Pictured is Michael Saylor. The picture comes from an article in The Wall Street Journal, which was titled as follows: "The Man Making Billions From the Wildest Bitcoin Bet."
In case you have missed my earlier pronouncements, my thought is that any investment in Bitcoin is wildly speculative. Bitcoin is a "thing" that has no inherent value. The value of a bitcoin is measured (and measured solely) by a prediction about what it will be worth later.
This is very different from other types of investment. For example, if you invest in shares of stock of a company (of General Motors, say), the future value of the stock will depend on how the company does. In the case of an investment in General Motors stock, as an example, the future value of your purchase will depend on how good a job the company does in making and selling cars. There is some objective measure that will, in substantial part, determine the value of an asset like that.
The future value of Bitcoin will depend (and depend solely) on how much people in the future are willing to pay for it. Its value is totally speculative. I have made this point before (many times, in fact). Still, people keep investing in Bitcoin, because they are hoping for a windfall. Our recently-inaugurated president has talked about investing federal funds in Bitcoin. Click the link for an exploration of this idea, and to learn why it's not what we might call a "good" idea!
The Wall Street Journal article reports that the shares of company owned by Saylor, MicroStrategy, are up 650% in the last year. He is pretty jazzed about this, and held a big New Year's Eve party to celebrate:
To celebrate bitcoin topping $100,000, Saylor hosted a New Year’s Eve party for several hundred members of the crypto community at his waterfront, Miami-area estate, near his luxury yacht. A half-dozen dancers dressed in gold performed. Celebrities mingled with investing luminaries, including Bill Miller, the former Legg Mason fund manager; Peter Briger, chairman of Fortress Investment Group; and Mark Casey, a key portfolio manager at Capital Group. The event was livestreamed on YouTube to tens of thousands of bitcoin fanatics as Saylor, in a black blazer and a bitcoin T-shirt, presided.Enthusiasm for Saylor’s company is so rabid it has resulted in a head-scratching situation: MicroStrategy owns about $47 billion of bitcoin, but its shares are worth about $97 billion. It’s as if investors are paying $2 for a $1 bill. Just as surprising: Sophisticated investors have been among the biggest buyers, including mutual-fund power Capital Group, which owned about 8% of the company as of Sept. 30, and Norges Bank Investment Management, Norway’s $1.5 trillion sovereign fund, which owned nearly 1%.Fans say the premium reflects confidence that Saylor can continue to produce profits betting on bitcoin. Only 21 million coins will be created, a scarcity that boosts its value, they argue. By issuing equity at lofty levels, and selling debt at friendly terms to the company, Saylor can create value for shareholders as he expands MicroStrategy’s bitcoin horde, says Richard Byworth, a partner at SYZ Capital, who personally owns MicroStrategy stock (emphasis added).
I am no billionaire, but I hope you will agree, if you think about it, that putting your money (or the nation's money) into Bitcoin is to fall prey to a con. The billionaires touting Bitcoin - the ones who got invited to that New Year's Eve party - are hoping that they'll get you to give them some of your money. If you do, don't count on getting it back!
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