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Merged Bitcoin - Part 3

blutoski said:
Worth mentioning that stock pickers on average *don't* beat these indexes, and the few that do, it's easily explained by random chance.

This is where the analogy to, say, dowsing, comes in. There's a few who walk away with impressive records, but upon closer examination they're either exaggerated or suddenly stop, because they're just random chance.

Warren Buffet's 'bet' that managed funds would not perform vs the S&P500 index was exactly what skeptics do with the Million Dollar Challenge. And again, as a skeptic, I was fascinated with the boilerplate post hoc rationalizations for failure that were offered as a substitute instead of just admitting that the stock market is unpredictable and charging money for stock picking is somewhere between self delusion and fraud.

Skepticism made me a better investor.
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I checked into it and it seems to be not something I would be interested in. I don't think handing money over to someone else and paying them a portion of my money to pick stocks is a sound investment strategy. In fact it seems to me you'd end up paying the other guy money whether he makes you anything or not. That's a bit foolish IMO.

I also checked with an uncle who told me he lost 60% of his life savings in 2008 due to being invested in a MER during the 2008 crash. So, again, not for me. When asked he said "If someone is urging you to invest in a managed fund now, run away, don't walk."

I guess I'll rebuy my 50% BTC if or when the price drops near the previous highs of the bull run 3 years ago and continue as I have. After all, I've been in early retirement for a few years now. If the managed fund guys were any good, they've have made enough money to retire too. :thumbsup:
 
ChrisBFRPKY said:
You don't take any profits on the way up?
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Not if you are greedy.

Bitcoin has entered into a major price bubble. It is not unreasonable to speculate that the peak price could end up at many times its December 2017 value (this has happened with every other major bubble). So a basic strategy of set selling price, wait for bitcoin to reach that price then profit is not unreasonable (provided that you can afford to lose your initial investment).

ChrisBFRPKY said:
I checked into it and it seems to be not something I would be interested in. I don't think handing money over to someone else and paying them a portion of my money to pick stocks is a sound investment strategy. In fact it seems to me you'd end up paying the other guy money whether he makes you anything or not. That's a bit foolish IMO.
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An index fund doesn't "pick" shares. It buys them in the same proportion that the shares contribute to the S&P 500 index. They charge a small fee for this service (which comes out of the dividends you would otherwise receive).

You could create your own S&P 500 index based portfolio but you would be paying 500 lots of brokerage fees to do so.

The stock market isn't necessarily a more secure investment than bitcoin (there is always a once or twice in a life time risk of a major crash) but generally the peaks and troughs are a lot less severe.
 
lomiller said:
a) there is actual consumption of precious metals. People use them to make things other people want.
b)over the long term precious metals track with inflation, they don't increase in value.

real investors are wary of wild swings. Like I said above, stocks in bankrupt companies continue to trade and have just the type of wild swings you are talking about. This doesn't make them good investments.



Can you walk into a jewelry store and buy a chain made of solid bitcoin?
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There’s no difference in utility between a fake gold ring and a gold ring, so the value of gold has little to do with its utility. The reason gold has value is the same reason Bitcoin has value: people think it does.
 
psionl0 said:
If you simply meant that for every buyer there is a seller then the entire commodities market* would be a zero sum game which would make the term "zero sum" meaningless.
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False. In the commodity market there are consumers who come out ahead because they buy the commodity at a price that is attractive for them to use it, and producers who come out ahead because they sell the commodity at a price that is attractive for them to produce it. When producers sell to consumers, even if it's through and intermediary, BOTH come out ahead. This is how trade works, why it happens and is NOT zero sum.

Conversely there is no meaningful analogy for consumption of bitcoin. Speculators selling to other speculators IS zero sum. When there are producers also selling to speculators but no consumers it's actually negative sum for the speculators. On average they will lose money.
 
lomiller said:
False. In the commodity market there are consumers who come out ahead because they buy the commodity at a price that is attractive for them to use it, and producers who come out ahead because they sell the commodity at a price that is attractive for them to produce it. When producers sell to consumers, even if it's through and intermediary, BOTH come out ahead. This is how trade works, why it happens and is NOT zero sum.

Conversely there is no meaningful analogy for consumption of bitcoin. Speculators selling to other speculators IS zero sum. When there are producers also selling to speculators but no consumers it's actually negative sum for the speculators. On average they will lose money.
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Ehm. Do you know where little bitcoins come from ?
 
lomiller said:
False. In the commodity market there are consumers who come out ahead because they buy the commodity at a price that is attractive for them to use it, and producers who come out ahead because they sell the commodity at a price that is attractive for them to produce it. When producers sell to consumers, even if it's through and intermediary, BOTH come out ahead. This is how trade works, why it happens and is NOT zero sum.

Conversely there is no meaningful analogy for consumption of bitcoin. Speculators selling to other speculators IS zero sum. When there are producers also selling to speculators but no consumers it's actually negative sum for the speculators. On average they will lose money.
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Where do you get this silly notion that commodities are "consumed"? In bullion form they are often not even moved (at least for the big buyers and sellers). The ownership merely changes hands.

Of course, if you looked at the answers to the post that you copy/pasted you would already know this.
 
ChrisBFRPKY said:
I checked into it and it seems to be not something I would be interested in. I don't think handing money over to someone else and paying them a portion of my money to pick stocks is a sound investment strategy.
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It isn't. Which was Buffet's point. Just get index funds or etfs. Nobody's picking stocks, not even me.




ChrisBFRPKY said:
In fact it seems to me you'd end up paying the other guy money whether he makes you anything or not. That's a bit foolish IMO.
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Right, which is why my post was recommending against it, and I cited Buffet's successful bet that it would be a bad investment.




ChrisBFRPKY said:
I also checked with an uncle who told me he lost 60% of his life savings in 2008 due to being invested in a MER
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An MER is a fee, not an investment vehicle. I don't think you understand any of this.



ChrisBFRPKY said:
... during the 2008 crash. So, again, not for me. When asked he said "If someone is urging you to invest in a managed fund now, run away, don't walk."
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Yep. Thus my (and Buffet's) recommendation to use an index fund instead of a managed fund.




ChrisBFRPKY said:
I guess I'll rebuy my 50% BTC if or when the price drops near the previous highs of the bull run 3 years ago and continue as I have. After all, I've been in early retirement for a few years now. If the managed fund guys were any good, they've have made enough money to retire too.
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So, like, later this afternoon, I guess.
 
blutoski said:
ChrisBFRPKY said:
during the 2008 crash. So, again, not for me. When asked he said "If someone is urging you to invest in a managed fund now, run away, don't walk."
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Yep. Thus my (and Buffet's) recommendation to use an index fund instead of a managed fund.
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Worth noting, however, that just about anything was a fantastic investment in late 2008. While an index fund would still have been marginally better, the advise to "run away, don't walk" was terrible. Other then a handful of stocks everything was cheep so both managed and index funds would have both made a killing.

(Rather then putting my available cash into my existing index funds I took a bit of a gamble on Canadian bank stocks once it was reported they had little or no exposure to sub-prime in the US. I reasoned that the whole sector would get pummelled and the banks with no exposure would get hit just as hard. I put $12K into BMO, the book value on that is about $60K now. (growth is a little slow but I don't want the tax hit for selling) it's also paid me more than $20K in dividends, which reinvested are now worth over $40K)

Maybe I was smart, because it worked out the way I hoped, but It could also just be luck. It really is easy to make money getting in near the bottom of a crash.
 
lomiller said:
Worth noting, however, that just about anything was a fantastic investment in late 2008. While an index fund would still have been marginally better, the advise to "run away, don't walk" was terrible. Other then a handful of stocks everything was cheep so both managed and index funds would have both made a killing.

(Rather then putting my available cash into my existing index funds I took a bit of a gamble on Canadian bank stocks once it was reported they had little or no exposure to sub-prime in the US. I reasoned that the whole sector would get pummelled and the banks with no exposure would get hit just as hard. I put $12K into BMO, the book value on that is about $60K now. (growth is a little slow but I don't want the tax hit for selling) it's also paid me more than $20K in dividends, which reinvested are now worth over $40K)

Maybe I was smart, because it worked out the way I hoped, but It could also just be luck. It really is easy to make money getting in near the bottom of a crash.
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When you buy into the stock market during an all time high, it seems you could be setting yourself up for disappointment. Certain things that the US Government does or does not do can be seen by investors as positive or negative influences on the market. With these factors in mind I'll stick with BTC, day trading ALT coins, cash and silver.

The time it takes for the investment to mature and begin payouts is also a factor I consider. It looks like you've done well with that $12K, depending on how long you've had it invested to get to those numbers for returns. $12K spent on BTC in March of 2020 could have returned over $120K in Jan 2021.
 
blutoski said:
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An MER is a fee, not an investment vehicle. I don't think you understand any of this.



So, like, later this afternoon, I guess.
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I understand enough to know if I put in $100K in the morning I probably won't cash out $130K that night. whoops I meant $144K. Second whoops, $181K from $100K this morning. I think you might get it now.



Let us pray....
 
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ChrisBFRPKY said:
When you buy into the stock market during an all time high, it seems you could be setting yourself up for disappointment. Certain things that the US Government does or does not do can be seen by investors as positive or negative influences on the market. With these factors in mind I'll stick with BTC, day trading ALT coins, cash and silver.

The time it takes for the investment to mature and begin payouts is also a factor I consider. It looks like you've done well with that $12K, depending on how long you've had it invested to get to those numbers for returns. $12K spent on BTC in March of 2020 could have returned over $120K in Jan 2021.
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Apples to oranges. All I had to do was identify a stock that was being priced incorrectly, whereas going back in time to buy bitcoin at it's bottom is an impossibility. Trying to predict a top and bottom in a random walk is a fools errand and not something that it likely to make you money in the long term.
 
ChrisBFRPKY said:
I understand enough to know if I put in $100K in the morning I probably won't cash out $130K that night. whoops I meant $144K. Second whoops, $181K from $100K this morning. I think you might get it now.
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So, it's volatile, like gambling, and you can win if you have a time machine to go back to a few hours/days earlier. Got it.
 
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lomiller said:
Apples to oranges. All I had to do was identify a stock that was being priced incorrectly, whereas going back in time to buy bitcoin at it's bottom is an impossibility. Trying to predict a top and bottom in a random walk is a fools errand and not something that it likely to make you money in the long term.
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Nobody can accurately predict the top or the bottom. But, everyone can study the trading chart, buy when it is low and sell at a higher price than you purchased. It's not rocket science although a calculator is nice. Or there are those that skip trading and go for a long term hold.

And it doesn't take long term to make enough to retire on. After you cash out you can always go back to CD's, stocks or other investments if BTC doesn't suit you.

blutoski said:
So, it's volatile, like gambling, and you can win if you have a time machine to go back to a few hours/days earlier. Got it.
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Yep a time machine would be better but it's not required.
 
ChrisBFRPKY said:
Nobody can accurately predict the top or the bottom. But, everyone can study the trading chart, buy when it is low and sell at a higher price than you purchased. It's not rocket science although a calculator is nice. Or there are those that skip trading and go for a long term hold.
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"low" or "high" don't work that way in a random walk. No matter what the price is today the chances of next weeks price being higher or lower is entirely random and has no connection with what's happened in the past.

Technical trading at least has the hope (or fiction) that what they see in the charts is a reflection of fundamental knowledge posses by at least some buyer\sellers. Bitcoin price is entirely subject to the sentiment of speculators so such knowledge can't exist in the first place.

The alternative where bitcoin prices are not a random walk is even worse for would be investors. If the prices are not a random walk, they are probabaly the subject of market manipulation. When the people manipulating the price cash out their winnings it's the would be investors trying to "get in on the action" that will be left holding the bag.
 
lomiller said:
"low" or "high" don't work that way in a random walk. No matter what the price is today the chances of next weeks price being higher or lower is entirely random and has no connection with what's happened in the past.

Technical trading at least has the hope (or fiction) that what they see in the charts is a reflection of fundamental knowledge posses by at least some buyer\sellers. Bitcoin price is entirely subject to the sentiment of speculators so such knowledge can't exist in the first place.

The alternative where bitcoin prices are not a random walk is even worse for would be investors. If the prices are not a random walk, they are probabaly the subject of market manipulation. When the people manipulating the price cash out their winnings it's the would be investors trying to "get in on the action" that will be left holding the bag.
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By all means feel free to remain skeptical about BTC. It's certainly not everyone's choice to own it. Obviously it's not for you.
 
It seems likely the coin will return to 20k before making new highs (if ever).
The move from the top to 30,200 looks to be a powerful first wave.

Clearly a falsifiable prediction. Anyone else is welcome to make a prediction of course.
 
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