Author Topic: Is it too late [bitcoin]?  (Read 82677 times)

Finallyunderstand

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Re: Is it too late [bitcoin]?
« Reply #800 on: January 18, 2018, 01:12:51 PM »
From looking at the Tether printer, it appears as though 400m has been issued in four days. Four. Hundred. Million. Dollars. In a cryptocurrency tethered to the US dollar, except with no evidence that it's backed by any money at all, which is immediately transferred to the exchange owned by the same people and used to purchase and bid up Bitcoins right as it's losing almost half its value. On an exchange which has no banking facilities and will implode spectacularly if there's a rush for the exit from the cryptocurrency market, and therefore would be extremely motivated to keep the market afloat, for example by inventing four hundred million dollars out of thin air when Bitcoin's price is dropping in order to reinflate the bubble and keep the wolves from the door.

If it is the case that Bitfinex's owners are creating Tethers out of nothing, claiming they're backed by dollars, and using them to bid up Bitcoin...well, that's Nick Leeson territory. That implies that prices at the moment are even more fragile than people may have imagined - what we're seeing isn't the result of a speculative bubble alone, but one repeatedly manipulated into continued inflation by the people who conduct a full third of all Bitcoin transactions. If this is the case, it would take even less to collapse the bubble (a leak of financial statements showing that Bitfinex and Tether aren't actually flush with dollars might be enough by itself) and the collapse would be even more vicious, as a third of the market place vanishes, people stampede for the exits, and the fall in prices, instead of being arrested by hundreds of millions of dollars of possibly fictional money, simply keeps going.


sort of like this situation...

https://cointelegraph.com/news/just-one-person-found-to-have-caused-bitcoins-jump-from-150-to-1000-in-2013

That's an interesting read from the last time bitcoin went up quickly and then crashed 5 years ago.

phil22

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Re: Is it too late [bitcoin]?
« Reply #801 on: January 18, 2018, 05:16:10 PM »
Phil22: 

I typed up a response and realized that everything I was saying, I had already said in previous posts. There is nothing to gain by repeating myself yet again. Let me just put in one more plug for Intelligent Investor. I think reading that will help you understand what I haven't been able to get across.

Quote from: phil22
again, i am fully on board with the concept of an asset allocation and index investing.  i will not buy a book that explains asset allocations and index investing to me, but i will check it out from the library.

It doesn't explain index investing. The original book actually predates Vanguard and the first index fund by decades. The notes about indexing were added in the 4th edition. The book explains how to be an intelligent investor. It's not a short book... It changes how you think about investments. You stop thinking of them as these little numbers that go up and down, and you think of them as businesses you are purchasing. After reading it you will look at a 50% drop and think, "Oh goodie, Mr. Market is being stupid again, and everything is on sale!"

If that thought seems strange to you, then read the book. The 4th edition starts with a preface from Warren Buffet about how he read the book in 1950 when he was a teenager, and how it changed his life. If this books helps you make one better decision in your entire life, it will pay for itself many times over again.

ah there's our problem.  you're not even reading my posts.  perhaps you're skimming them.  i said before and i'll say it again i am getting that glorious book from the library.  you can stop plugging the book now.

since you won't even spend the time to actually read my posts and respond to them point by point, as i have yours, then yes we are done here on this subject.

Indexer

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Re: Is it too late [bitcoin]?
« Reply #802 on: January 20, 2018, 10:37:08 AM »
Phil22: 

I read your posts including the part that you would read the book. I don't think you read mine, that's why I stopped bothering.

You keep talking about dividend yields after I explained over and over that I was looking at earnings, not dividends.
You keep talking about how your 4% SWR would be ruined if the market dropped 50%, even after I pointed out that the trinity study assumed you retired in the worst market and that is where the 4% rule came from.
You keep telling me that I'm speculating after explaining ad nauseum the rational behind investing based on intrinsic value, not speculation.
You are throwing around insults based on your own lack of understanding. Saying that I have cognitive dissonance because I see a market drop as an opportunity? I'm still in the accumulation phase, I'm not FIRE yet. Mathematically a market drop is an opportunity to me. If prices drop 50% I can buy twice as manner shares with the same contribution. Regardless of what prices are in 10 or 20 years, being able to buy at half the price would be a benefit to me now. Companies have profits, whether I get those profits through dividends, buy backs, or reinvestment I believe over a 20... or 50 year time horizon it will be beneficial to me. If I can buy at an even cheaper price today that's a good thing.


I came to the conclusion that saying the same thing over and over is a complete waste of my time.
« Last Edit: January 20, 2018, 01:04:38 PM by Indexer »

sol

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Re: Is it too late [bitcoin]?
« Reply #803 on: January 20, 2018, 10:41:59 AM »
I came to the conclusion that saying the same thing over and over is a complete waste of my time.

Don't feel bad, we don't all learn these things at the same speed.  That's okay.

phil22

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Re: Is it too late [bitcoin]?
« Reply #804 on: January 20, 2018, 01:59:53 PM »
I came to the conclusion that saying the same thing over and over is a complete waste of my time.

sorry you feel that way.  this back-and-forth is helping to refine exactly what my point is.  it seems to me now that as an "index investor with an asset allocation" that it's about your current investing GOAL:

  • if your goal is to NOT maintain an SWR but instead accumulate, and become more and more wealthy, then perhaps you are not speculating and can appreciate the earnings of your stocks and the economy as a whole
  • if your goal IS to maintain an SWR, then are you speculating because following a stock crash you need very high market price returns over the short term.  rebalancing is used to create more dependable market price returns over the long term via an assumed pattern of short-term market price volatility.

we on this board have looked at tons of data and evidence and have concluded that a ~4% rule SWR with index investing and a stock-heavy asset allocation is the safest way to get returns over the long term.  my point is that's speculating on market price and that's OK, because we agree that's the best investing strategy to achieve FIRE.

Phil22: 

I read your posts including the part that you would read the book. I don't think you read mine, that's why I stopped bothering.

i replied to individual sentences/paragraphs in many cases.  i am reading and considering your posts carefully.

You keep talking about dividend yields after I explained over and over that I was looking at earnings, not dividends.

as an index fund owner, you get returns in two ways:  dividends, and market price.  you're either reinvesting dividends or spending them to put your SWR into practice.  either way, my point is that for an SWR it boils down to market price.

You keep talking about how your 4% SWR would be ruined if the market dropped 50%, even after I pointed out that the trinity study assumed you retired in the worst market and that is where the 4% rule came from.

assuming your SWR is safe after a 50% crash PERFECTLY fits many definitions of "speculation." at that point you are expecting to get a 50%+ market price return after a year or three.  after a crash, earnings/intrinsic value are a separate concern from your SWR goal.

and how do i know you are "expecting" big returns after a crash?  that's the whole idea behind the 4% rule and rebalancing stock-heavy asset allocations .

You are throwing around insults based on your own lack of understanding. Saying that I have cognitive dissonance because I see a market drop as an opportunity? I'm still in the accumulation phase, I'm not FIRE yet. Mathematically a market drop is an opportunity to me. If prices drop 50% I can buy twice as manner shares for the same price.

i concede that during the accumulation phase your goal is not to maintain an SWR, but to accumulate.  i agree with you there.
« Last Edit: January 20, 2018, 02:02:58 PM by phil22 »

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Re: Is it too late [bitcoin]?
« Reply #805 on: January 21, 2018, 07:30:53 AM »
Phil22:

Quote
we on this board have looked at tons of data and evidence and have concluded that a ~4% rule SWR with index investing and a stock-heavy asset allocation is the safest way to get returns over the long term.

We on this board? What are you talking about? We on this board haven't concluded anything. The 4% SWR and index investing were both established ideas before Pete retired at 30.

Quote
as an index fund owner, you get returns in two ways:  dividends, and market price.

Yes, and dividends tend to increase over time. Future dividends are likely to be higher than current dividends. Earnings can go to dividends, buy backs, or reinvestment. Both buy backs and reinvestment drive future earnings per share which could be used for higher future dividends. They also both increase the intrinsic value of the company. Now, due to speculation, the market price could be higher or lower than the intrinsic value. If you are betting on speculation to achieve your goals you are essentially gambling. I'm not betting on speculation to keep prices high. I don't assume PE ratios will remain where they are, yet alone imagine they will continue to increase. Speculation could disappear, PE rations could fall back down to 15 or lower and they could remain there for decades. If that happens my returns would be lower. My FIRE plans assume a lower future rate of return specifically because current valuations are high. However, those returns are still higher than the returns on cash so my AA is still stock heavy. (I look at more metrics than just PE ratios. I'm trying to keep it simple.)

Quote
assuming your SWR is safe after a 50% crash PERFECTLY fits many definitions of "speculation." at that point you are expecting to get a 50%+ market price return after a year or three.  after a crash, earnings/intrinsic value are a separate concern from your SWR goal.

Here is an example that PERFECTLY fits the definition of you ignoring what I said. I just said the trinity study's conclusion was that a 4% SWR would survive the worst markets. Where do you get the idea that markets always recover in a few years? From peak to recovery it took about 5 years to get back to 2007 numbers. The bottom of the market in 2009 was lower than markets in 1999(tech bubble), giving us negative returns over 10 year. Those were less than ideal markets. The worst would have been the crash in 1929.

After the crash in 1929 it took 26 years for markets to recover! How did someone with a 4% SWR survive? It sure wasn't by selling appreciated stocks! They would generate income from dividends, bond income, and selling bonds. Let's talk about those dividends, because this was a real life example of what I've been getting at with earnings. In 1929 prices were driven up by speculation. By 1931 prices had dropped significantly, the speculation was gone, but dividend yields doubled! You see, companies with earnings continued to pay their dividends. If dividend payments remain the same and prices drop by 50%, then the dividend yield doubles.

I'll agree, assuming markets will quickly recover after a crash is speculation. You assume it will occur so you are speculating. I'm not assuming it will occur so I'm not speculating.
« Last Edit: January 21, 2018, 07:44:47 AM by Indexer »

phil22

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Re: Is it too late [bitcoin]?
« Reply #806 on: January 21, 2018, 01:01:24 PM »
Phil22:

Quote
we on this board have looked at tons of data and evidence and have concluded that a ~4% rule SWR with index investing and a stock-heavy asset allocation is the safest way to get returns over the long term.

We on this board? What are you talking about? We on this board haven't concluded anything. The 4% SWR and index investing were both established ideas before Pete retired at 30.

when you pick an investing strategy, you look at the options and eventually come to some conclusion.  i didn't say this board invented the strategy.  jesus christ.

Quote
as an index fund owner, you get returns in two ways:  dividends, and market price.

Yes, and dividends tend to increase over time. Future dividends are likely to be higher than current dividends. Earnings can go to dividends, buy backs, or reinvestment. Both buy backs and reinvestment drive future earnings per share which could be used for higher future dividends. They also both increase the intrinsic value of the company. Now, due to speculation, the market price could be higher or lower than the intrinsic value. If you are betting on speculation to achieve your goals you are essentially gambling. I'm not betting on speculation to keep prices high.

i agree that during the accumulation phase you are not speculating on market price.  if you are also saying that after the accumulation phase, when your goal is to maintain your initial SWR, that you don't need the stock market price to follow an assumed pattern of short-term (<5 years) changes, then i don't believe you.

I don't assume PE ratios will remain where they are, yet alone imagine they will continue to increase. Speculation could disappear, PE rations could fall back down to 15 or lower and they could remain there for decades. If that happens my returns would be lower. My FIRE plans assume a lower future rate of return specifically because current valuations are high. However, those returns are still higher than the returns on cash so my AA is still stock heavy. (I look at more metrics than just PE ratios. I'm trying to keep it simple.)

ah.  is your target SWR lower than 4%?

Quote
assuming your SWR is safe after a 50% crash PERFECTLY fits many definitions of "speculation." at that point you are expecting to get a 50%+ market price return after a year or three.  after a crash, earnings/intrinsic value are a separate concern from your SWR goal.

Here is an example that PERFECTLY fits the definition of you ignoring what I said. I just said the trinity study's conclusion was that a 4% SWR would survive the worst markets. Where do you get the idea that markets always recover in a few years?

obviously they don't always recover in a few years.  as a FIRE investor with an SWR you are speculating that it WILL recover.  risk of failure is part of the definition of speculation.

From peak to recovery it took about 5 years to get back to 2007 numbers. The bottom of the market in 2009 was lower than markets in 1999(tech bubble), giving us negative returns over 10 year. Those were less than ideal markets.

since you're rebalancing into stocks during a crash, recovery to exactly market peak levels doesn't need to occur.  again, rebalancing assumes short-term price patterns, or else you wouldn't be selling winners to buy losers.  the current huge, long bull run that started in 2009 immediately following the crash.  you're arguing for my point.

The worst would have been the crash in 1929.

After the crash in 1929 it took 26 years for markets to recover! How did someone with a 4% SWR survive? It sure wasn't by selling appreciated stocks!

there was a huge bull run from 1932-1937.  that's how the a hypothetical 1929 investor with 4% SWR survived.  no, it didn't reach 1929 levels but 1929 was a bubble and after rebalancing from 1929-1932 they would have been well on their way toward recovery.  again, these are all short-term price movements that an SWR/rebalancing assumes happens, and it did in that case.

buying an asset, where you risk losing principal, and where you're hoping for a short-term return, is speculating.  that's what an SWR and rebalancing is.

They would generate income from dividends, bond income, and selling bonds. Let's talk about those dividends, because this was a real life example of what I've been getting at with earnings. In 1929 prices were driven up by speculation. By 1931 prices had dropped significantly, the speculation was gone, but dividend yields doubled! You see, companies with earnings continued to pay their dividends. If dividend payments remain the same and prices drop by 50%, then the dividend yield doubles.

higher dividend yields don't mean higher dividends.  of course the dividend yields were higher -- the market price was much lower.  a FIRE investor with an SWR around 4% cannot survive on dividends.

(according to this article, dividend yield reached 14% at the market low in 1932: http://www.nytimes.com/2009/04/26/your-money/stocks-and-bonds/26stra.html)

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Re: Is it too late [bitcoin]?
« Reply #807 on: January 21, 2018, 07:28:40 PM »
Quote from: phil22
as a FIRE investor with an SWR you are speculating that it WILL recover.

If my previous posts about intrinsic value haven't covered this then there isn't anything new I can say.

Quote from: phil22
if you are also saying that after the accumulation phase, when your goal is to maintain your initial SWR, that you don't need the stock market price to follow an assumed pattern of short-term (<5 years) changes, then i don't believe you.

I don't need the stock market price to follow an assumed pattern of short term changes during FIRE. You don't believe me. At this point continuing this conversation really seems like a waste of time.


EDIT: Decided to add more detail to this. Phil22, I have no clue where you are going with this but it feels like we are just going in the same circles. Some of your thoughts seem contradictory. In the same post you said I am speculating because I need markets to recover after a crash and then you agreed that a portfolio could survive a 1929 style crash where prices took decades to recover and then you even said, "recovery to exactly market peak levels doesn't need to occur." Yes, you would be rebalancing, but that is not the same thing as saying prices WILL recover. You are admitting prices don't have to recover at the same time you are telling me I need them to recover.

On the topic of speculation, technically making any guess or assumption about the future is speculation. Assuming the world won't end tomorrow is speculation. I believe that is how you are using the definition. However, "speculation in regards to investing is the purchase of an asset (a commodity, goods, or real estate) with the hope that it will become more valuable at a future date. In finance, speculation is also the practice of engaging in risky financial transactions in an attempt to profit from short term fluctuations in the market value of a tradable financial instrument—rather than attempting to profit from the underlying financial attributes embodied in the instrument such as capital gains, dividends, or interest."

source: https://en.wikipedia.org/wiki/Speculation

I'm not investing in VTSAX because I expect to profit off price increases. Actually, I wouldn't be surprised if US stocks had negative returns over the next 10 years... I'm investing because I want the future earnings. Speculation driving up prices just means I have to pay more today for those future earnings. Like Sol said, price is what you pay, value is what you get. I don't know how many ways I can say that.

BTW, yes you could sustain a SWR of 4% on dividends and/or bond income, especially in any period where the yield was greater than 4%. I assume that is self explanatory. In addition, a 4% SWR doesn't require 4% returns. It requires returns sufficient to keep the portfolio positive over the given time horizon. The Trinity study was only looking at 30 years, and you would only need 1.219% real returns to achieve a 4% SWR over 30 years.

Quote
ah.  is your target SWR lower than 4%?
Yes, given higher valuations and a longer time horizon, I am aiming for 3.75%. If valuations are lower by the time I FIRE then I would go back to 4%. In addition, I am assuming lower market returns on my way to FIRE. If we keep experiencing pleasant returns I will be pleasantly surprised, but my spreadsheets don't assume that.
« Last Edit: January 21, 2018, 09:53:52 PM by Indexer »

phil22

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Re: Is it too late [bitcoin]?
« Reply #808 on: January 22, 2018, 06:43:11 PM »
Quote from: phil22
as a FIRE investor with an SWR you are speculating that it WILL recover.

If my previous posts about intrinsic value haven't covered this then there isn't anything new I can say.

i see your points on intrinsic value.  i agree that during the accumulation phase market price doesn't matter so you're not speculating.

(sorry, i keep saying "you."  i don't mean you personally.) my caveat is that once you are no longer in the accumulation phase, if you have a 4% SWR (by historic and current market metrics) then any year there's a bear market, or a crash, a flat year, or even only modest returns, you'll have to lose principal (sell mutual fund shares) to maintain your SWR.  if there's a long-term bear market and you keep rebalancing into stocks, you accelerate your principal loss because your withdrawal rate stays the same.  you are taking the risk that a bull market, not even a gradual recovery, won't occur before you lose too much principal.

Some of your thoughts seem contradictory. In the same post you said I am speculating because I need markets to recover after a crash and then you agreed that a portfolio could survive a 1929 style crash where prices took decades to recover and then you even said, "recovery to exactly market peak levels doesn't need to occur."

you're right -- i should have said "strong bull market" not "recovery."  rebalancing into stocks following the crash, and then the '32-'37 bull market, would have helped investors through that crash.  i don't see a contradiction in the semantics there.  i'm saying a bull market is not guaranteed to happen shortly after a crash, but it did in that case.

On the topic of speculation, technically making any guess or assumption about the future is speculation.  Assuming the world won't end tomorrow is speculation. I believe that is how you are using the definition.

nope, i'm talking about that accepted investment-world definition of "speculation."

using the quoted definition of "speculation," let's step through how a 4% SWR index investor with a stock-heavy asset allocation fits that description:

(again, you personally are accumulating, and not even planning for a 4% SWR, do don't be offended by the below)

"... In finance, speculation is also the practice of engaging in risky financial transactions ..."

having the majority of your portfolio in stock index funds, where you can't live off the dividends (4% SWR), where you gradually own fewer and fewer fund shares, is taking the risk that there won't be a long period of bear/crash/flat/modest markets without a subsequent bull market.  it's a calculated risk with 100+ years of history to look at.  no sensible investor would argue stocks aren't a "risk."  look at Japan, for example, or the history of US stock market crashes.

"... in an attempt to profit from short term fluctuations in the market value of a tradable financial instrument ..."

rebalancing is considered a sound strategy to take advantage of "short-term fluctuations."  sell winners and buy losers.  if we all agreed that losers tend to stay losers for a few years, then annual (or more often) rebalancing wouldn't be recommended.
 rebalancers are literally attempting to "profit from short-term fluctuations."

"... rather than attempting to profit from the underlying financial attributes embodied in the instrument such as capital gains, dividends, or interest."

again, 4% SWR index investors get dividends and market price returns.  they can't even survive, let alone "profit from," dividends: the 4% SWR was arrived at INCLUDING earnings/dividends/buybacks/etc AND market price.  if you don't get the market price returns you are expecting, your SWR has to be below 4%.  many people on this forum, including yourself, are shooting for a less than 4% SWR because you are not expecting the market price returns.

BTW, yes you could sustain a SWR of 4% on dividends and/or bond income, especially in any period where the yield was greater than 4%.  I assume that is self explanatory.

i fully agree that if you get great returns, your SWR is fine.... i think we're on the same page there.  but again the 4% rule was arrived at by the trinity study by including both dividends and market price.

In addition, a 4% SWR doesn't require 4% returns. It requires returns sufficient to keep the portfolio positive over the given time horizon. The Trinity study was only looking at 30 years, and you would only need 1.219% real returns to achieve a 4% SWR over 30 years.

agreed.  yet there is nonzero risk that you will run out of principal too soon, or you wouldn't be able to afford a large medical bill, or whatever, which is why you're not even targeting a 4% SWR.

a FI non-speculator, who remains in the accumulation phase perhaps with part-time work or a side hustle, would almost never run out of principal and would be more likely to afford large unexpected purchases.

Yes, given higher valuations and a longer time horizon, I am aiming for 3.75%. If valuations are lower by the time I FIRE then I would go back to 4%. In addition, I am assuming lower market returns on my way to FIRE. If we keep experiencing pleasant returns I will be pleasantly surprised, but my spreadsheets don't assume that.

i think the exact number is debatable but i think we both agree, by current metrics, that once you are somewhere below a 4% SWR, you are no longer speculating because in any given year, no matter what the markets do, you will most likely not have to lose much principal (sell mutual fund shares) if any, to maintain your SWR.

speculators look at the risk of losing principal, look at the chance of getting returns, and pull the trigger.  if you're happy to take that chance and go back to work if you lose your principal, you're still speculating.  if you're shooting for a very low SWR or a short retirement period, and don't care about market price returns, then you're not speculating.  most posters i've seen on this forum are in the former category.

Indexer

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Re: Is it too late [bitcoin]?
« Reply #809 on: January 22, 2018, 07:43:51 PM »
Phil22:  Seems like we agree on most now. Glad to see it.

I would like to add context to rebalancing. Why is the person rebalancing? Rebalancing can improve returns during a market with a lot of back and forth, but not rebalancing would be better if stock prices kept trending up for a long time. If you are doing it, or not doing, because you think it will improve returns then that is likely a form of speculation.

However, many people, especially retirees, rebalance for the sake of lowering risk. Someone who is comfortable with a 60/40 might not be comfortable with an 80/20. If they were in an 80/20 during a major crash they might make impulsive decisions. Rebalancing to the 60/40 helps them check their emotions.

MrThatsDifferent

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Re: Is it too late [bitcoin]?
« Reply #810 on: January 29, 2018, 12:28:05 PM »
Yes, still feels too late, no movement at all to buy bitcoin. So far only Vanguard makes sense to me.

sol

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Re: Is it too late [bitcoin]?
« Reply #811 on: January 29, 2018, 02:06:35 PM »
Looks like bitconnect has gone from $425 to $7 in the last three weeks.  Ouch. It's not 100% losses, but it's close.

Maybe other cryptocurrencies will have a softer landing?

talltexan

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Re: Is it too late [bitcoin]?
« Reply #812 on: January 29, 2018, 02:39:33 PM »
I will out myself as having bought Bitcoin at around $14,700 (and ethereum at $970) the first week of this year.

I've followed the exchange rate between the two, which has swung favorably toward the ethereum stake. I was expecting Bitcoin to hold up better on those days when all crypto- is down, but that hasn't played out during this month.

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Re: Is it too late [bitcoin]?
« Reply #813 on: January 29, 2018, 05:19:58 PM »
I will out myself as having bought Bitcoin at around $14,700 (and ethereum at $970) the first week of this year.

I've followed the exchange rate between the two, which has swung favorably toward the ethereum stake. I was expecting Bitcoin to hold up better on those days when all crypto- is down, but that hasn't played out during this month.

The window of time for picking crypto has dramatically decreased. Websites show a list of 1500. There are thousands more not shown, and in 2018, I predict there will be tens of thousands. For new speculators, the thousands of new crypto are huge gambles at this point; bloomberg cautions everyone to risk no more than 1-5% of their finances.

I view eth as a safe bet among your choice. What's the thought process behind purchasing bitcoin? Did you do 50-50% of eth and btc or some other %?





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Re: Is it too late [bitcoin]?
« Reply #814 on: January 29, 2018, 11:20:13 PM »
Looks like bitconnect has gone from $425 to $7 in the last three weeks.  Ouch. It's not 100% losses, but it's close.

Maybe other cryptocurrencies will have a softer landing?

Sol, The trick is knowing which beenie babies to pick (you want the rare ones and the ones with errors) and making sure to keep the original tags.

Oops, sorry, wrong bubble...

https://www.psychologytoday.com/blog/the-decision-tree/201107/psychology-not-economics-is-behind-market-bubbles

zoltani

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Re: Is it too late [bitcoin]?
« Reply #815 on: January 30, 2018, 03:05:19 PM »
And being sued for a ponzi scheme! I mean, who wouldn't trust a guy like Carlos Matos?!?!?

Bitconekkkkkkkttttt!!!!!!!!!!

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Re: Is it too late [bitcoin]?
« Reply #816 on: January 30, 2018, 04:24:53 PM »

phil22

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Re: Is it too late [bitcoin]?
« Reply #817 on: January 30, 2018, 09:11:50 PM »
surely you remember when bitcoin hit $2 following the dramatic crash from $32... those were uncertain times.  it was too late then too i gather.

Mr Mark

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Re: Is it too late [bitcoin]?
« Reply #818 on: January 30, 2018, 11:34:38 PM »
surely you remember when bitcoin hit $2 following the dramatic crash from $32... those were uncertain times.  it was too late then too i gather.

I guess it depends - as with any bubble (or even a pure ponzi scheme) it's possible to make a lot of money if you get in and out at the right time. The problem is timing the market. Traditionally, as the bubble inflates or the Ponzi runs, people get greedy & instead double and triple down, and have great reluctance to sell. The fact that bitcoin has had such huge volatility in the past as you point out (ie dropping over 90% over a short time period) is hardly a vote of confidence in it's future stability.

A lot of the pro comments on bitcoin as an "investment" and the criticisms directed at people who call it a bubble/scam strike me as almost of a religious nature. Any currency is based on collective faith, and when anyone's faith is challenged people respond by defending the attack in myriad (and often bizarre) ways. Ad hominem attacks on anti-crypto commentators, even ones with Nobel prizes, are pretty common (they don't get it, they're old, they're just a shill for the corrupt fiat system, their business model is threatened by bitcoin, they are too stupid to understand how blockchain will rule the world, etc etc).  If people do not have faith in the value of bitcoin (and I'll here ascribe 'value' as the amount of physically useful things it can be exchanged for, such as food, utilities, shelter, healthcare, transportation, etc) it will be confined to the past as a weird fad where people actually exchanged things of real value for a few 1s and 0s in an unregulated Asian computer programme.

The oft cited criticism of the above might be something along the lines of  "Well, your 'investments' in the SP500 and US fiat have also been historically volatile, and are also just as much an act of faith! Aren't US equities and bonds also a bubble?" which indeed, is sort-of true. But there are significant differences.

The fiat of the US is founded on the US Government's ability to tax the income and assets of 330 million people in the world's larget economy and that of most of the largest businesses in the world. And despite the dollar losing over 94% of its value over the past 80 years it still remains the world's reserve currency and the benchmark of value for any traded commodity. I can use them at any time to pay my taxes to that Government and to obtain all the material needs I might have, 24/7, often delivered to my home effortlessly.

The US equity market is also underpinned by the rule of law which therefore allows me to own a piece of every traded company registered in the world's largest economy, and to take a slice of the earnings generated by those companies across the USA and the world. That market has existed for over 120 years, is highly regulated, and has systematically continued to increase in value, albeit with periods of decline that have always proved ephemeral - and perhaps more importantly the fundamental economics of earnings and dividends from businesses in a growing economy explain very well why the periods of declining equity values eventually recover.

So while hindsight is a great way to trade anything, I'll avoid relying on the greater fool theory to invest my fiat US$. Instead I'll own pieces of all the publicly traded companies in the world, take my share of the continued growth of the US and global economy, claim ownership of land and buildings for which people will pay me rent, and even lend some of my money to the US government and some large companies.

While it's been a facinating discussion to observe, I don't believe it belongs on an 'early retirement through badassity' forum except as a means to educate savers on what a crazy and unreliable place the cult of crypto would be to send your hard earned green soldiers.


Telecaster

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Re: Is it too late [bitcoin]?
« Reply #819 on: January 31, 2018, 09:21:56 AM »
@Mr Mark, that was quite a good post. 

Acastus

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Re: Is it too late [bitcoin]?
« Reply #820 on: February 01, 2018, 01:21:04 PM »
How many times has Bitcoin lost 50% of it's value in the past?

Bitcoin went from ~1000 to ~250 a couple years ago.

dougules

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Re: Is it too late [bitcoin]?
« Reply #821 on: February 01, 2018, 03:53:36 PM »

Cwadda

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Re: Is it too late [bitcoin]?
« Reply #822 on: February 02, 2018, 09:23:08 AM »
@Mr Mark, that was quite a good post.
Agreed, great post Mr Mark

Ya_Yeet

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Re: Is it too late [bitcoin]?
« Reply #823 on: February 06, 2018, 03:19:05 AM »
A lot of people are freaking out and selling everything. Hopefully they didn't invest more than they were okay with losing. Sure doesn't feel like it though.

marty998

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Re: Is it too late [bitcoin]?
« Reply #824 on: February 06, 2018, 05:00:18 AM »
surely you remember when bitcoin hit $2 following the dramatic crash from $32... those were uncertain times.  it was too late then too i gather.

Wake me up when it gets back to $2. I'll throw a few coins at it then just for the lols.


uwp

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Re: Is it too late [bitcoin]?
« Reply #825 on: February 12, 2018, 03:58:15 PM »
How many times has Bitcoin lost 50% of it's value in the past?

Bitcoin went from ~1000 to ~250 a couple years ago.

Yeah, it was more of a rhetorical question.  Lots of people seem to be willing to dance on Bitcoin's grave and laugh about the price drops.  I'm not quite as confident that this is over.

KTG

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Re: Is it too late [bitcoin]?
« Reply #826 on: February 16, 2018, 06:29:33 AM »
Quote
Puerto Rico's governor is bullish on blockchain as part of island's comeback

https://www.cnbc.com/2018/02/16/puerto-ricos-governor-is-bullish-on-blockchain-as-part-of-islands-comeback.html

Love it.

sol

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Re: Is it too late [bitcoin]?
« Reply #827 on: February 16, 2018, 08:13:53 AM »
Quote
Puerto Rico's governor is bullish on blockchain as part of island's comeback

https://www.cnbc.com/2018/02/16/puerto-ricos-governor-is-bullish-on-blockchain-as-part-of-islands-comeback.html

Love it.

I was so sure that was going to be satire. But alas, no.

I was expecting something like "infrastructure efforts are ongoing to restore power to 80% of the island, but we're confident that blockchain's disruptive and transformative effects on the economy are more important than putting roofs back on buildings after the hurricane."

Or maybe "cryptocurrency is going to save our ravaged country because a distributed immutable ledger is immune to the corrupt interference of central bankers and their imaginary fiat currency manipulations, a feature we desperately need as we continue to ask the international community for financial aid to rebuild our roads and sewer systems."
« Last Edit: February 16, 2018, 08:34:29 AM by sol »