The Last Trade E014: Why Bitcoin is the Ultimate Form of Value Investing with Brian Cubellis
Aug 25, 2023
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Financial expert Brian Cubellis discusses his journey into Bitcoin and value investing. They delve into topics like inflation targeting, challenges of value investing, recognizing the journey of understanding Bitcoin, Bitcoin mining with natural gas, accessing and spending Bitcoin, regulatory trajectory of a concept, tokenization in real estate, evolution of tokens and affinity scams, and the potential collapse of Binance.
The underperformance of value strategies is linked to the central role of monetary policy in determining company value.
Concentration in high-performing stocks can be more effective than diversification for value investors.
Coinbase's conflicts of interest between short-term trading and long-term value investing highlight challenges in the crypto industry.
The potential collapse of Binance could have significant ramifications for the crypto market and regulatory landscape.
Deep dives
The Difficulty of Value Investing in Today's Market
Value investing has become increasingly challenging due to the central role that monetary policy and low interest rates play in determining the value of companies. This has led to the underperformance of value strategies and concentration in certain indices. It has also hindered the ability of active investors to justify their fees. The environment of short-termism and chasing growth has made it harder to find opportunities and execute value-oriented strategies.
The Importance of Concentration and Long-Term Thinking
Concentration in a few high-performing stocks has been shown to be more effective than diversification, and has been a key factor in the success of many value investors. It allows investors to focus on the winners and avoid diluting their returns with losers. Long-term thinking and a focus on value can provide an edge in a market that is dominated by short-termism and momentum trading.
The Challenges of Traditional Investing in a Crypto World
The experience at Coinbase highlighted the stark difference between traditional investing and the short-term, trader-oriented mindset of the crypto world. Coinbase's business model was tied to short-term trading and incentivized pushing people into various tokens. This conflicted with the long-term value investing approach and the desire to simply advocate for the ownership of Bitcoin. The conflicts of interest within the industry became apparent, and it became challenging to freely express one's thoughts and opinions.
The Journey of Individual Investors and Institutional Mindsets
Individuals and institutions often come to Bitcoin from different angles, but ultimately converge on the importance of Bitcoin as a long-term investment. Whether through research or personal experience, the understanding of the flaws in other investment options and the potential of Bitcoin as a sound monetary asset becomes evident. This journey can involve experimentation with other cryptocurrencies and learning from personal mistakes, but it ultimately leads to a realization that Bitcoin is the most logical choice to preserve and grow wealth over time.
Binance's potential collapse and its similarities to FTX
There are speculations and speculative evidence pointing towards a potential collapse of Binance, similar to what happened with FTX. Binance's token, BNB, has been trailing off in value, and there are suggestions that Binance may be selling off bitcoin to bid up the price of BNB and defend against it dropping below a certain price level. If Binance runs out of cash and cryptocurrencies to sell, it could lead to a collapse larger than FTX.
Regulatory concerns and impact on the cryptocurrency market
Binance is currently facing regulatory clampdowns, including charges from the DOJ and stricter compliance measures. This regulatory pressure may be cutting off Binance from banking partners, impacting their ability to withdraw funds and deliver customer bitcoin. The SEC's dissatisfaction with Binance's perceived market manipulation and flouting of US regulators may also be hindering the approval of a Bitcoin ETF. If Binance collapses, it could open up opportunities for Wall Street to step in with a compliant ETF, bringing in more capital to the Bitcoin market.
The potential impact on the crypto market and investors
If Binance collapses, it could have significant ramifications for the crypto market and investors. The collapse could lead to widespread fear and uncertainty, potentially pushing Bitcoin's price below $20,000. Additionally, it may attract the attention of regulators who have been critical of offshore exchanges like Binance. While the regulatory scrutiny may delay ETF approvals, it could ultimately result in increased regulatory compliance and the growth of a more regulated cryptocurrency market.
The Last Trade: a weekly, bitcoin native, interactive podcast covering where Bitcoin and traditional finance meet on a macro scale. Hosted by Marty Bent, Jesse Myers (Croesus), Michael Tanguma, and a special weekly guest host.
Join us as we dive into what Bitcoin means for how individuals & institutions save, invest, and propagate their purchasing power through time. It's not just another asset - in the digital age, it's the Last Trade that investors will ever need to make.
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