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In This Issue:
The Legend Of Warren Buffett
Bitcoin Thoughts And Analysis
Legacy Markets
What’s Happening With FTX?
Cointelegraph Releases More Heroes And Villains
The Legend Of Warren Buffett
An aspiring, young, and laser-focused businessman was in the early days of building his financial empire. The year was 1958, and Warren Buffett narrowed his focus on his first major investment opportunity.
He was ready to strike.
Sanborn Maps was a simple, Midwestern map publishing company, that had seen its annual profit drop nearly 80% from the late 30s to the late 50s. Advancements in mapping technology pushed Sanborn against the wall and it was only a matter of time before disaster struck.
Buffett saw an opportunity.
Morale in the company was low, as the stock continued to plummet. But Buffett saw something different - a book value significantly exceeding the stock value. This was an opportunity for Buffett to make money with almost no risk. Buffett quickly devised a plan to raise capital, buy stock, win a board seat, and then convince the company to liquidate for a large profit.
But Buffett was met with serious resistance. His plan was rejected by the board.
After pleading with his parents, aunts, friends, and acquaintances to raise even more capital, Buffett went against the advice of his mentor and put everything he owned and borrowed into Sanborn to buy majority control. Buffett returned to Sanborn and notified the board of their new options - follow his lead or leave. Buffett proceeded to liquidate the company and walk away with a +45% return on his investment.
Sanborn was only the beginning.
For the next +65 years (and still going) Warren Buffett was the greatest investor the world had ever seen, earning the nickname, ‘the Oracle of Omaha’ along the way and attracting a devout following that will likely never be matched. This is the story of Warren Buffett, a story that crypto investors dismiss, but one that undeniably deserves our attention - and our respect.
The Great Depression began when Warren Buffett was only two years old. Although his once-affluent family lost almost everything, the Buffett mentality was born. During the depression, Buffett's father, Howard, came up with a brilliant idea to alleviate financial pain. Howard, a stockbroker, began selling stocks that he considered "safe" to protect clients' capital, which turned out to be successful.
“The best gift I was ever given was to have my father. In all ways, he was teaching me, never taught by telling me. He taught me by example. He had unlimited confidence in me, even when I screwed up and that takes you a long, long way.”
After selling newspapers, owning and operating a pinball machine, betting on horses, and excelling in school, all Warren needed was to meet the right person at the right time. As an aspiring entrepreneur, Buffett had many idols, but Benjamin Graham stood out, and Buffett was determined to cross paths with him.
And he did.
After scoring his first job at Graham’s firm, Buffett was assigned to find ‘cigar butt’ companies.
“Cigar butt companies are pathetic companies that sell so cheap, you think there is one good free puff left in it. We used to pick up a lot of soggy cigar butts.”
At that point in the story, Buffett's career began to take off. With $19,000, Buffett purchased Rockwood, a struggling cocoa company in New York. While Graham saw it as an opportunity to arbitrage differences between assets and stock, Buffet saw it as an opportunity to go long. Buffett quickly learned the meaning of "value investing" and did it better than his predecessors.
At age 26, Buffett set up his own firm with his profits and network and was off to the races. For the next five years, Buffett hunted for bargain companies by analyzing pink sheets and traveling far and wide to find the right deals. He was a fast success, netting over 100% annually each year. By 1962, Buffett had $7.2 million in AUM.
During the 1960s, Buffett navigated through social, economic, and political volatility well. Companies like Disney, American Express, Hochschild Kohn, Dempster, and Berkshire Hathaway were some of the companies he invested in. He was viewed by some as a corporate raider and ruthless liquidator and by others as an activist investor and profitable savior. It was during this time that Buffett mastered his craft and learned to manage his reputation as a pillar of financial good.
As Berkshire Hathaway transformed from a failing textile company into a multinational conglomerate holding company or financial empire, Buffett invested in companies like Coca-Cola, Apple, Bank of America, and See's Candies. Buffet teamed up with Charlie Munger, and together they turned Berkshire Hathaway into a company with hundreds of billions in AUM. It would not be surprising to see Berkshire Hathaway break the trillion-dollar mark this decade. Buffett's success story was a lifetime story, making him the best investor ever.
There's much more to Buffett's success story, but let's wrap it up here. Despite Buffett's quirks like eating a McDonald's breakfast every day and not understanding crypto, he is a financial genius and the greatest investor ever, likely never to be rivaled. It's helpful to step back and appreciate experts in their field, and Warren Buffett truly is the best of the best. I look forward to sharing more stories about other great investors in the future.
The inspiration behind this intro and its framework originated from this documentary by FINAiUS. It’s an excellent film produced by an even better filmmaker. I highly suggest you check out his channel.
Bitcoin Thoughts And Analysis
Bitcoin is giving mixed signals at the moment. We continue to see bearish divergence with RSI on the daily chart, which usually signals a drop is coming.
We have 3 touches of the key $25,212 resistance in the past 6 days. Price wicked slightly above it today, by a few dollars. One could say that support is weakening, but the slight move above also signals liquidity engineered for shorts.
$25,212 is a very tough nut to crack. We want to really see closes above that line, not small wicks.
We have a potential ascending triangle on the 4-hour chart. This means a horizontal resistance at $25,212 with higher lows consolidating towards that level. This is ONLY AN IDEA unless we see a break above $25,212 on increasing volume and a candle close above.
Legacy Markets
The Fed Pivot Usually Precedes The Stock Market Bottom
Is the bottom in yet for stocks?
While history does not need to repeat, a look back at every other similar situation would give a clear answer - no.
Let's look at history.
1. Yield Curve Inversion (Blue)
2. Fed Pivot (Red)
3. Recession/Bear Market And Bottom (Black)
Maybe this time is different. Maybe not. We are currently at "Yield Curve Inversion." The Fed Pivot that seemingly everyone is hoping for generally precedes the market bottom.
MARKET WRAP
Key events this week:
Earnings for the week are scheduled to include: Alibaba, Anglo American, AXA, BAE Systems, Baidu, BASF, Danone, Deutsche Telekom, Holcim, Home Depot, Hong Kong Exchanges & Clearing, Iberdrola, Lloyds Banking Group, Moderna, Munich Re, Newmont, Nvidia, Rio Tinto, Walmart, Warner Bros Discovery
PMIs for Japan, Eurozone, UK, US, Tuesday
US existing home sales, Tuesday
US MBA mortgage applications, Wednesday
The Federal Reserve minutes from Jan. 31-Feb. 1 policy meeting, Wednesday
Eurozone CPI, Thursday
US GDP, initial jobless claims, Thursday
Atlanta Fed President Raphael Bostic speaks, Thursday
G-20 finance ministers and central bank governors meet in India, Thursday-Friday
Japan CPI, Friday
BOJ governor-nominee Kazuo Ueda appears before Japan’s lower house, Friday
Some of the main moves in markets:
Stocks
The Stoxx Europe 600 fell 0.2% as of 10:48 a.m. London time
S&P 500 futures fell 0.8%
Nasdaq 100 futures fell 0.9%
Futures on the Dow Jones Industrial Average fell 0.6%
The MSCI Asia Pacific Index fell 0.8%
The MSCI Emerging Markets Index fell 0.9%
Currencies
The Bloomberg Dollar Spot Index rose 0.2%
The euro fell 0.3% to $1.0653
The Japanese yen fell 0.3% to 134.65 per dollar
The offshore yuan fell 0.4% to 6.8843 per dollar
The British pound rose 0.4% to $1.2091
Cryptocurrencies
Bitcoin fell 0.3% to $24,695.3
Ether fell 1.4% to $1,677.66
Bonds
The yield on 10-year Treasuries advanced six basis points to 3.87%
Germany’s 10-year yield advanced two basis points to 2.49%
Britain’s 10-year yield advanced seven basis points to 3.54%
Commodities
Brent crude fell 0.4% to $83.76 a barrel
Spot gold fell 0.5% to $1,832.87 an ounce
What’s Happening With FTX?
The void created by the collapse of major crypto exchanges is slowly being filled by a new marketplace that specializes in exchanging your claims for cash. On this bankruptcy marketplace, FTX creditors can exchange their claims for a market rate and trade the cash value offered. The public bankruptcy marketplace Xclaims currently offers an immediate 16% recovery on all FTX claims. Private OTC markets, according to sources familiar with them, offer rates for FTX in the range of 15% to 20%. The rate for creditors varies depending on where they are: Genesis = 55%, Voyager = 35%, BlockFi = 22.5%, and Celsius 21%. It is important to note that these numbers are subject to change at any time.
In other FTX news, FTX Japan has announced that fiat withdrawals will begin today at noon, JST. All creditors must proceed with their withdrawals through Liquid Japan, a local crypto exchange purchased by FTX, which will manage the process. If successful, these clients will be the first to receive funds back from FTX. Despite this, the bankruptcy process can still take years, even if FTX Japan operates smoothly. Furthermore, bankrupt firms today are likely crypto short in the hopes of buying back more funds if the market dips. If prices leave them, it may be even more damaging to the Chapter 11 bankruptcy and take even longer.
Cointelegraph Releases More Heroes And Villains
Cointelegraph's "Crypto Influencer" list has expanded to the #11 position, leaving only the top 10 names remaining. The selections are the result of staff and community voting and include both "heroes" and "villains."
Some of my favorite mentions in the list include:
#48, Mike Novogratz - Understanding the phrase "think before you ink."
#26, Barry Silbert - Trouble in crypto paradise.
#20, Jack Dorsey - Smartest career pivot ever?
#21, Elon Musk - Buyer's remorse?
#11, Gary Gensler - Something something "crypto," something something "wild west."
I will come back to this segment for the final time when the top 10 names are released. Despite being in a bear market, there is certainly no shortage of crypto characters to write about.
The views and opinions expressed here are solely my own and should in no way be interpreted as financial advice. Every investment and trading move involves risk. You should conduct your own research when making a decision. I am not a financial advisor. Nothing contained in this e-mail constitutes or shall be construed as an offering of financial instruments or as investment advice or recommendations of an investment strategy or whether or not to "Buy," "Sell," or "Hold" an investment.