Portfolio First

You say it’s simple, while the topic starter literally asked why not take a loan and buy STRC. I wouldn’t short it either, even though I believe it will go to zero one day. I also believe the crash will happen very fast, leaving most people behind and not giving an entry point to short.

I think the prospectus covers all the bases. Do they get into the company mechanics behind it all? No, nor do I think that’s expected…. But are they hiding anything about those mechanics? You and I seem to have a fair grasp on how it works, and what could cause it to fail…. You really think we’re that special? Anybody with an interest and marginal intelligence could dig a bit and figure it out. I bought a little bit of STRC at a small discount. I don’t think it’s going to zero. If I did, I would short it…. That’s also an option. I do own a bunch of STRK and a meaningful position in MSTR (repurchased recently, after selling off my holdings between late summer and early fall)…

Please explain this to me like I'm 8 years old... You can literally get a loan for let's say 5-6% and put it in $STRC and get an 11.5% annualized yield? Is this real life cheating? What's the best reason NOT to do this?

Because it’s a ticking bomb for investors. I don’t think anyone buying it expects the price of STRC to go to zero. But it could go to zero very quickly if people stop believing in it. In hard times, Bitcoin will survive, and even MSTR will probably survive — but not STRC. Do the terms explain the underlying mechanics of the security’s pricing? I don’t think they do. Do you personally buy STRC?

Ok, I misspoke, the rest of my post makes pretty clear what I was saying. Why unethical? You don’t support a free market? Nobody is forced to buy. If someone believes in the strategy and the product, why shouldn’t they have it available for them to buy? Everyone understands it all rests on btc. If they don’t, they probably shouldn’t have access to a brokerage account. The company is more transparent than probably 99% of publicly listed companies…. There are far sketchier securities out there.

Sorry, but you also said, “He borrows.” And if I had said “raising capital by issuing perpetual preferred securities” instead of “borrowing,” that would not have prompted people to actually think about how those 11.5% differ from the other 5–6%, which was my whole point. I still think that creating such products based on speculation that Bitcoin’s CAGR will remain at a certain level is, at the very least, unethical.

I just interpreted as it as plainly written. Which is why my response aimed to explain the difference between Saylor raising capital by issuing perpetual preferred securities and paying 11.5% (which is *not* the same as borrowing) and taking a loan, margin or otherwise, at 5% (which is indeed borrowing). Your comment that I initially responded to in no way was about the risks of a retailer borrowing at 5% and putting on a carry trade by buying strc and capturing the 6.5% spread. Idk why you’re so defensive. I think it’s great if in fact you already understood it. Many don’t. And on the risks that retailers may be blind to, we seem to largely agree. Though as I said, with understanding of the dynamics at play, I do think this one will work out. Subject to any unexpected/unwise moves by management, like getting over their skis and smashing huge buys at a cycle top. At which point I would quickly change my assessment…

@jasonpizzino @dotkrueger You say hopium, he says pure science :)

@dotkrueger What a pretty chart full of hopium.

From Plan C (link in comments), we are headed into a SuperCycle.

Not sure how you interpreted my initial comment. But if I were to answer my own question, I’d say that borrowing money and selling STRC are not the same, and that 11.5% comes with much higher risks that, in my opinion, outweigh the 11.5% - 6% = 5.5% difference. Or, in other words, it’s not like you borrow money in one place at low rates and lend it somewhere else at higher rates. The risk profile is different.

@Portfolio_First @marc02200 Ok bro 👍

@Entouarnt4 @marc02200 I didn’t say he is dump by paying 11.5% I rather say that people who believe they found a cheat code by borrowing at 6% and buying STRC are not smart enough.

Yup. It’s up to willing buyers on the open market to offer an exit at an agreeable price… early STRF and STRK buyers are feeling that reality right now. STRC has greater ability to hold near the peg given the variable rate, and apparently the demand for monthly/bimonthly divs… Personally I believe it will work out. So long as btc appreciates from here, STRC looks powerful as a capital raising tool for MSTR. But time will tell. In any case, I was more pushing back on that notion that Saylor is dumb to be paying 11.5% when we can borrow at 5% on margin…

@Entouarnt4 @marc02200 I know this math very well. What I’m not sure about is whether the people who buy these “bonds” understand the risks that come with the word “perpetual.”

Saylor doesn’t have to pay back the principal. Ever. Hence the “perpetual” in perpetual prefs. He borrows at 11.5%, takes your $100 capital, and buys BTC with it. When BTC doubles, his fixed $11.50 annual cost is now a ~5.75% burden against the asset value on that original capital. When it doubles again, sub 3%. And on and on. The bet is that btc CAGR massively outpaces a fixed 11.5% against a fixed $100 face value. Offering 11.5% is how he attracted $15.5 billion of permanent capital. Principal that will never come due. And, importantly, nobody is getting 5-6% unsecured with no maturity date. That rate needs serious collateral. This doesn’t…

@pricey_life @marc02200 Yes, it supposed to cost 0 eventually

@Portfolio_First @marc02200 Saylor doesn’t want to take loans. $STRC is not a loan (it never has to be paid back).

@marc02200 @RetrohwcmD Not sure what was not clear, but let me clarify anyway. You can supply your USDT at average 3.7% and borrow at 5.07% in AAVE.

@RetrohwcmD @Portfolio_First I said LOAN, that doesn't mean I can let my money sit there at 6% lol

@marc02200 That's actually what you stated initially about 5-6% loan. But if you ask me - even in DeFi. In AAVE you can get USDT at 5.07% in average.

@Portfolio_First Where do you get 6%?

@marc02200 That’s clear, but why not borrow at 6%?

@Portfolio_First Becauses he believes Bitcoin will grow with more than 11,5% overtime.

@martypartymusic Yes, that's exactly how we do it.

So you telling me the side line sheep waiting for Benjamin Cowens $92k to flip bullish are going to lose the opportunity of $60k to $92k because Benjamin Cowen told them to? What kind of sick cult is that?

@kekpepehehe @StealthQE4 Because it does its job, and people don’t speculate on its price going parabolic.

@Portfolio_First @StealthQE4 Why trx doing well

Is it just me or has Bitcoin just died? If you look at a 5 year chart it’s up about 20% since it’s high in 2021. Annualized that’s about 4% a year. I can find a boring dividend stock that’s doubled this return. I thought this was supposed to save us 😀

@RampCapitalLLC Actually I just recently started slow DCA on Bitcoin expecting it going down for the next 6+ months.

Think I’m gonna stop buying bitcoin every day. Don’t really get the point of it anymore.

@bell_jerem47013 @marc02200 Of course, because upside for STRC investors is limited with the APR, while downside... Well, STRC price going down all the way to $0.

@Portfolio_First @marc02200 Saylor wants time. Standard loans come due and put pressure on Strategy to liquidate. STRC never comes due so he can stretch his time horizon to 10 years.

@TedPillows Until Friday’s market close, I am relatively bullish on Bitcoin.

Are you bullish? Sentiment check.

@cryptomanran Exactly. Except the fact that buying bitcoin with borrowed at interest money is not bullish, it’s bearish. Leveraged buy is always a delayed selling pressure.

I have a serious question. What happens if STRC doesn't go back to $100? The way I see it is a follows: - Holders of STRC receive the dividend regardless of the price. - If STRC doesn't go back to $100m then Saylor can't sell more to buy BTC. - That is bad for BTC because the market will realize that the biggest buyer can't raise cash. -If STRC has one or 2 months where it doesn't hit $100 the market realizes that its not actually worth $100, it could be worth $70, $50, who knows... - As soon as that happen we get a death spiral of sorts where Saylor has to keep raising the yield to try get it back to $100. The only problem is that the more he raises the yield , the more BTC he may need to sell... What am I missing? Serious comments only please.

@PeterSchiff Doesn’t really matter what is the egg and what is the chicken. With this price of oil for that long - inflation can only go up. Even if war ends tomorrow the impact has been made already.

The Iran war is causing investors to dismiss the rise in inflation and bond yields, as they attribute both to the war. Since they think both problems will resolve themselves when the war ends, they're not concerned. But inflation and yields would have risen even without the war.