To begin, I write daily and don’t edit my posts either as I write or afterwards. Some age well, some may not. Here on April 12, 2021, as we have mania around BTC and NFTs and more, I nail my colours to the mast and recommend you focus on intrinsic value.
The other day on Twitter, someone who understands investment very well, Naval Ravikant (@Naval), tweeted something profound and concise, to which I responded:
As I have said for several years, I don’t believe anybody can be investing in Bitcoin or crypto currencies, fundamentally as they have no intrinsic value, so they are voting in a popularity context, amplifying speculation. Not investing.
Yes, many people have built wealth in different ways, but my bias remains towards a focus on intrinsic value. Income follows Assets, not the other way around. Build assets, but note they are only truly assets if they then ultimately generate income and, more specifically, cash flow.
As my tweet indicates, I’m also a big fan of Buffett, who himself was a mentee of Benjamin Graham (if you wish to invest, a favour you can do yourself is to start with reading “The Intelligent Investor“). I leave you with Buffett’s definition of Intrinsic Value.
“Intrinsic value is an all-important concept that offers the only logical approach to evaluating the relative attractiveness of investments and businesses. Intrinsic value can be defined simply: It is the discounted value of the cash that can be taken out of a business during its remaining life.”
Warren Buffett, from pg 4 of the Berkshire Hathaway Owner’s Manual