of a few years ago, when iced tea manufacturer microcaps would "pivot to blockchain" and spike 200% overnight.
I think a 1.5 billion market cap, NASDAQ-listed company putting 2-8 microcap-sized companies worth of their excess cash into bitcoin is quite a different thing from microcap naming gimmicks during the 2017 bubble...

Re: You are probably invested in Bitcoin now

Posted: Tue Sep 15, 2020 9:31 pm
by Normchad
Interesting. I remember MicroStrategy, from back in the day. They were at various points, a high flying company. I think they ended up going to court or big SEC problems, something like that. It was pretty news worthy at the time. They seemed like a "chameleon" of a company, that would quickly change their focus in life, depending on what was in fashion at the time. (Did they try to start a university?)

Anyway, really surprised they are still around, and still run by Mr. Taylor.

Re: You are probably invested in Bitcoin now

Posted: Tue Sep 15, 2020 9:34 pm
by Impatience
I’m sure index fund and ETF owners are unwitting possessors of much more dubious assets than a few fractions of bitcoin. Who knows what kind of fraudulent dealings are afoot at some of those companies. But that’s why we’re diversified ... VTSAX could be 5% bitcoin and it still probably wouldn’t matter that much.

Re: You are probably invested in Bitcoin now

Posted: Tue Sep 15, 2020 9:37 pm
by Normchad
Impatience wrote: Tue Sep 15, 2020 9:34 pm I’m sure index fund and ETF owners are unwitting possessors of much more dubious assets than a few fractions of bitcoin. Who knows what kind of fraudulent dealings are afoot at some of those companies. But that’s why we’re diversified ... VTSAX could be 5% bitcoin and it still probably wouldn’t matter that much.
Good point. If I personally vetted every company in an index, I'm certain I would find something personally objectionable with every one of them. And I just don't have the time and energy to do that anyway.

Re: You are probably invested in Bitcoin now

Posted: Tue Sep 15, 2020 9:37 pm
by Nate79
Great. This is exactly how I want to hold bitcoin. By having businesses somehow making money off of it, using it in a productive way, vs speculating on it like a commodity.

Re: You are probably invested in Bitcoin now

Posted: Tue Sep 15, 2020 9:41 pm
by Northern Flicker
bogivan wrote: Tue Sep 15, 2020 8:49 pm For those that are new, welcome to the cryptocurrency club! :sharebeer

MicroStrategy, Inc, a NASDAQ-listed business intelligence company, has now exchanged over $400 million cash into bitcoin to hold as a primary treasury reserve - nearly a third of the market cap of the company. “This is not a speculation, nor is it a hedge,” said Saylor, the CEO, “I want something that I could put $425 million into for 100 years”

Vanguard Total Market Index holds MicroStrategy, so you - yes, even you bitcoin haters - now own something like 0.001% bitcoin for every dollar in VTSAX if I'm doing my very quick math correctly. I look forward to celebrating our bitcoin gains together in the next bitcoin bull market! :mrgreen:
I don't hold it, as I use a Russell 1000 fund for US equity exposure, but honestly, I can live without a tech company struggling to disambiguate tech from finance.

Re: You are probably invested in Bitcoin now

Posted: Tue Sep 15, 2020 9:53 pm
by ChinchillaWhiplash
Well in Sept 30, 2001 Vanguard 500 fund had the 5th Largest Mutual fund holding of ENRON shares. Think that ended up OK :mrgreen:

Re: You are probably invested in Bitcoin now

Posted: Tue Sep 15, 2020 11:35 pm
by HawkeyePierce
I would imagine VTI already held some Bitcoin via Square as they've been quite active in crypto for a while now.

Re: You are probably invested in Bitcoin now

Posted: Tue Sep 15, 2020 11:38 pm
by Northern Flicker
MSTR seems to have gone public in June 1998. Performance relative to the total market index:

http://quotes.morningstar.com/chart/fun ... A%5B%5D%7D

It is a tech company that seems to have missed the recent tech boom.

Re: You are probably invested in Bitcoin now

Posted: Wed Sep 16, 2020 12:09 am
by firebirdparts
When you put it that way, this thread starts looking like an argument for actively managed funds.

Re: You are probably invested in Bitcoin now

Posted: Wed Sep 16, 2020 1:24 am
by Northern Flicker
My last post would actually be an argument against active mgmt. If MSTR is misallocating capital by holding 1/3 of its market cap in Bitcoin, this does not harm investors in a total market fund given its tiny percentage of the total market cap, but holding MSTR at a much higher weight would be quite risky.

I have held exclusively an R1000 fund for US equity since 6/2017 to improve perceived correlations with other assets, not to avoid stocks like MSTR.

Re: You are probably invested in Bitcoin now

Posted: Wed Sep 16, 2020 2:12 am
by Robert T
Normchad wrote: Tue Sep 15, 2020 9:31 pm Interesting. I remember MicroStrategy, from back in the day. They were at various points, a high flying company. I think they ended up going to court or big SEC problems, something like that. It was pretty news worthy at the time. They seemed like a "chameleon" of a company, that would quickly change their focus in life, depending on what was in fashion at the time. (Did they try to start a university?)

Anyway, really surprised they are still around, and still run by Mr. Taylor.
Yes, I remember that.

MicroStrategy was the epitome of the dot.com boom and bust. Its split adjusted share price peaked at $3,330 on March 10, 2000. Current share price = $155.

I remember the Washington post did a four part series on Dot-com Halo: The Rise and Fall of Michael Saylor – that also covers the accounting irregularities, restating earnings, and the SEC investigation

https://www.washingtonpost.com/archive/ ... 7de3c8d67/
https://www.washingtonpost.com/archive/ ... 187913506/
https://www.washingtonpost.com/archive/ ... 9b993a226/
https://www.washingtonpost.com/archive/ ... daa39be60/

From the articles:
"Heaven for me is a microphone and a captive audience," Saylor said, and he relished the gamesmanship of sales and motivational talks, "that deer-in-the-headlights moment when you know you've flipped someone," he said in 1998.
In early 2000, investors were falling heavily for "Mike's Come-to-Jesus speech," as some MicroStrategists called it. .... Friends and aides warned Saylor to tone down the rhetoric, telling him he risked sounding offensive or ridiculous. His staff and MicroStrategy's board members reminded him to stay focused on business "fundamentals" -- operations, finance, customer service. But Wall Street was the oracle that Saylor heeded the most,
In late 1999 and early 2000, a recurring source of Saylor's fascination -- and, in turn, the media's -- was his plan to build a "Versailles" on 48 acres in Great Falls. He issued a 100-page request for proposals from architects and sent memos to his public relations staff that outlined some basic features he envisioned for his compound -- rooftop conservatory, nine-hole golf course, Japanese gardens. He referred to the compound as "my 21st-century villa,"
Then things fell apart... But he does have some resilience - he is still CEO of MicroStrategy which is still around.
.

Re: You are probably invested in Bitcoin now

Posted: Wed Sep 16, 2020 8:10 am
by David Jay
Tingting1013 wrote: Tue Sep 15, 2020 9:20 pm
David Jay wrote: Tue Sep 15, 2020 9:15 pm Serious disconnect here -

1. MSTR has a market cap of $30 Million
$1.5B

And you’ll note the stock skyrocketed on this announcement
Okay, but the point remains that from the data of Nisi’s search tool (Q-2?), MSTR had some $400M in invested assets and a $30M market cap. Not exactly a ringing endorsement of management performance.

Re: You are probably invested in Bitcoin now

Posted: Wed Sep 16, 2020 8:20 am
by bogivan
HawkeyePierce wrote: Tue Sep 15, 2020 11:35 pm I would imagine VTI already held some Bitcoin via Square as they've been quite active in crypto for a while now.
True, though I don't believe Square tries to hold bitcoin or, at least, I don't believe they publicly state their intention to keep any for themselves and don't split it out on their balance sheet.

There is also Riot Blockchain in VTSAX/VTI which is a 140 million market cap bitcoin mining stock that has some cryptocurrency on the balance sheet, but again I think their goal is not necessarily to hold it themselves after mining and we're talking about 5-10 million amounts versus the 400 million now added by MicroStrategy.

Re: You are probably invested in Bitcoin now

Posted: Wed Sep 16, 2020 8:28 am
by bogivan
David Jay wrote: Wed Sep 16, 2020 8:10 am
Tingting1013 wrote: Tue Sep 15, 2020 9:20 pm
David Jay wrote: Tue Sep 15, 2020 9:15 pm Serious disconnect here -

1. MSTR has a market cap of $30 Million
$1.5B

And you’ll note the stock skyrocketed on this announcement
Okay, but the point remains that from the data of Nisi’s search tool (Q-2?), MSTR had some $400M in invested assets and a $30M market cap. Not exactly a ringing endorsement of management performance.
I don't know what Nisi's search tool is, but VTSAX happens to own something like $30M worth of MSTR - is that what you were looking at?

Current share price is around $155 and number of shares is 9.686 million = 1.508 billion market cap.

Re: You are probably invested in Bitcoin now

Posted: Wed Sep 16, 2020 12:35 pm
by Tingting1013
David Jay wrote: Wed Sep 16, 2020 8:10 am
Tingting1013 wrote: Tue Sep 15, 2020 9:20 pm
David Jay wrote: Tue Sep 15, 2020 9:15 pm Serious disconnect here -

1. MSTR has a market cap of $30 Million
$1.5B

And you’ll note the stock skyrocketed on this announcement
Okay, but the point remains that from the data of Nisi’s search tool (Q-2?), MSTR had some $400M in invested assets and a $30M market cap. Not exactly a ringing endorsement of management performance.
As OP points out right above this post, your interpretation of the numbers is incorrect.

Stock is up another 10% today after gaining 10% yesterday. How’s that for an endorsement of management performance?

Re: You are probably invested in Bitcoin now

Posted: Wed Sep 16, 2020 12:57 pm
by Jack FFR1846
Are any of the other "total US market" type funds in this clownshow? SCHB, and the like? I don't see it in the SCHB "all holdings". Time to check basis in VTI.

Re: You are probably invested in Bitcoin now

Posted: Wed Sep 16, 2020 12:58 pm
by brad.clarkston
Tingting1013 wrote: Wed Sep 16, 2020 12:35 pm
David Jay wrote: Wed Sep 16, 2020 8:10 am
Tingting1013 wrote: Tue Sep 15, 2020 9:20 pm
David Jay wrote: Tue Sep 15, 2020 9:15 pm Serious disconnect here -

1. MSTR has a market cap of $30 Million
$1.5B

And you’ll note the stock skyrocketed on this announcement
Okay, but the point remains that from the data of Nisi’s search tool (Q-2?), MSTR had some $400M in invested assets and a $30M market cap. Not exactly a ringing endorsement of management performance.
As OP points out right above this post, your interpretation of the numbers is incorrect.

Stock is up another 10% today after gaining 10% yesterday. How’s that for an endorsement of management performance?
People always flock to a snake oil salesman.

Re: You are probably invested in Bitcoin now

Posted: Wed Sep 16, 2020 1:04 pm
by Tingting1013
brad.clarkston wrote: Wed Sep 16, 2020 12:58 pm
Tingting1013 wrote: Wed Sep 16, 2020 12:35 pm
David Jay wrote: Wed Sep 16, 2020 8:10 am
Tingting1013 wrote: Tue Sep 15, 2020 9:20 pm
David Jay wrote: Tue Sep 15, 2020 9:15 pm Serious disconnect here -

1. MSTR has a market cap of $30 Million
$1.5B

And you’ll note the stock skyrocketed on this announcement
Okay, but the point remains that from the data of Nisi’s search tool (Q-2?), MSTR had some $400M in invested assets and a $30M market cap. Not exactly a ringing endorsement of management performance.
As OP points out right above this post, your interpretation of the numbers is incorrect.

Stock is up another 10% today after gaining 10% yesterday. How’s that for an endorsement of management performance?
People always flock to a snake oil salesman.
So I guess no one knows better than the market, except when it contradicts your predisposed biases?

Re: You are probably invested in Bitcoin now

Posted: Wed Sep 16, 2020 1:06 pm
by bogivan
Jack FFR1846 wrote: Wed Sep 16, 2020 12:57 pm SCHB, and the like? I don't see it in the SCHB "all holdings".
Yes, it looks like SCHB owns at least a half a million dollars worth of MSTR (page 49 if sorting in reverse by ticker)

Re: You are probably invested in Bitcoin now

Posted: Wed Sep 16, 2020 1:44 pm
by brad.clarkston
Tingting1013 wrote: Wed Sep 16, 2020 1:04 pm
brad.clarkston wrote: Wed Sep 16, 2020 12:58 pm
Tingting1013 wrote: Wed Sep 16, 2020 12:35 pm
David Jay wrote: Wed Sep 16, 2020 8:10 am
Tingting1013 wrote: Tue Sep 15, 2020 9:20 pm

$1.5B

And you’ll note the stock skyrocketed on this announcement
Okay, but the point remains that from the data of Nisi’s search tool (Q-2?), MSTR had some $400M in invested assets and a $30M market cap. Not exactly a ringing endorsement of management performance.
As OP points out right above this post, your interpretation of the numbers is incorrect.

Stock is up another 10% today after gaining 10% yesterday. How’s that for an endorsement of management performance?
People always flock to a snake oil salesman.
So I guess no one knows better than the market, except when it contradicts your predisposed biases?
I didn't say anything about the market, any biases is yours and yours alone.

Re: You are probably invested in Bitcoin now

Posted: Wed Sep 16, 2020 1:49 pm
by nisiprius
I don't have any strong reaction. If it's a "gotcha," OK, ya got me.

But not really, because owning a share of stock in a business is not at all the same thing as owning that business's assets. It's basically a vote to elect a board, which in turn provides pressure on the board to act in the shareholders' interests and share in the profits of the business's operation (now or eventually).

I can't take a ExxonMobil stock certificate and walk into the lobby at 5959 Las Colinas Blvd., Irving, TX and an empty barrel and say "here's your stock certificate, now give me my share of all the oil I own."

Similarly I own (or am at least the "beneficial owner") of Barrick stock (in Total International) but I don't own any gold, I own stock in a business.

I own Canopy Growth stock, but I don't own any cannabis.

I own stock in Las Vegas Sands (in Total Stock), but I don't own any poker chips.

It's mildly interesting, but every six months or so the cryptocurrency enthusiasts overhype something as evidence of cryptocurrency's arrival--"you can buy sandwiches at Subway with bitcoin" when the truth is that you can buy sandwiches at one Subway out of the fourteen in Allentown, PA. First Crypto ETF Index Fund Launched!!! $HODL and you can find out where that went to. "Starbucks, Whole Foods, and Nordstroms accepting bitcoin for purchases" when they were doing a technology pilot to see if they could integrate with a payment processor's smartphone app--that never materialized, and would have paid them in dollars, not in bitcoin.

P.S. The Long Island Iced Tea company didn't just change its name to Long Blockchain. They put out press releases saying they had contracted to buy "1,000 Antminer S9 mining rigs and 1,000 APW3++ PSUs." Oddly, though, those contracts were all canceled and the rigs were never delivered.

Re: You are probably invested in Bitcoin now

Posted: Wed Sep 16, 2020 1:52 pm
by firebirdparts
I am just thinking imagine having to own this and now NKLA. Some guys just can’t get enough of SEC investigators for some reason. I’m sure they dress nicely.

Re: You are probably invested in Bitcoin now

Posted: Wed Sep 16, 2020 2:36 pm
by shess
Impatience wrote: Tue Sep 15, 2020 9:34 pm I’m sure index fund and ETF owners are unwitting possessors of much more dubious assets than a few fractions of bitcoin. Who knows what kind of fraudulent dealings are afoot at some of those companies. But that’s why we’re diversified ... VTSAX could be 5% bitcoin and it still probably wouldn’t matter that much.
Your index investments likely hold companies whose relationship to Bitcoin is similar to Barrick's relationship to gold. *shrug*

Re: You are probably invested in Bitcoin now

Posted: Wed Sep 16, 2020 2:43 pm
by SmileyFace
Random Musings wrote: Tue Sep 15, 2020 9:03 pm You can put $425MM in a lot of things for 100 years, or even longer. Gold is one good example. However, there are no guarantees that it will pan out.

RM
"Gold" ... "Pan Out" - I see what you did there! LOL. (Did you? - look up origin of "pan out").

Re: You are probably invested in Bitcoin now

Posted: Wed Sep 16, 2020 2:51 pm
by Tamarind
*shrug* Ok. I'm perfectly happy to hold it insofar as it's cap-weighted and part of the assets of a publicly traded company. If crypto actually begins to have serious impact on business operations then I'll be happy to see that grow. Plenty of wild models being tried out among the microcaps... That's what they are there for.

Re: You are probably invested in Bitcoin now

Posted: Wed Sep 16, 2020 3:57 pm
by arcticpineapplecorp.
the good news is it makes up less than 1/100th of 1% of the total stock market index fund.

so if it goes horribly awry, it has very little impact over my life savings.

back in 2017 I wrote about my neighbor who put significant money into bitconnect.

she lost that "investment" and all the money.

my portfolio's up since then.

Re: You are probably invested in Bitcoin now

Posted: Wed Sep 16, 2020 4:03 pm
by Northern Flicker
bogivan wrote: Wed Sep 16, 2020 8:20 am
HawkeyePierce wrote: Tue Sep 15, 2020 11:35 pm I would imagine VTI already held some Bitcoin via Square as they've been quite active in crypto for a while now.
True, though I don't believe Square tries to hold bitcoin or, at least, I don't believe they publicly state their intention to keep any for themselves and don't split it out on their balance sheet.

There is also Riot Blockchain in VTSAX/VTI which is a 140 million market cap bitcoin mining stock that has some cryptocurrency on the balance sheet, but again I think their goal is not necessarily to hold it themselves after mining and we're talking about 5-10 million amounts versus the 400 million now added by MicroStrategy.
Regardless of one's view of Bitcoin, a Bitcoin miner is an actual business that is trying to achieve a future revenue stream, moving it from the realm of pure speculations to the realm of investments.

Re: You are probably invested in Bitcoin now

Posted: Wed Sep 16, 2020 9:15 pm
by Random Musings
DaftInvestor wrote: Wed Sep 16, 2020 2:43 pm
Random Musings wrote: Tue Sep 15, 2020 9:03 pm You can put $425MM in a lot of things for 100 years, or even longer. Gold is one good example. However, there are no guarantees that it will pan out.

RM
"Gold" ... "Pan Out" - I see what you did there! LOL. (Did you? - look up origin of "pan out").
Have panned for gold in the Black Hills of SD. Was fun, but no luck. A few people found small flakes but the troy weight was immaterial.


RM