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Tilson Writing A New Book: Promotes His Upcoming Short Selling Conference “it’s going to be EPIC!”: On Bitcoin “One part of me thinks maybe I should have listened”

From Whitney Tilson’s latest email to investors below but first see his last Bitcoin comments here.

The half-price early-bird special for the conference I’m hosting at the NY Athletic Club on May 3 on The Art, Pain and Opportunity of Short Selling expires at midnight tonight. Check out the line-up of speakers (attached) (and I’m adding a half dozen more) – it’s going to be EPIC!

The early-bird rate is $2,000, rises to $3,000 tomorrow and to $4,000 after March 1st. If you’re not sure if you can make it, register now to lock in the best price and then just get a refund later – it’s fully refundable until two weeks beforehand (4/19) and transferable at any time. You can register at: http://bit.ly/KaseRegister

PS—If you want to bring two people with you, there’s an even bigger discount (again, only until midnight tonight) of $5,500.

I hope to see you there!

2) I’m writing a book that will be out mid-year on the worldly wisdom I’ve learned from Buffett and Munger – to be specific, the NON-INVESTING lessons I’ve learned from them that have had such a big impact on my life.

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For example, I’ve tried to capture Munger’s avoiding calamities lessons in a 49-slide deck entitled, The five calamities that can destroy your life – and how to avoid them, which I’ve posted at: www.tilsonfunds.com/Tilsoncalamities.pdf. Page 20 has drawn particular attention (in the section on avoiding the calamity of marrying the wrong person):

If you have any favorite quotes of Buffett or Munger’s worldly wisdom and/or have a story you’d like to share about how their non-investment teachings have affected your life, I’d love to hear from you. Thanks!

3) Bitcoin continues to plunge and is now down more than 50% since I called the top on Dec. 16th (at what turned out to be the exact top, at ~$20,000). I’ve been doing some reading on it and particularly enjoyed this book from 2015: Digital Gold: Bitcoin and the Inside Story of the Misfits and Millionaires Trying to Reinvent Money.

It helped me understand the real problems with our current financial system (high fees, long delays, hacking risk) that bitcoin aims to address, that there are legitimate uses for it other than illegal activity, and that the underlying technology is pretty cool and sophisticated.

That said, it didn’t change my view one iota that this is an obvious, stupid bubble and a total scam in which a small group of techno-enthusiasts created something, traded it among themselves at ever-increasing prices, and then used that to lure in gullible average folks who ran it up even further – just like a classic pump-and-dump scheme by a Wolf of Wall Street bucket shop.

If these folks were truly interested in creating an alternative currency that addressed legitimate problems, then they’d fix the price of it to remove the speculative element – the fact that they don’t tells you all you need to know. Yet another tech industry get-rich-quick scheme…

It’s good to see the SEC (and other regulators around the world) finally taking some steps to rein in this nonsense.

4) The Winkelvoss twins presented bitcoin at one of my last Value Investing Congresses on Sept. 17, 2013 (when, I recall, the price was ~$650). Attached is their presentation and here is one slide from it:

One part of me thinks maybe I should have listened (in light of what the price has done since), but I don’t have many regrets about staying away from this foolishness. Buffett says (correctly) that it never bothers him that someone else makes a lot of money in things he knows nothing about like “cocoa beans”.

5) Here’s Paul Krugman’s op ed in yesterday’s NYT, Bubble, Bubble, Fraud and Trouble, https://nyti.ms/2GuCkhx.

6) You can NOT make this stuff up!

A cryptocurrency created as a parody is now worth more than $1 billion

https://www.cnbc.com/2018/01/04/cryptocurrency-dogecoin-now-has-a-market-value-of-more-than-1-billion.html

  • Dogecoin, a cryptocurrency created as a parody after a popular internet meme, now has a market cap of more than $1.1 billion
  • The rise of Dogecoin and other bitcoin descendants is due to the fact that they're perceived as being "cheap" compared to bitcoin or ether, according to Dave Chapman from Octagon Strategy
  • One of the Dogecoin founders told a cryptocurrency news site that the token's rise makes him worry about market excess

7) I’m struggling to think if I’ve ever seen anything stupider than this…

Rise of Bitcoin Competitor Ripple Creates Wealth to Rival Zuckerberg

By NATHANIEL POPPER

NYT, JAN. 4, 2018

https://www.nytimes.com/2018/01/04/technology/bitcoin-ripple.html

......................

8) A hilarious bitcoin spoof, Bitcoin - Ultra Spiritual Life: https://www.youtube.com/watch?v=g-zIbVEjVpQ&feature=youtu.be (4:13) Excerpt:

 

“Technically it’s nothing, but because the good-hearted, anonymous people behind bitcoin release only a limited amount of this nothing, it’s worth something. Scarcity is what makes anything valuable, so with bitcoin, scarcity is what makes nothing valuable.”

 

Classic!

9) Here’s what Munger had to say about it (part of a 55-min talk he gave in Dec. at the U of Michigan; www.youtube.com/watch?v=kxKRiPBWdFQ):

10) Speaking of Munger, I was going through some of my old articles and came across this one (www.fool.com/boringport/2000/boringport000501.htm) from May 1, 2000, only six weeks after the Nasdaq/internet bubble peaked, in which I captured highlights from the Berkshire Hathaway meeting. Here’s what Buffett and Munger had to say about the tech bubble (identical words could be used about the cryptocurrency bubble, though it’s not nearly as large):

Buffett: "We've seen companies with market caps of tens of billions of dollars that are worthless, and seen other companies that trade at 20-25% of their true value. It eventually gets sorted out. But the speculative mania in one area is not creating equivalent discounts elsewhere. We're not finding businesses at half their real value today. Forty-five years ago, I had lots of ideas and no money. Today, I have a lot of money but no ideas."

"I've seen companies valued at $10 billion that couldn't borrow $100 million. This sort of thing has happened before, but this is the most extreme ever, including the 1920s. In the past year, the ability to monetize shareholder ignorance has never been greater.

 

Munger added, "It's the most extreme in modern capitalism. In the 1930s, we had the worst depression in 600 years. Today is almost as extreme in the opposite way." Buffett noted, however, "That doesn't mean it's easy to predict the outcome. We can be cautionary, but not find opportunity."

"In time, people will see this era as one of enormous wealth transfer, but the only wealth actually created is by the businesses. Investors as a whole may feel richer, but they're not. It's like a chain letter. The early participants can make a lot of money, but no wealth is created. In fact, due to frictional costs (the cost of the envelope and postage, etc.), wealth is destroyed."

 

"Anytime there has been a real bubble (uranium, conglomerates, Nebraska farm land in the late 1970s), it has been corrected. But with a huge number of participants with a whole lot of money, the [speculative] game can go on for a long time. We know the game, but it just isn't our game." Munger added, "We use the phrase 'wretched excess' because the consequences are wretched."

The Art, Pain and Opportunity of Short Selling conference-5-3-18

Winklevoss presentation on Bitcoin-Value Investing Congress-9-17-13