True Believer

My years as a highly naïve and woefully under-resourced baseball memorabilia dealer

At some point in my childhood I got an allowance, a $1 to $5 affair. This was peak 1980s and I am very much a (recovering) 80s kid. Capitalism is king. Greed is good. Etcetera.

Ultimately there were three things I spent money on:

• Slushies (I’d clip a coupon for a 25 cent slushie out of each Sunday paper)
• Video games (I’d play 3 games of Street Fighter II with the remaining three quarters)
• Things that I thought would make more money

I wasn’t a completely unsuccessful entrepreneur, I’d occasionally run a candy arbitrage operation where I’d buy candy at the drug store for about a quarter and sell it for a dollar at school. Cha-ching.

But most of my investment energy went into baseball cards. I’d buy the Beckett Basketball Card Price Guide and look up each card I owned. Keep in mind, at my budget, most cards I owned were essentially worthless just as a function of the amount of space they occupied. But the Beckett guide gives everything a price. A recently issued card for dependable veteran Ozzie Guillén? $0.25. But the reality is that price is dependent on you finding a Ozzie Guillén fan. Most people on the street don’t want an Ozzie Guillén card, it isn’t the most liquid asset compared to something like drug store candy.

I kept this up for years, looking at cards, looking at baseball stats. Looking back, I’m not sure how good of a use of time this was. Nerding out over sports statistics certainly isn’t the worst, but I at least partially did so with a delusion that I was making shrewd investments.

Why gold

Top 10 podcast episodes of all time: Why Gold, by Planet Money

The premise is the title, why does gold serve such a consistent role as a store of value? Why not vanadium? Or bromine?

I recommend the 20 minute story, but if you’ve gone 10+ years without listening to it, I guess I can spoil it. Gold is solid (ie not a gas), durable, easily verified, and the right amount of plentiful. That last part is pretty crucial: you want something that is common enough you can find more, but not so common a huge amount can be discovered and dumped on the market.

You go through this sort of practical exercise and it only ever could have been gold. It’s uniquely suited for its role as that thing we all agree as a marker of value.

Cryptocurrency, the anti-gold

In contrast: cryptocurrency. There are basically infinite cryptocurrencies. You could make another Bitcoin and the biggest thing you’d have to change would be the name.

For other assets there is something behind it: the aspects of a material (gold), the assurances of a country (USD), a stake in a company (stock). The value of each of these have much to do with speculation, but there is something underneath.

A xerox of a share of Microsoft isn’t worth anything because it has no stake in the big company. Cryptocurrencies never suggested there was a stake to anything other than themselves. And unlike gold, there are infinity themselves. You can make infinity cryptocurrencies with essentially the same intrinsic characteristics. We can only make gold in fables.

On a fundamental level, I’d say they are a worse store of value than baseball cards, which are already a terrible store of value. But at least people have fun with baseball cards. Maybe people have fun with crypto? Is math the new baseball? Who knows.

Sure its crashed, but

I haven’t been able to enjoy the fall of cryptocurrency.

First, I feel bad for people who bought the hype. Since my childhood I’ve been taught that we must invest, investment is what will fill up our 401K and keep us from being destitute in our old age. This sort of investment requires risk, and at my middle age I’ve gained and lost thousands of dollars betting on mutual funds. These are the most conservative, hedged sort of investing you can do and on average I’ve gained more than I’ve lost. Yay for me? Nonetheless, all of us are asked to throw our money into uninsured, potentially high-yield investments, that’s the only way that a moderate wage person successfully retires.

So when a person misjudges the risk of an investment, I have a hard time judging them too harshly. Most of us aren’t accountants or investment professionals and yet we are sent into this dicey landscape. Hiring someone to help is itself fraught, they are unlikely to do better than tying the market, and will eat away at your money through their fees. I’m fairly convinced Vanguard-style mutual fund investment is the only sort of thing most of use should do. Not even sure we should do that, honestly.

Second, while Bitcoin falling ~$45K/coin to ~17K/coin seems like the right trajectory, the correct market value is zero. ~$17K is so much higher than zero.

Zero might be unfair, but I think the value should be on the order of baseball cards, an arbitrary symbol of … something, worth … something. Ten cents sounds about right. Of course this would shatter the economics of Bitcoin, the operational cost would be much higher than the values being tossed around. And no cool pictures of ballplayers either.

The rise and fall of crypto Musk

Might just be a timing thing, but the veneer wore off Elon Musk at about the same time as crypto crashed. A few years ago people were likely to describe him as a brilliant industrialist, today the bubble has pretty much burst. He’s bought Twitter to rescue it using a pile of techniques that seem designed to reveal how shallow his thinking about that business is.

More than once I’d wondered: why did he do it? If he had shut up and not made the Twitter decision he’d probably still be idolized. But that’s the benefit of being me. My last 20 years has lead me to accepting my limitations, while his have been thinking he’s king shit of fuck mountain. Until now there was an argument he was! To his credit and detriment, he actually thinks he is what his idolizers think he is. Does he still think so? Beats me. I’ve been delusional about myself before, reality can be a hard pill to swallow.

Similar to crypto, my schadenfreude is tempered by the fact that he still has billions of dollars of wealth attached to him. No matter how poorly this goes for him, he will most likely die super rich, With the “genius” veneer shattered, that seems tremendously unfair.