Can Bitcoin save value investing? \ stacker news ~econ

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2126 sats \ 27 comments \ @grayruby 19 Jun econ

Other than a couple retirement accounts, I don't participate in the stock market anymore. I sold all my equity holdings over the past couple years and converted the proceeds to my preferred savings tool- Bitcoin.

Not having to make many active investing decisions (I still self directly manage one of my retirement accounts) has been liberating but I still enjoy participating as a market observer.

Here is something interesting I came across from Jeff Weniger, head of equities for Wisdom Tree.

https://m.stacker.news/36084

As you can see, there are currently more companies in the S&P 100 trading at a price to earnings ratio above 50 than trading at a price to earning ratio below 20.

I think there are many factors leading to this: Money supply expansion, passive investing, technology eating the world, democratization of investing (anyone can yolo top stocks with robinhood etc), and US corps being seen as a kind of safe haven for the flood of global capital seeking some sort of real return.

The thought experiment I am more interested in though is would this data be reversed if we operated under a bitcoin standard instead of a fiat standard? If the money was scarce, investors would surely more prudently allocate their capital and not accept being buyers at any price.

What do stackers think? Can Bitcoin save value investing?

Sats for all, GR

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291 sats \ 1 reply \ @jeff 20 Jun freebie

Questions like this are a gnawing reminder, of how barbarically distorted our money, our markets, and our lives are.

I used to love discussing markets. I used to love discussing economics. I used to love the hunt of finding under valued stocks.

But, in the last 5 or 10 years, all of these questions boil down to the fact that...

...the ruler we're using is broken...by the broken rulers we're voting for.

57 sats \ 0 replies \ @grayruby OP 20 Jun

I am with ya. Very well said.

133 sats \ 0 replies \ @Coinsreporter 19 Jun

Yes, I agree 100%. The P/E ratio would be 0 to 10 for stocks in Bitcoin standard. People would easily realise the real worth of any asset because of money scarcity.

135 sats \ 1 reply \ @Undisciplined 19 Jun

Yeah, I think this ties together a couple of recurring themes.

#578776: Fewer regular people will be involved in financial markets, which should reduce noise.
#474759: There's a huge monetary premium on stocks, because our money can't be used to store value. Without that, stocks and other investments have to offer more value.

42 sats \ 0 replies \ @grayruby OP 19 Jun freebie

Yes, I think this is right. If the money was a good store of value most folks would just save instead of trying to invest and monetary premium wouldn't be a given. An investment would have to be both quality and reasonably priced.

55 sats \ 3 replies \ @02bcd3eeb0 19 Jun

PE above 50 is not so crazy if massive inflation is coming.

21 sats \ 1 reply \ @freetx 20 Jun

That depends on your perspective:

Suppose I wanted you to invest in my lemonade stand. We earned $10,000 per year. I was willing to sell you 50% of shares for $10,000....that would be a P/E of 2:1. So, in theory, if all those earnings were divided out to investors you would recoup your investment back in 2 years. This implies a 50% per year dividend.

A P/E of 50, likewise implies your dividends will equal your principal in 50 years...thus it is a 2% implied dividend.

So from a perspective of "implied dividend", investing in a company paying only 2% yearly dividends in a high inflation environment is terrible.

0 sats \ 0 replies \ @02bcd3eeb0 20 Jun

A 2% real yield in a high inflation environment would be great.

0 sats \ 0 replies \ @grayruby OP 19 Jun

Sure in nominal terms.

83 sats \ 0 replies \ @0xbitcoiner 19 Jun

Absolutely! This post is also interesting because S&P 500 is all-time high, crazy!

120 sats \ 1 reply \ @TheBTCManual 20 Jun

In the grand scheme of things very few people own equity, its only in recent years people have moved to it as a savings vehicle, I think under a bitcoin standard this goes away, if your money appreciates, even slightly what appeal is there to go seek out risk?

I think a BTC standard would also see a lot more companies not needing public markets, they would find a size and stay there and remain private, owned by the founders, staff and maybe a few private equity players

As for the public market, oef PE ratios I think below 10 would be the norm and while some might still try to do the buy back thing, I think dividents make a big come back

0 sats \ 0 replies \ @grayruby OP 20 Jun

Good thoughts. I definitely think P/E ratios would come down substantially. I think sub 10 is feasible. Average for the market historically is around 19x.

110 sats \ 1 reply \ @BlokchainB 20 Jun

I sure hope so. Today’s stock market is a glorified highly regulated casino where the government picks winners and losers and the SEC acts as a bad referee to make sure no egregious scams make it to the public markets.

Investing fundamentals died. Wall Street just uses it to earn fees

Bitcoin is the best savings technology ever created so naturally risk will be priced properly and rent seekers like Wall Street and 401(k) managers will become obsolete.

At least I hope. If not I guess all of us bitcoiners will have fun staying poor.

60 sats \ 0 replies \ @grayruby OP 20 Jun

I hope so too. We will have fun but I don’t think we will be poor. Even if Bitcoin doesn’t reach its full potential it will go up against fiat.

60 sats \ 1 reply \ @riberet19 19 Jun

If money is scarce, saving becomes fruitful again and people would seek to preserve it mostly rather than put it at risk, if money is not valuable and devalues quickly people take more risks and put their money at risk since they don't have many alternatives left, Bitcoin could make investments somewhat less desirable in a Bitcoin standard in my view.

48 sats \ 0 replies \ @grayruby OP 19 Jun

Absolutely agree. Investing under a bitcoin standard an investment would need to be high quality at a reasonable price.

60 sats \ 0 replies \ @SatsMate 20 Jun

Passive indexing is artificially propping up markets to unimaginable levels. Every pension fund, workers' retirement account & investment account - is moving money into these indexes, propping up these mega corporations already higher. If something breaks, the unwinding could be terrifying.

50 sats \ 3 replies \ @gmd 19 Jun

Wow that's a terrific chart... seems like a great new follow on twitter... is he a straight finance guy or does he also talk about BTC?

99 sats \ 2 replies \ @grayruby OP 19 Jun

I don't follow him. Have just seen him retweeted by a couple tradfi guys I follow. Not sure if he talks about Bitcoin.

50 sats \ 1 reply \ @gmd 19 Jun

Looks like he's done an interview with Pomp so he seems BTC aware but seems he mostly focuses on tradfi although theres a good amount of bitcoin reply-guys in all of his posts.

99 sats \ 0 replies \ @grayruby OP 19 Jun

I think all tradfi guys need to be BTC aware now.

50 sats \ 1 reply \ @IamSINGLE 19 Jun

This is interesting! It means that fiat is overflodding in the market and it may well be looking promising currently, this wouldn't end well.

Definitely we need Bitcoin standard for quality investing. You can see how people invest in any shit stock these days hoping for quick bucks. Bitcoin will overturn this scenario successfully.

0 sats \ 0 replies \ @grayruby OP 19 Jun freebie

I think it ends fine in nominal terms but not in real terms. Market will still go up as fiat is debased but may not keep up with the rate of debasement.

50 sats \ 1 reply \ @BitcoinAbhi 20 Jun

https://m.stacker.news/36103

0 sats \ 0 replies \ @grayruby OP 20 Jun

Not going to get an argument from me.

20 sats \ 0 replies \ @16d86e9daa 20 Jun

One more benefit of bitcoin is that it can shield your money from inflation-related value losses. In contrast to regular currencies, which lose value as governments print more money, Bitcoin has a finite supply of 21 million coins, making it a reliable long-term investment

0 sats \ 0 replies \ @lightworks 20 Jun

Probably, but long term, and only when/if it is instrumental in cutting red tape & regulations, as well as repealing the insane laws that underpin global megacorps...

Why? Because there can be no real production of real value within this Beast Machine of printed fiat, precognitive censorship and literal insanity conjured up by the deep state et al.

We need new ventures, new sectors and basically a whole, new civilization built on freedom and direct, honest transactions. Then real value investing might make a comeback...