MSTR -- To get out or not...

[llIHeroic]

Unfair

mstr went from a small cap mature company with no growth with a $500M cash treasury to a company with $15B worth of treasury assets

A company that can command terms on debt no other public company can, not even the US govt, 85bips, and still get oversubscribed twice in the last 3-6 weeks

I tried to be careful in the words I used. By real value I mean productive activities or efficient services being offered to the market/economy. And eventually some of the profit or forward profit from those activities being passed on to the shareholders.

So far they have had great success in speculating on a commodity / store-of-value asset, amassing money from leveraging that trade, and also converting shareholder $$ into assets on their balance sheet. But that hasn't translated to value yet.

Also, US government could easily beat those debt terms. Offer 5y special issuance convertible into tax credits 2x the face value, if par 5y rates drop under 4%. Billions would snap buy that for a -5% interest rate way faster than the MSTR bonds. That's all that's happening here. But most can't understand.

but the most unfair of all is the very high bar you set for mstr.. really $20,000/share within 2 years or mstr is a failure and the hyped up investors have lost out?

Why the deadline (it can reach $20,000 split-adjusted, but maybe take 5 years or longer)?

What if mstr only reaches $8,000/share after 2 years, is it such a big disappointment as there are many other stocks that would easily go up 400% in the next 2 years?

Re: $20,000 / share. Numbers and timelines around there are real price targets I'm reading from some MSTR bulls, so I was just throwing that out in my post. But I'll concede this point. The idea is that this premium is unsustainable and not justified by any real advantage; if they are still floating at a mean NAV premium of 2.5x or greater over the next 2-5 years, I will have been 100% wrong here. And there is some advantage real or perceived that market is willing to persistently pay for that I can't wrap my head around.

The chart at the end of your post demonstrates what I'm trying to say. BTC / share has been flat for years. Even in the 2022-2023 timestep, the "BTC per Share in $" gain lagged BTC's rate of appreciation. So long term buyers lose on both counts. You are overpaying for your slice of a box full of BTC, and the full rate of BTC appreciation isn't even being forwarded to you.

Buyers like yourself gain from trading premium expansions and contractions, that's all, at least so far. Which is fine, but it's being confused by many with actual value which hasn't shown up by any discernible metric yet.

 

[johnarb]

I tried to be careful in the words I used. By real value I mean productive activities or efficient services being offered to the market/economy. And eventually some of the profit or forward profit from those activities being passed on to the shareholders.

We don't conflate virtue signaling with speculation, lest it clouds our judgement

What real value does Instagram, Casinos or banks? You know banks are the worst business, they exist primarily to suck value out of everywhere and give to their shareholders and executives

When you deposit money in the bank, that is actually an incorrect word, you can look it up, when you give money to the bank, that money belongs to the bank and you get an IOU with very low rates

they take the risks by loaning 9 times or higher creating new money and when they blow up, you're insured up to 250k

you don't know all of these until one day you try to redeem the IOU for $10k, or $100k at the bank and they deny you because they don't like the reasons you're telling them

You think the bank is doing a service to the society by safekeeping the money of the people? Try "depositing" $300 at the bank, they will charge you monthly fees if you do not have a direct deposit, they despise poor people, but they love to charge the highest fees to the poor people, bleed them to death

And the game is rigged, when many (most) of the banks were going bankrupt or needed to dump their treasuries to raise capital for all the withdrawals going into the high yielding money markets, why did the over $250k deposits got bailed out? USDC had $3B, that should have been wiped out

Story of the banks, privatized profits for executives and shareholders, socialized losses because tbtf excuses financial system collapse, has been going on since LTCM, 2008, and now our btfd still unresolved but contained. The best free market in the world (sarcasm)

Funny thing is that the banking services where I'm at are so goood!! wtf, why can't banking be this good in the greatest country in the world???

Oh, mstr is providing business intelligence software to its customers and securing over 1% of the hardest money in the history of mankind

That's a service to the whole world, bitcoin is a store of value asset that is protecting the global wealth of anyone who chooses to do so, and it's permissionless

Also, US government could easily beat those debt terms. Offer 5y special issuance convertible into tax credits 2x the face value, if par 5y rates drop under 4%. Billions would snap buy that for a -5% interest rate way faster than the MSTR bonds. That's all that's happening here. But most can't understand.

You get paid a pittance for the risk. They will inflate the debt away, we need a few years of double digit inflation even triple digit and boom, a non-default default, iykyk

The US people are hungry for yields after over a decade of nirp/zirp, but the smart money would not be taking that risk, all the foreign countries are selling US Treasuries, perhaps you didn't know the concerns of lack of liquidity at times

please be honest, would you lend the USG $1M at 5% when you know the true inflation is higher than that? And now the fed will lower the rates, even when inflation has not reached 2%, inflation will shoot up, but damn the poor people, all the assets owners will get even richer, but my eyes are open, the regular people do not care, they are too busy with the football, basketball, baseball games, the social media, the political issues, the blue and the red, the racism.... give them circus and bread and water, bring out the clowns, no one will notice, they are modern day equivalent of slaves of the past, except this time, much more sophisticated coin clippings by the Roman emperors

Re: $20,000 / share. Numbers and timelines around there are real price targets I'm reading from some MSTR bulls, so I was just throwing that out in my post. But I'll concede this point. The idea is that this premium is unsustainable and not justified by any real advantage; if they are still floating at a mean NAV premium of 2.5x or greater over the next 2-5 years, I will have been 100% wrong here. And there is some advantage real or perceived that market is willing to persistently pay for that I can't wrap my head around.

The chart at the end of your post demonstrates what I'm trying to say. BTC / share has been flat for years. Even in the 2022-2023 timestep, the "BTC per Share in $" gain lagged BTC's rate of appreciation. So long term buyers lose on both counts. You are overpaying for your slice of a box full of BTC, and the full rate of BTC appreciation isn't even being forwarded to you.

Buyers like yourself gain from trading premium expansions and contractions, that's all, at least so far. Which is fine, but it's being confused by many with actual value which hasn't shown up by any discernible metric yet.

You concern yourself with mstr bulls operating on different timelines, the price target if you must know is over $100,000/share of mstr split-adjusted if applicable, but you'd have to account for a $2-10M / btc timeline

The chart I gave you is not updated, the btc per share is at the highest level

But let's concern ourselves with the timeline that we're involved with...

I've already said on a different post that I'm holding most of my mstr calls for the next 60 days and I'll make a prediction that in my opinion will happen within that time period:

• 90% probability that bitcoin will touch $80k and same 90% probability that mstr will touch $2500/share and I will sell the next tranche of mstr calls I'm holding and reassess

 

[llIHeroic]

john, I think we hashed out just about everything already. But I like your spirit and didn't want to leave you hanging when you're direct quoting me. I'm going to take a break after this though.

We don't conflate virtue signaling with speculation, lest it clouds our judgement

What real value does Instagram...

Wasn't trying to take the discussion into conceptual realm. Just ability to produce goods or services that people pay for. Instagram generates revenue. We're probably in agreement that much of what generates revenue for goods/services isn't good for the wellbeing of society.

You think the bank is doing a service to the society..

Lots of problems with banks, but they do provide a service that is currently very useful to most of society, who don't want to convert their pay into paper money and/or assets and barter with people. Once something is entrenched in society I understand there is pressure to conform and the status quo is difficult to change.

Oh, mstr is providing business intelligence software to its customers and securing over 1% of the hardest money in the history of mankind

That's a service to the whole world, bitcoin is a store of value asset that is protecting the global wealth of anyone who chooses to do so, and it's permissionless

Yes, their software is value. And that value is probably worth at least $1b or more. It's just the BTC premium is dominating the company market cap right now so that's what dominates the convo.

Them buying and storing an asset that we're free to buy and store ourselves for 2x the price isn't a useful service. And it doesn't generate revenue.

please be honest, would you lend the USG $1M at 5% when you know the true inflation is higher than that?

I'm saying I would pay 5% interest to the USG in order to lend them money if they were giving me optionality worth much more than that. Like MSTR is doing. I wouldn't buy MSTR shares outside a very short-term tactical trade, but I'd buy their bond for 0% interest in a heartbeat with the proper convertible terms.

Most people I know who have capital keep minimal amounts of cash in the bank, and only lend a fraction of it at rates somewhat close to inflation. And even then not expecting long-term appreciation but moreso to shield from volatility of other held assets denominated in USD, and for rebalancing.

So I don't identify with the USD is a scam / inflation is theft narrative. There's no trick going on, people have been aware that inflation is occurring for the past 100 years and we have the freedom for buyers and sellers to reach price equilibrium on USD debt anywhere they want and thus decide the current yield at any duration. And a multitude of factors go into their pricing decisions.

 

[johnarb]

john, I think we hashed out just about everything already. But I like your spirit and didn't want to leave you hanging when you're direct quoting me. I'm going to take a break after this though.

Yes, their software is value. And that value is probably worth at least $1b or more. It's just the BTC premium is dominating the company market cap right now so that's what dominates the convo.

Them buying and storing an asset that we're free to buy and store ourselves for 2x the price isn't a useful service. And it doesn't generate revenue.

I do appreciate the time and your knowledge

The premium is not something dictated or have to dissolve

It is not mstr vs bitcoin, nor is it shareholders ownership of mstr shares that entitle them to the bitcoin treasury, the latter was never promised nor implied (oops, might open up a can of worms and shareholder rights discussion of which I have near zero knowledge or understanding)

mstr the company owns the bitcoins, period. If someone wants bitcoins, they can go out to any of the crypto exchanges and buy bitcoins

I listed a bunch of reasons for the premium to nav of mstr, but ultimately, the market decides, it can stay irrational longer than a shorter's solvency, He Who Sells What Isn't His'n Must Buy it Back or Go to Pris'n

What is the premium of net asset value to Apple's market cap? How about Microsoft? How about Nvda? (credit to the video I just posted)

Stock Valuation is a vodoo science at best (you don't believe me, remember in 2008 crisis, majority of stocks traded below book value, fiat liquidity is the ultimate driver of stock market valuation, hence the Fed was savior of the whole world's financial system),

but quoting an oft-repeated phrase, "market is forward-looking"

So, tech growth would be justification for the premium to nav for Apple, Microsoft, or Nvidia, except, Apple is manufacturing growth through share buybacks, same with Microsoft, but Nvidia is hyper-growth, so it's undervalued (lol)?

As a bitcoiner, I already see bitcoin price hitting $300-$500k in the next 2 years and $1M by 2030, so the mstr premium nav you speak of doesn't exist, what I see is one of the most undervalued companies in the world which is mstr

Most people I know who have capital keep minimal amounts of cash in the bank, and only lend a fraction of it at rates somewhat close to inflation. And even then not expecting long-term appreciation but moreso to shield from volatility of other held assets denominated in USD, and for rebalancing.

Most people's net worth are not liquid, holding a mortgage or several and other financial assets or instruments tied to the fiat financial system. They do not hold cash because it gets debased, so the need to increase the nominal value in usd terms

Bitcoin is not a debt-based money, it is a true savings account, a store of value, so holding most of our net worth in it and having no debt, all that has to be done is hodl and during bull market, cash out enough fiat to survive the next bear market

That has been disrupted in a good way by a side-bet on mstr

I'm running through some mental exercises, this mstr trade could produce a large amount of fiat that is going to need some of that capital acrobatics you described

If I end up making $2M+, just whiteboarding it, the easiest thing to do (for me) is to spread it around several accounts, buy some short term US treasury etf's (yup, I'm a dumb money in this instance), leave some in brokerage money market funds, and buy some bitcoins, but not a lot, otherwise, it could present an upside-down risk if a bear market arrives unexpectedly and tax obligations are unfunded

I'm actually risk-averse disguised as a degen, hence why I do asymmetric trades, fixed amount risk capital

Anyway, shouldn't count the eggs before hatched, but a few eggs have been consumed

\So I don't identify with the USD is a scam / inflation is theft narrative. There's no trick going on, people have been aware that inflation is occurring for the past 100 years and we have the freedom for buyers and sellers to reach price equilibrium on USD debt anywhere they want and thus decide the current yield at any duration. And a multitude of factors go into their pricing decisions.

You are from a world so foreign to mine and everyone I know. I'm not saying everyone I know are poor, in fact, many are doing well, thanks to real estate values, the ever increasing stock market value

But come on, all the people I know are not aware or even care to learn about fiat debasement nor can they do anything about it

They are too busy with 5-6 digit student loans, 5 digit cc balances, 5 digit car loans, 6 digit mortgages, 5 digit helocs, their 9-5's, their kids school, clothing, food, medical, extra curricular expenses, the sports teams, the Korean soap operas, the latest news

They don't understand why their salaries are becoming less and less sufficient, even though they are getting big fat raises

true story, I was texting with a good friend, about investments, he knows I'm a bitcoiner, and got to the subject of inflation and fiat debasement, I've known him for over 15 years so going to lunch the prices back then, versus now (even though at the time of the conversation a few months ago, I was not in the US any more)

You know what he said to me? It's been going on forever and there's nothing we can do about it, but I told him bitcoin is the solution, nope, he doesn't think so

Happy Good Friday to you, if you celebrate... it's already early morning Holy Saturday for me

 

[NoahA]

Stock Valuation is a vodoo science at best

This is the most frustrating part. So many smart people have been ruined by shorting the market when this is in fact the logical play. The extent of the manipulation and the ability to kick the can down the road is extraordinary. And now I even have to recognize that stocks will likely keep going higher since the dollar will keep going lower and lower. Stocks, going forward, are now more likely to be about getting out of the dollar than about business cycles and generating cash flows.

Most people's net worth are not liquid,

The shitty part about this is that its Bitcoin that takes a hit because it is so liquid. RE is the toxic asset, and yet the volatility is tiny in comparison. Yes, I know when the door closes, most will not be able to get out, so the lack of liquidity will eventually be a lesson that RE investors will learn, but its taking too long!

You know what he said to me? It's been going on forever and there's nothing we can do about it, but I told him bitcoin is the solution, nope, he doesn't think so

This amazes me as well.

I honestly think the solution to everything is bitcoin. Not that bitcoin can directly fix it, but it just helps to allocate resources into other places. Like bitcoin isn't going to fix the government, but it will greatly reduce the government, and this then allows people to solve their own problems. If the problems in business is too much regulation, then slashing government means there won't be any way to create more stupid policies and regulations. But I worry that too many people want the government to fix everything even though you show them countless examples of how governments actually make more problems.

What I look forward to most is bitcoin repricing everything from assets to wages. We are at the point where government workers have the best paying jobs and benefits and hence can pay the higher fees for food and shelter which makes those prices go up even higher. Easily 50% of the population just cannot keep up, and they are blamed for being poor by not having gone to school. What's even worse is that the entire economy relies on consumers, and if those bottom 50% weren't consuming, the economy would crater and all those assets that those rich people have would plummet. The rich fuckers are literally reliant on the poor people to keep spending and taking on debt, and yet at the same time consider those poor people as just a drain on the system.

Even I think about how useless all the drug junkies are, but then I'm sure the healthcare system uses this as a reason to employ so many nurses and doctors and counsellors, etc. Without the drug users, lots of these government jobs are gone! Same thing with crime. Nobody wants criminals, but if we were as safe as Japan, how would police officers rake in the big bucks and all that overtime! Every government agency uses a crisis as a reason to demand higher budgets, but nothing gets fixes, the money is gone, and the employees and unions benefit the most.

I fucking hate rich people. They think they are so smart and deserving of their income without realizing that it comes off the backs of others. Good luck to these fuckers on a bitcoin standard. Most rich people could never work as hard as poor people do (the hard working ones of course), and they they think their 10x salary is justified. I of course understand that there are just as many bad apples who just leech off the system without contributing anything, so both extremes of the spectrum need to go. Bitcoin is the only way. You slash budgets, you slash spending, so government can only spend what they collect in taxes, and you watch organic growth happen the way its supposed to be!

Shit.. I went off on a tangent John. What I mostly wanted to say was that I really enjoyed this last post of yours!

 

[johnarb]

I'm going to take a break after this though.

Enjoy your time off from ET, and have a nice Easter weekend, Heroic!

[ET is like the facebook/instagram for speculators and it has the same dopamine addictive qualities for feedback, likes and comments]

I fucking hate rich people!

I am somewhat embarrassed to admit I'm considered rich where I am, we have 3 full time help, there are things I would never have thought of delegating, like the other day, I'm applying for business transaction, I fill out the form at home on my desk, while shitposting on ET, then after completion, needed to get a copy of my id's and sent someone to do it for me, it's surreal, wtf, I was always a gofer in some capacity at most of my jobs

But hear me out, not all the rich are your enemies, and not all the poor are your friends. Be kind-hearted, and have a clear conscience and help when you can to those deserving, my 2 satoshis

-------

Bitcoiners will be invited to the table, probably

I think Saylor is an absolute genius, but there are certain types intelligence in the Bitcoin ecosystem

I consider American Hodl "smarter" than Saylor, and there are a few others that call no bullshit, fuck the system types, Samson Mow, Junseth

Watch this section of WBD from last year, the whole episode is good, but this one section applies to our particular convo topic here

 

[NoahA]

But hear me out, not all the rich are your enemies, and not all the poor are your friends. Be kind-hearted, and have a clear conscience and help when you can to those deserving, my 2 satoshis

Agreed, but I work in a government job, and everyone thinks they aren't paid enough! Granted, everyone has their purchasing power eroded, but my department has a shit ton of overtime, and that overtime is never questioned, and there is no mechanism to figure out ways to be more efficient because its government money, and you can't bring in lower paid workers to do some of the menial tasks because the super strong unions will fight like crazy, and on top of all this, these guys want their union dues covered by the government because of how important they think they are and they expect they should get a break.

I don't mind the rich people who struggled at some point in their life, but some people are just tone deaf. Take Mike Alfred on twitter for example. For the past few months he keeps talking about how strong the economy is and how every restaurant is full. The fucker lives in some very nice part of California I'm sure where assets have done incredibly well. The stock market is clearly not a bell weather for the general well being of the average citizen. He lives in a total bubble. I don't know his history or how he acquired his wealth, but I know I wouldn't ever want to be friends with him.

Watch this section of WBD from last year, the whole episode is good, but this one section applies to our particular convo topic here

Yup, saw this episode for sure, and the part you link to sounds exciting, and I want to believe it, but I'm not sure if I ever see central banks getting into bitcoin. It is literally the complete opposite of the business that they are in. If governments realize the dollar is dying and bitcoin is necessary, it shouldn't be the Fed that scoops it up, what we should be doing is getting rid of the Fed and just letting the treasury manage the finances. There is no role for a central bank if we are switching to bitcoin. As he points out, they would just fractionally reserve the bitcoin and the whole game starts again. Letting a central bank control the monetary policy after it just blew it up is the dumbest way forward.

 

[johnarb]

Expiration week for the MSTR 750 calls Jan/2022

Invested about $50K, at one time worth $100K now position is worth less than $1K and will expire worthless on Friday

I still like MSTR as hedge fund proxy ETF for Bitcoin so maybe I'll come back later to buy call leaps on MSTR

That has been disrupted in a good way by a side-bet on mstr

I'm running through some mental exercises, this mstr trade could produce a large amount of fiat that is going to need some of that capital acrobatics you described

If I end up making $2M+, just whiteboarding it, the easiest thing to do (for me) is to spread it around several accounts, buy some short term US treasury etf's (yup, I'm a dumb money in this instance), leave some in brokerage money market funds, and buy some bitcoins, but not a lot, otherwise, it could present an upside-down risk if a bear market arrives unexpectedly and tax obligations are unfunded

Lost $50k on mstr calls in the beginning of 2022 and the bear market was just starting

I did buy the LEAPS calls on mstr which expired in Jan/2024 but sold before expiration that was rolled to buy the current mstr calls

Bull market is better than a bear market

 

[The_Krakenite]

Bull market is better than a bear market

We can argue that one a bit... The elevator down goes much faster usually

If only you had bought PUTs instead of CALLs when the bear market was just starting. But that's all coins under the bridge for now...

Taking a look at my BTC CALLs which are deep in the money, I realize there's very little liquidity at strikes that deep. I'm going to start unwinding some of them and taking profits soon.

Or... I could just wait to be assigned, but I'll have to raise a boatload of cash first. I guess it's one of those 'good' problems to have

 

[johnarb]

Or... I could just wait to be assigned, but I'll have to raise a boatload of cash first. I guess it's one of those 'good' problems to have

I'm not an options expert, but I think you can short 1 bitcoin, that will put $70k in your account, then instruct the broker early exercise 1 call to return the bitcoin and cover your short, but 1 big caveat is that if you still have a lot of time on your call option, you'd be throwing the time and volatility premium away

for example, mstr july 1,100 calls are ~773 each, but intrinsic value is 600 points in the money, that's $17,730 that would be thrown away for each of those calls