Sanrith Descartes
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Investing General Discussion
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Guest, it's time once again for the massively important and exciting FoH Asshat Tournament!
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Flobee
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Well, I'm saying institutions bought the convertible bonds. I'm not sure who all is buying MSTR since presumably anyone who can buy MSTR equity directly can buy the Bitcoin ETF? Not sure on that one. I do know the people that I've listened to talk about MSTR most intelligently are crazy bullish so may be other reasons they're not selling. I dunno but its dropped from $436 to $317 so I would guess some of that was rebalancing?
Sanrith Descartes
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But that share price drop is correlated to the price of BTC dropping down to around $90k.
There could be a very valid reason for the share price to have gained 3x the price of BTC itself, but I cant see one.
Sanrith Descartes
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I asked Grok this prompt: "Why would the MSTR share price growth for 2024 exceed the price growth of BTC by almost 300 percent? BTC is the underlying asset for MSTR."
The answer. Vast majority of the reasons are non-quantifiable. Sentiment, FOMO, etc. They mention BTC per shares as they acquire more BTC but they don't mention that the share dilution to generate capital to buy more BTC.
The answer. Vast majority of the reasons are non-quantifiable. Sentiment, FOMO, etc. They mention BTC per shares as they acquire more BTC but they don't mention that the share dilution to generate capital to buy more BTC.
The significant outperformance of MicroStrategy (MSTR) share price growth over Bitcoin (BTC) in 2024 can be attributed to several key factors:
Premium on Bitcoin Holdings: MSTR has been trading at a substantial premium to its Bitcoin holdings. This premium reflects not just the value of the Bitcoin MicroStrategy holds but also the market's anticipation of future Bitcoin acquisitions by the company. This strategy has been noted to increase the Bitcoin exposure per share, thereby driving up the stock price beyond the growth of Bitcoin itself. This phenomenon is discussed in various analyses where MSTR's market cap to Bitcoin premium allows for dilution that increases both total Bitcoin and Bitcoin per share.
Aggressive Bitcoin Acquisition Strategy: MicroStrategy has employed an aggressive approach to acquiring Bitcoin, using both equity and debt financing to add to its Bitcoin treasury. In 2024, they announced plans to raise $42 billion in capital over three years, with a significant portion aimed at buying more Bitcoin. This strategy has led to an increase in Bitcoin per share, which in turn boosts the perceived value of MSTR stock. The company's announcements and actions have often resulted in immediate positive impacts on the stock price, as investors see potential for continued growth in Bitcoin holdings.
Market Sentiment and Institutional Interest: The enthusiasm around Bitcoin, particularly with the political landscape favoring cryptocurrency (notably after the "red sweep" mentioned in relation to Bitcoin's surge post-election), has also boosted MSTR's stock. Investors looking for indirect exposure to Bitcoin through traditional financial instruments have turned to MSTR, especially as the stock has been included in notable indices like the Nasdaq 100, enhancing its visibility and appeal to institutional investors.
Leverage and Financial Engineering: MicroStrategy uses financial instruments like convertible notes to fund Bitcoin purchases, creating a leverage effect. This has been highlighted as a strategy where the company can increase its Bitcoin holdings without proportionally increasing its equity base, thus potentially leading to a higher stock price growth than Bitcoin's price growth. The issuance of such securities often comes with zero interest rates, indicating strong investor confidence in MSTR's strategy and future growth.
Speculative Trading and Short Squeezes: The dynamics of short selling and speculative trading have also played a role. High short interest in MSTR due to its apparent disconnect from Bitcoin's fundamentals can lead to short squeezes, where short sellers are forced to buy back shares to cover their positions, pushing the stock price even higher. This has been observed in instances where MSTR's stock price moved contrary to Bitcoin's price, indicating unique market forces at play.
In summary, while Bitcoin is indeed the underlying asset for MSTR, the company's strategic maneuvers, market perception, and financial engineering have created a scenario where MSTR's stock growth significantly outpaces Bitcoin's price growth in 2024.
Premium on Bitcoin Holdings: MSTR has been trading at a substantial premium to its Bitcoin holdings. This premium reflects not just the value of the Bitcoin MicroStrategy holds but also the market's anticipation of future Bitcoin acquisitions by the company. This strategy has been noted to increase the Bitcoin exposure per share, thereby driving up the stock price beyond the growth of Bitcoin itself. This phenomenon is discussed in various analyses where MSTR's market cap to Bitcoin premium allows for dilution that increases both total Bitcoin and Bitcoin per share.
Aggressive Bitcoin Acquisition Strategy: MicroStrategy has employed an aggressive approach to acquiring Bitcoin, using both equity and debt financing to add to its Bitcoin treasury. In 2024, they announced plans to raise $42 billion in capital over three years, with a significant portion aimed at buying more Bitcoin. This strategy has led to an increase in Bitcoin per share, which in turn boosts the perceived value of MSTR stock. The company's announcements and actions have often resulted in immediate positive impacts on the stock price, as investors see potential for continued growth in Bitcoin holdings.
Market Sentiment and Institutional Interest: The enthusiasm around Bitcoin, particularly with the political landscape favoring cryptocurrency (notably after the "red sweep" mentioned in relation to Bitcoin's surge post-election), has also boosted MSTR's stock. Investors looking for indirect exposure to Bitcoin through traditional financial instruments have turned to MSTR, especially as the stock has been included in notable indices like the Nasdaq 100, enhancing its visibility and appeal to institutional investors.
Leverage and Financial Engineering: MicroStrategy uses financial instruments like convertible notes to fund Bitcoin purchases, creating a leverage effect. This has been highlighted as a strategy where the company can increase its Bitcoin holdings without proportionally increasing its equity base, thus potentially leading to a higher stock price growth than Bitcoin's price growth. The issuance of such securities often comes with zero interest rates, indicating strong investor confidence in MSTR's strategy and future growth.
Speculative Trading and Short Squeezes: The dynamics of short selling and speculative trading have also played a role. High short interest in MSTR due to its apparent disconnect from Bitcoin's fundamentals can lead to short squeezes, where short sellers are forced to buy back shares to cover their positions, pushing the stock price even higher. This has been observed in instances where MSTR's stock price moved contrary to Bitcoin's price, indicating unique market forces at play.
In summary, while Bitcoin is indeed the underlying asset for MSTR, the company's strategic maneuvers, market perception, and financial engineering have created a scenario where MSTR's stock growth significantly outpaces Bitcoin's price growth in 2024.
Flobee
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Decent starting point if you're interested enough, host is pretty critical of him:
I don't know how serious I would take Grok on this given how few "experts" even understand what he is doing at this point. My original buy for MSTR is like $30 split adjusted so I've been watching this for a while
Sanrith Descartes
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Im interested in so far as I am interested in making money. I was doing a deep dive since
Blazin
caught me sidewise with his option play. It was during the price analysis looking for options strike that I found that big divergence in MSTR to BTC during Q4 and it got me digging further down the rabbit hole.- 1
Tmac
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One reason is that I can buy MSTR in a retirement account. Another reason is that MSTR is usually 2x movement of ETF’s. And lastly and mainly bc Saylor is committed to lowering the premium, so you’ll end up owning more BTC per share at 2x movement.
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Just know if you invest anything in MSTR it's incredibly volatile in both directions (This is not a safe stock choice). It's also not something i plan to hold through a bitcoin bear cycle as it's going to get absolutely hammered during it. I may scoop up a bit if it goes 270 or lower, but I'm already pretty good in my position and will be scaling out rather than accumulating more at this stage of the cycle.
When we get another bitcoin bear cycle and if MSTR doesn't implode due to it, i will be a buyer at the bottom, probably LEAPS at that point.
When we get another bitcoin bear cycle and if MSTR doesn't implode due to it, i will be a buyer at the bottom, probably LEAPS at that point.
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Sanrith Descartes
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Did a little speculating.
Wrote NVDA puts $132 strike 1/17 expiry. $3.40 premium. Since my previous NVDA puts expired worthless with a $2.16 premium, this gives me a $5.56 net premium on NVDA. If I get assigned on these I'll effectively have a cost basis at $126.44 which is about 1/2-way between the 100 and 200 DMA. I actually want the shares and am going to keep writing puts until I get assigned. Ideally, I eventually get the shares with a cost basis around the 200-DMA or less
Wrote MSTR puts at the $225 strike 1/17 expiry. $2.50 premium. If my assumptions are valid, this would put BTC at the $65-$66k price. I am ok putting money into MSTR at this BTC price. Unlike NVDA, I am not still 100% on the MSTR train, but I see a money making opportunity in it.
With two market holidays ahead, these puts are only 11 trading days of holding time and expire before the inauguration.
Wrote NVDA puts $132 strike 1/17 expiry. $3.40 premium. Since my previous NVDA puts expired worthless with a $2.16 premium, this gives me a $5.56 net premium on NVDA. If I get assigned on these I'll effectively have a cost basis at $126.44 which is about 1/2-way between the 100 and 200 DMA. I actually want the shares and am going to keep writing puts until I get assigned. Ideally, I eventually get the shares with a cost basis around the 200-DMA or less
Wrote MSTR puts at the $225 strike 1/17 expiry. $2.50 premium. If my assumptions are valid, this would put BTC at the $65-$66k price. I am ok putting money into MSTR at this BTC price. Unlike NVDA, I am not still 100% on the MSTR train, but I see a money making opportunity in it.
With two market holidays ahead, these puts are only 11 trading days of holding time and expire before the inauguration.
Hateyou
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Boeing plane crashes are definitely priced in.
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Sanrith Descartes
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Don't forget to get those 2025 IRA contributions done today, bros!
Wrote the check out to make my final mortgage payment this morning. Just need to wait for the local bank branch to open because apparently you can't make the final payment online. Feels good to get this done (I'm 36). I do have a rental property that I still owe $90k on as my only debt, with my goal to get that taken care of before my 40th birthday.
I don't mean to post this as some sort of brag. There are much bigger swinging dicks around here than myself. My primary reason for coming out of lurking is to say 'thank you' for all of the advice, especially to the regular contributors of this thread over the years. The info that can be found here is invaluable to a layman like myself.
Now, if you'll excuse me, I've got some 0DTE options to buy on margin
Wrote the check out to make my final mortgage payment this morning. Just need to wait for the local bank branch to open because apparently you can't make the final payment online. Feels good to get this done (I'm 36). I do have a rental property that I still owe $90k on as my only debt, with my goal to get that taken care of before my 40th birthday.
I don't mean to post this as some sort of brag. There are much bigger swinging dicks around here than myself. My primary reason for coming out of lurking is to say 'thank you' for all of the advice, especially to the regular contributors of this thread over the years. The info that can be found here is invaluable to a layman like myself.
Now, if you'll excuse me, I've got some 0DTE options to buy on margin
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Sanrith Descartes
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Technically they aren't due until April 15.
I advise most of my clients to wait until we run a tax worksheet to make sure they aren't over income cap for Roth and to see where they stand on deductibility for traditional. Over contribution is an abusive penalty (6% a year until the over contribution is removed).
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Sanrith Descartes
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Khane
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Been busy with work as most of my company always takes the holidays off and this is the busiest time of year in my industry (healthcare) and kind of lost track of my PLTR stop price. It executed this morning at $73.
Mixed emotions on that. Now I'm gonna sit here hoping it tanks during the first quarter of 2025 for no reason other than angst about what might happen.
I'm off the bandwagon PLTR!!! You suck you overpriced POS!!!!
Mixed emotions on that. Now I'm gonna sit here hoping it tanks during the first quarter of 2025 for no reason other than angst about what might happen.
I'm off the bandwagon PLTR!!! You suck you overpriced POS!!!!
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300Lane1
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Both me and the wife fully fund 401k/deferred comp accounts. Would you suggest a Roth or find a better use for those funds (real estate)? I'm PERS so I'm out at 55 (both currently 43). Not sure funding a Roth at this point would be beneficial.