The Intelligent Crypto Investor: A Conversation with John Hargrave

Yeah, I love that approach.

It's really thinking about your risk adjusted returns as opposed to just returns alone, which I think, you know, that approach combined with the title of your book, right, it really brings forward a lot of connections to value investing.

And I've certainly spoken to a fair number of proclaimed value investors who believe that investing in crypto does not

fit

the philosophy of value investing in the slightest.

Can you maybe talk through how value investing principles can be applied to investing in crypto and digital assets?

Sure.

The grandfather of value investing, of course, is Ben Graham and his classic book, The Intelligent Investor, from which my book, The Intelligent Crypto Investor, takes its name.

And, you know, at its core, value investing was about let's go find great companies that hopefully are trading at a fair price.

So they're a good value.

And then let's hold on to them for the long term.

At its core, those simple principles can absolutely be applied to crypto assets.

Now, to do that, it's really key to think about cryptos like companies.

So to be clear, legally, they're different.

Legally, cryptos and companies are two different things.

But conceptually, they're similar.

And it's very clear to me that this is the way investors already think about cryptos.

You know, we have ticker symbols, for example, and increasingly cryptos are being wrapped up in traditional financial instruments like ETFs.

Some traditional companies also have a token and so on and so forth.

So the lines are blurring.

But the key sort of thing to get your head around is if we treat cryptos like companies and their tokens like stocks, then it allows us to apply some of these value investing frameworks to crypto tokens.

And that's the key unlock that makes suddenly much more intelligent investing possible in crypto markets.

So what are the important metrics that you look for when you're evaluating a crypto token and trying to look at it like a stock? Like, are you interested in cash flows that are generated by the networks or and like, how do you look at tokens like Bitcoin that that may not have cash flows?

So with traditional value investing, the challenge that some people have is, well, you can't apply the same frameworks.

There is no real PE ratio, for example, with crypto.