An investment guru's thoughts on Bitcoin

Among Wall Street investors, I am very concerned about the speeches and writings of several investors. In addition to the Buffett, Soros, Rogers, and Dario I mentioned in the previous article, Howard Marx is also one I am very concerned about.

Howard Marx is the founder of Oaktree Capital. He has a very famous book "Cycle". In this book, he describes in detail how he views the cycle of the investment market and how to use the cycle to invest.

There is a very important point in this book:When the investment product invested is valuable and the price keeps discounting during the market's downward cycle, investors should not only not be afraid, but also continue to buy without fear of market sentiment.

This point of view has a deep influence on me, and my insistence on fixed investment in a bear market is largely influenced by this point of view.

Howard Marx is also an investor highly respected by Buffett. Buffett himself admits that every memo issued by Howard is a must-read work for him.

Howard Marx, like many senior Wall Street investors, had an extremely negative view of Bitcoin in his early years. But in a recent interview, he admitted that his views on Bitcoin have changed.

He talked about his son investing in Bitcoin, and after his son taught him about Bitcoin and digital currency, he had a different view on Bitcoin.

Here is his full view expressed:

“Cryptocurrencies do have no tangible value, no profitability, no cash flow, and no assets. But isn’t that true of all currencies? Isn’t it true of the dollar and the euro? The dollar used to be pegged to gold or silver, but now the dollar is not pegged Anything in kind. Why do people want to hold dollars or pounds? Because other people recognize the value of these currencies and are willing to exchange them for commodities. Right? If this logic holds, then the same is true for Bitcoin. If the dollar and If the British Pound is accepted, then Bitcoin should also have value."

In my view, this view is actually an acknowledgment of the importance of consensus.

People living in modern society are born in contact with the world, and what we see is that the paper currency issued by the government is valuable, and it can buy various commodities. We seldom consider how much a banknote is worth in our daily life? How much labor cost does it take to design a banknote? How much does it cost in materials and machinery to print a banknote? Does the value of the things we buy with 100 yuan match the cost of a 100 yuan banknote itself?

So the power of consensus is so powerful.

The same consensus can make a piece of paper valuable, and it can also make the invisible bitcoin valuable.

In a previous article, I listed Dalio's views on Bitcoin. Now we compare Dalio and Howard's views on Bitcoin, and we will find that the thinking angles of the two masters are very different.

Dario’s analysis of Bitcoin is to compare Bitcoin with a certain type of existing investment products (gold) based on its characteristics, and think about its anti-inflation characteristics and its value in anti-inflation. So in Dalio's description, he often mentioned that the circulation of Bitcoin is limited.

But Howard did not talk about this feature of Bitcoin, but from the perspective of consensus, he compared Bitcoin with legal tender to find the source of Bitcoin value.

Looking at the same thing, the starting point of the two thinking is so different. This is something we can learn from.

But the two masters have one thing in common, and they are more worthy of our younger generations to learn. Both of them are over 70 years old, but their thinking is so flexible. Even if there are differences in cognition of new things at first, they will soon Ability to change perceptions through further reflection.

Howard said in the interview:

Investment should keep an open mind, and should not easily exclude any target.

I think this is the best advice for each of our investors.