Mike Saylor the Dumb BTC Investor
In about three months his company made more money on BTC than on its product. Damn is he stupid or what?
According to the article you linked, Mike Saylor’s bitcoin portfolio is worth $525 million at the bitcoin price of $13,700. That means that he owns approximately 38,300 bitcoins.
This is great news for all the bitcoin acolytes (who also own a modicum of bitcoin) who want the price to go ever higher. Having another advocate on board just drives more demand for the limited number of coins.
I have a couple of questions for you:
- Did Saylor announce ahead of time that he was buying bitcoin?
- Will Saylor announce ahead of time when he will sell?
Why does it matter? Stock market prices can be determined mostly by capital flows. Why would bitcoin be any different? As long as more people fear missing out, the price will go up. As soon as more people fear the price has gone too far, they’ll capitalize. Will it be the little dumb bunnies who sell at the top? The little dumb bunnies won’t have enough impact because they don’t own enough to affect the price. They really don’t act like a herd. A few will be smart and sell at a profit. Most typically are the bag holders who thought they were unfathomably rich and just going to get richer and richer. They’ll ride their speculative investment toward the bottom.
So, will you announce ahead of time when you unleash your hoard of bitcoin? I don’t think you’re that stupid. Why would anyone do so?
He puts almost all his company’s free cash into one asset. Then he talks it up in the media. He says he’s never going to sell it. He says he’ll hold on to it for 100 years. He calls cash and other assets “a melting ice cube”. He cites some dubious inflation figures.
That’s a lot of risk to take in one asset that could have the rug pulled out from under it with one simple change in the law. I could see if he put 25% into BTC. I could see if he said he plans on holding it long term. But almost all of their free cash? And 100 years? I guarantee you his company won’t be around in 100 years … and neither will he. And I doubt if BTC will be as well. It will likely be crushed by CBDCs.
I find his rash actions, the hype, and the hyperbole all a bit unsettling from an investor perspective. It doesn’t sound like wise and prudent money management. And the wealth preservation claim is dubious and unproven. It doesn’t sound like investing. It doesn’t even sound like speculation. It sounds like gambling … or something else.
As for me, I’d prefer sitting on a melting ice cube as compared to climbing on board a supposed rocket ship that can easily turn into a ticking time bomb. That rocket ship could go to the moon but it could just as easily be blown to bits. And worse of all, it all seems highly dependent upon the greater fool theory. As Mr. T would say “Pity the poor fools.”
Good questions Grover. You will not watch the following video which goes into great detail. So I will answer your two questions. First no he did not announce ahead of time. That would be pretty fucking stupid wouldn’t it? He has 2 degrees from MIT and has an extremely successful business. Second he would be pretty stupid to announce he is selling wouldn’t it. Another question to ask is “with the move of institutional money moving into crypto why would he sell?”
So my questions for you are : do you own crypto? do you know much about it? have you ever seen a chart of BTC? do you think Saylor is stupid? Do you think Raoul Pal is stupid? what are your objections to owning BTC? do you think BTC is a global local currency? if you had $425 million in cash what would you do with it?
BTW Grover there are two motivating factors in human psychology. Just two.
They are fear and love. Having been here for 13 years I can state objectively and unequivocally this site and its denizens are operating in a fear based paradigm. I have spent years away from here and dropped in periodically only to see articles that could be cut and pasted from years before. MKI has eloquently described how he ignored that paradigm and profited.
I will tell you something that you and virtually everyone else is missing. I have made my millions in the crypto world. I don’t give a shit if it drops 95%. What I care about is freedom. What separates you from the homeless living under a bridge on Carrollton Ave.? Economic freedom. What separates you from Bill Gates? Greater economic freedom. What is the root cause of lack of economic freedom? Our current monetary system.
Now Grover there are some very intelligent people here who sort of understand that wouldn’t you say? Now you being one of them perhaps, why wouldn’t you embrace something that has the potential to give not only you but everyone economic freedom? There is only one answer to that question. It is fear pure and simple. The knee jerk reaction here is to come up with all the worst case scenarios why crypto won’t work. You being intelligent why would you not come up with reasons why it will work?
Grover there are two kinds of people : those who say something can be done and those who say it can’t be done. The absolute truth is they are both right.
NOTICE: I am not getting involved in stupid time wasting debates here, been there and done that. All the information is readily available with one click. All questions are addressed here and online with one click. I have nada, zero, nothing to defend.
Mike Saylor has a fiduciary responsibility to his shareholders, customers and employees. He spent 9 months researching BTC along with his Board, and executive officers. This was not just his decision it was a company decision that was not taken lightly. The technology was thoroughly investigated, the economic climate was investigated and the shareholders were allowed to opt out.
Stay safe and secure and hold on to your gold and hope the feds don’t confiscate it.
Having listened to Saylor explain his motivations several times, I think he genuinely fell down the BTC rabbit hole. It happens when people take time to understand BTC beyond its role as an investment or hedge. What a lot of people end up thinking is that we’re really talking about a monetary regime paradigm shift; it seems clear to me that’s where Saylor has landed. I think that’s where many Central Banks are arriving, too. They just want to control the new wild mare.
Now, Saylor has always been unconventional and idiosyncratic, and proudly so. To hear him tell his own story, it’s clear that’s how he sees himself and as it’s been wildly successful for him, he’s proud to continue in that path. BTC adoption helps him do so.
I don’t mean to suggest he’s a poseur; rather, I think he’s temperamentally a libertarian and the BTC community ethos strongly appeals to him; it’s helped him find a tribe, and it’s one that appreciates his idiosyncrasies. That, of course, confirms them in him. Never the less, from what I can see, he’s given the whole issue a deep think, as evidenced by the range of materials he has posted as the reading list he and his board went through and discussed together prior to making their decision. If you want to understand what Saylor sees in BTC that is not apparent to you, you could explore the same material. Of course that doesn’t mean you’ll end up ready to do what he did, but you would understand him – and perhaps how he could go all-in the way he did. That reading list is the Resources section on his company site, here.
One could argue – and I’m not sure I’d wholly disagree – that he’s irresponsibly long BTC. For my part, I’m only interested in putting into BTC what I am prepared to lose. All the same, I truly don’t think I’ll lose. However, I have developed a high risk tolerance by investing in young, volatile companies over the years, and so the gyrations in BTC don’t cause me sleepless nights. My risk is contained within my comfort range. I suspect my comfort with risk at my advanced age is broader than yours at your roughly-equal age. Saylor’s is quite broad. He also knows that whatever happens to that almost half billion dollars, he’s still got a company that throws off $30 billion free cash a year. He and his company can afford a big-risk play more than I can as a retiree.
On the other hand, there’s Raoul Pal who is not inclined to risky behavior with his own money. He was very clear – long before he got involved with BTC – that he took his risks with hedge fund money but was quite conservative with his own. Traditionally, he was in just 4 baskets: bonds, personal real estate, cash and equivalents, and select high-quality equities. He also resisted even exploring BTC until he was prevailed upon by Novogratz, for whom he has high regard; and once he took the dive into the material, he emerged a convert. Now he’s surprisingly committed. He’s the one who coined the phrase I used above about Saylor; it is Pal who said “I’m irresponsibly long BTC, but I have never in my life seen such an incredible opportunity.” He recently said he’s reduced (or perhaps eliminated, it’s not clear) his bond exposure, and has at least contemplated selling some of his gold, putting it all in BTC.
In thinking about why Saylor and Pal might choose to go more or less all-in on BTC, I want to offer three observations drawn from the now 11-year history of BTC.
The first is that in the period 2009 – 2020 BTC has significantly outperformed gold despite the high volatility of BTC. According to USAGold.com, in January 2009 gold was about $885. BTC was zero, being launched that month; let’s nominally say $1. Today gold is around $1900 and BTC is around $13,000.
The second is that there is no 4-year period in which a BTC stalwart has lost money. While it is true that BTC can gyrate wildly from high to low, shaking out weak holders, it does so on a predictable 4-year cycle. That means the market could be timed by those who wish to do so.
The third is that despite the volatility, BTC always posts higher lows on the low extremes of each full cycle and settles into a midpoint that is higher than previous cycle midpoints.
Do some investors and many speculators play games with BTC’s price and flow? Of course. It turns out, though, that those games are just froth over the surface of a deep current that runs like clockwork. It is that clockwork character that explains why the committed core does not panic when the highs plunge, nor lose hope during the 18 months just prior to a new halving when the coin trades inconclusively sideways.
Past history is no promise of future performance, of course. But even if Saylor is engaged in a pump and dump scheme (I don’t think he is, but I recognize he could be), that, too, would just be froth.
Additionally, given the rapidly increasing institutional and big money interest in BTC, if he does dump, there is every reason to expect a willing market of new institutional buyers, who understand the cyclical nature of the BTC dynamic and the reason for its relentless asymmetrical upside trajectory, who will be happy to buy all the coin he chooses to shed – especially if they can pick it up during the next low. Heck, I’d try to get my pittance proportion, too.
Clearly, the cyclical volatility of young BTC is not for everyone. However, it’s still possible to capture some gain by devoting 1-2 percent of one’s portfolio to the asset. That’s the approach of investment strategist Lyn Alden, who looks at BTC strictly through a rigorous and fairly risk-adverse lens. In this article from August, she explains in very measured language why she turned bullish on BTC in April this year, and why she plans to hold a stake for at least a 2-year period (corresponding, I’ll note, to the current cycle’s uptrend). You might find it informative.
Another institutional analyst, pseudonymously known as PlanB, illustrates the history of BTC growth within its cyclical pattern in comparison to what his stock-to-flow cross-asset model predicts. Here’s his chart (posted October 21 on his Twitter feed).
Question for you VT. It is clear that large institutional investors are starting to get involved in BTC. There will only be 21 million “mined” and there are 18.5+ in circulation (caveat) and there are only 900 mined a day. What happens to the “retail” purchaser? Really if Fidelity decides to put a billion of its trillions into BTC then it would seem we would not be talking about BTC we would be talking about Satoshis.
Saylor has expressed amazement based on that, that someone would actually sell him BTC. Of course people would think Saylor is just doing a pump and dump but that clearly defies logic. He got out of cash because the stock is going off the charts, and into an asset that will never ever produce the stock that currently exists. It is a mathematical impossibility. With the halvings the stock to flow number will go up every 4 years. Thus it is inevitable it will go up in value. Now an existential threat might happen to Microstrategy that would force the sale of some or all the BTC, but that is impossible to predict.
Having been in the BTC for 9 years (in Dec.) I have become immune to the volatility. I used to have my alerts set to $5 moves lol. As time has gone on the volatility has been “smoothing out” .
What do you propose a good “retail” strategy would be?
Here’s some data that supports Mr Cranky’s position: google trends for “bitcoin price.” I was a bit surprised. There could be all sorts of heck breaking loose when the Eurozone decides to impose capital controls during the Great Reset. Bitcoin might be the only way out. Well, gold too, but getting it across borders is more difficult unless you have a boat.
But the amount of “internet interference” that The System could impose might make it quite difficult for “normals” to execute a purchase during that time.
I mean, if you put me in charge, I could sure make it difficult. And I’m not all that unique.
Still – bitcoin is not a bubble, according to google trends. Not financial advice. 🙂
It is clear that large institutional investors are starting to get involved in BTC. There will only be 21 million “mined” and there are 18.5+ in circulation (caveat) and there are only 900 mined a day. What happens to the “retail” purchaser?
The reality is that large institutions like a Fidelity cannot get involved yet because there is inadequate liquidity. If Fidelity wants a 1% stake they have to buy about $30 billion dollars worth. At the recent price of $10,000, Fidelity would need to purchase 3 million Bitcoin – that’s 1/6 the existing coins, or all the production coming in the next 100 years. Can’t be done. They have to wait for per-coin price to increase to something in the order of a million dollars.
Consider, too, that a Fidelity doesn’t get out of bed for a 1% stake; they want 5% minimum. This is why Raoul Pal says the institutional investment side has to gradually mature. Right now we’ve got the small and medium sized corporations, family offices, and hedge funds getting in; later it’ll be larger entities. Because the demand steadily increases faster than the regularly-reduced supply, the per-coin price ratchets up until the biggest of the big players can justify entering the market. By then, a satoshi will have real value and retail purchasers will be buying satoshis, for the most part.
Meanwhile, playing out this scenario provides a darned good reason for people to pick up Bitcoins now. They’re still shockingly cheap.
What do you propose a good “retail” strategy would be?
Really, it’s simple: stack as many satoshis as you can afford each week. There’s a meme out there: don’t stack furniture, stack satoshis. Another: live in your parents’ basement and stack satoshis. Another: sell your parents chairs and stack satoshis. Another: if your spouse won’t stack satoshis, get a divorce then stack satoshis.
That’s distilled Millennial wisdom among those who see what’s happening.
In reality each Bitcoin is 100 million satoshis. That’s how it’s defined in the protocol. Stack satoshis.
In the long run, as demand for bitcoin increases, Bitcoins will be broken down and exchanged in satoshis. That will happen as those holding Bitcoins pay for services and products of value to them provided by others. It’s the natural market at work, and as the market works satoshis will disperse ever more widely; and every person who holds a satoshi will see her wealth go up year over year. At the same time, the network will become ever stronger with more and more people linked in through trades of mutual value transacted in satoshis.
If one day someone wants satoshis and none are exchangeable for fiat, it will be a matter of trading value for value, denominated in satoshis.
For now, everyone can afford a satoshi; they’re still valued less than a penny each. Stack ’em and hold ’em until you’re ready to trade them for something of value. (Several exchanges are designed for dollar cost average purchasing; I like Swan.)
Relatedly, the on-chain analyst Willy Woo just tweeted:
Total supply of Bitcoin will not be 21m, it’ll be around 17m as many coins died in the fight for being acknowledged as something valuable in the early days. This means 0.002 BTC per person on the planet.
I’m curious what you think of that.