And to clarify from my last post, from an Investment Risk perspective, Crypto is much higher risk than stocks per se. I would have to look deep in the bowels of something like the Investment Management Certificate or the Advance Financial Planning core study material to find it, but it will be mentioned somewhere. And also a reason why so few IFAs/Wealth managers will ever consider them for clients.
Iran have fairly recently allowed licences to be held for miners working off of excess power from nuclear power stations. That of course , might just be to have a pop at the USA. But that does hint at what I’ve mentioned before, that if bitcoin is a great store of value,why don’t the countries buy it up and park it next to their gold reserves. I have a few shots that I’ll put on another post, including one which suggests the South Koreans should get their backsides over to Venezuela. Billions are being invested in blockchains similar to the bitcoin chain, which makes you wonder why. In China, crypto wealth is reported to be leaving the country due to laws that might be implemented. It’s reportedly going out to addresses around the world using tether. I think the price can be manipulated quite easily. On low volume days that would be quite easy to do, especially if you have institutions getting involved. All the action around bitcoin makes it a big draw for futures etc. Those houses involved would definitely want it around. The high hash rates are always from China, with the Xinjiang autonomous area having the highest hash rate in the world. BTW, that region is where the Uighurs are located, but it’s not clear who is actually mining it. With the cost of mining likely to go up, some might look back and think about how much power has been used, especially the greenies,on which is essentially a computer against computer puzzle/ game. Although, there’s massive data storage too. Currently to mine a bitcoin, the odds of matching the hash are 1 in 16 trillion, Although there are a sea of computers banging away. I didnt know the exact requirements to mine one coin, but you probably know it’s matching a 64 digital hexadecimal number. Others might not know that. I’m wondering if the halving might be the carrot to keep players involved,and I think there might be about only 14 or 15m coins accessible/ circulating by the time all are mined. That size might make them seem rare, but there’s only one Mona Lisa. In fact, it would be quite easy for a country to have a foot in the enemies camp and control the price, if they fought that, for instance, the dollar was under threat. Maybe it might be nation to nation battling it out in crypto wars😊
China were buying gold in 2018-2019, but lie well behind others in reserves, as my shots show. China are the biggest producers and consumers, with India lying second in consumption. India has a big influence on the price of gold, as its used as a gift at wedding and festivals, which are usually held in the fourth quarter. So with their country badly affected by the virus, will that have an impact? That’s me done, the drugs are wearing off, but I think there might be the odd point I’ve made that May be worthy of comment.
If stocks were a punt or even close to that the Warren Buffet wouldn't be a multi billionaire. It's widely acknowledged that over someones working life, stocks provide the best return of any asset class.
Bitcoin is a punt, because it's true value is subjective as opposed to being based on fundamentals.
Well, that depends on what you regard as a “ punt”. My definition is putting money into something that could lead to oneself losing all their capital. Going “ long only” is obv different than trading. Most folks buy stocks for hopefully capital appreciation, and hopefully some dividends. Are you using Warren Buffet as bench mark. That’s a bit like using Germany as a bench mark for the virus in Europe. Buffet has always been seen a value investor. He actually paid less tax than his own secretary, mainly due to his frugal lifestyle. There have been numerous companies , probably thousands that have gone t it’s up. These, in most cases , mean the equity holders get wiped out, leaving the bond holders to divi up the assets. Enron was worth $60 billion, priced at 70 times earnings,then went t it’s up. DeLorean ( quirky car ) Lionel corp,Aldephia, Pets.com, Bear Sterns, some of the biggest failures. If you’re lucky, a company that might be about to go under, might get bought out. By buying a stock, you’re taking a chance on the economic outlook,expected growth, and hopefully your stock choice doesn’t have major competitors in the future. Like @chicknMelts crypto, bitcoin in particular, you’re wealth lies in others bidding it up. At this moment in time, there’s more chance of listed companies going to nought than crypto, imo.
Why would you construct a portfolio based on the expectation of how one company would perform?
If anything it's far more prudent to buy an OEIC or IT to minimise investment risk and at the same time employing a professional to manage your money. Even if you did buy stocks rather than investment funds, you'd be pretty unlucky to come across more than a few large companies going bust over your lifetime, and that's where basic investment strategy comes into play. Most active investors who manage their own portfolios usually employ techniques like stop losses to get out of investments that depreciate by a set percentage.
Comparing the probability of one company going broke versus a commodity/currency going to zero is a total apples and pears comparison.
There are folks that have one or two shares, by the way of private or state owned companies being listed, and being offered to them at a discount.They will likely be the few though. It depends on what crypto is being compared to regarding stocks. ETF’s, Index Funds, Fund Managers against Fund managers or solely the indices. Then you can throw in “ insider information” etc, for stocks and for crypto, that can lead to rather large profits.Dirty Rotten Scoundrels. It’s really the first time you’ve mentioned portfolios,that’s a whole topic on its own. And Brokers trading just to keep their commission rate up. Dirty Rotten Scoundrels. I think the market cap on crypto would be far less, as folks just buy into any old coin hoping for a few winners.
In my mind, the things to look out for are the finding of a Vaccine, obviously the USA election, more stimulus. I think the markets will get hit if Biden gets in,as the markets will be then unsure.
Sorry I am out. I've put a few pointers in and I see comments like Brokers Dirty Rotten Scoundrels, when the reality is you can buy/sell stocks these days from an online broker literally for a few quid per trade. The spread between the buy and sell price is negligible and the platform management fees are a fraction of one per cent.
There is a big difference between a broker and a financial adviser/wealth manager. People need to understand how UK financial services operate before making such misinformed comments
@ACEGOONER , I’m obviously not tarring the whole industry, but there’s plenty of black sheep. Max Keiser is a particular favorite of mine. Always has an interesting take on things. I could put up endless examples of financial corruption, also plenty of quite recent hacks on numerous coin exchanges. I’ll save anybody from that fate though. Obviously Maddoff takes the gold medal. The banks are at the centre of the economy, not the government, imo. If Parliament shut down for a year, barely anybody would notice. If a bank has trouble with their systems, for 15-30 minutes, there’s uproar.
Warren Buffet is known for his reluctance to learn about anything technology related. He hasn't beaten the S&P500 over the last decade, and sold airlines at the bottom recently. It isn't that surprising, people don't get better with age and the guy is 90.
A bit ageist there if I might say so. Let's look at the BH portfolio, two notable tech stocks in his portfolio are Apple and Amazon. He has a $70bn stake in Apple, being the largest institutional shareholder in the world. He also has a $1bn stake in Amazon, which by comparison is small fry but Buffet has always been a value investor. If an asset is hard to value there is a big chance he will overlook it. Other notable stocks in the portfolio, Visa Inc which now really is a fintech stock and Verizon a telecoms firm.
His long term track investment record comfortably outperforms the rate of inflation, not over one, three, five or ten years but six decades. Knowing what I do today about wealth creation, would I trust Warren Buffet aged 30 versus Bitcoin over the next 20 years, (think of a word that is the opposite of heaven that sky doesn't permit) yes.
The way I look at it is the crypto evangelists always turn against Buffet because they don't like what he said a few years back about Bitcoin. Well he's still go his shirt, a lot of crypto enthusiasts have lost a lot of money.
You keep going on about people's real wealth being eroded by fiat inflationary depreciation of the £/$/Yen or whatever currency you want to quote, again I put to you that most people don't only hold assets in pure Fiat. Every worker in this country is participating in a workplace pension, a lot of them hold ISA's as well that they either use to supplement their pensions or to build a lump sum for property purchase. The UK financial services industry manages over $1trn in assets and that's before you even start looking at DIY investors. The UK property market is worth over $8trn, and despite the pandemic prices are still rising as we speak. In the United States 401k plans hold over $5 trn in assets (2018). And I am not talking about the super rich here, it's the average Joe's that also participate in stock market rallies these days.
None of these asset classes over decades have lagged behind the real rate of inflation. You can pull off every currency graph you like but that is fact. On a social level there may be sectors of the population that have not participated in accruing wealth for various reasons but that is a totally different discussion.
Its not just that we don't like what Buffet said about bitcoin, its that he said it without any understanding or reasoning. He has bought into companies like Apple and Amazon now, but was pretty late to the party. Don't think its ageist to say people's abilities decline in their later years, its just a fact of life - maybe the way I said it wasn't the best though. I respect his achievements, and avoiding investing in things he doesn't understand has obviously worked well for him. All I'm saying is don't take what he says about bitcoin seriously when he openly admits he doesn't understand it.
I agree, asset inflation is rampant right now - it's the primary reason for Michael Saylor moving MicroStrategy's money from $ to BTC. A factor of how the money being printed is distributed?
Inflation can be viewed in a few different ways. Inflation includes things like Netflix subscriptions, packets of sweets and all sorts of other things that might stay the same cost, or even reduce in cost due to technological advances, or price reductions to attract business in an economic slow down.
I also agree more "average Joes" take part in the stock market now, which might be a good thing, but it also creates a bubble feel about the market when the stock prices are almost completely detached from performance of the company.
Most crypto's are similar to holding a stock - its part ownership of a company. The main difference is that you can invest from a much earlier stage, verses the stock market where only listed companies can be invested in, unless you are in a position of privilage (unless crowd funding is used). Crypto enables new types of business models, and anyone can invest from day one. Naturally the environment is much higher risk due to the companies being less established, but the rewards are also far greater than anything the stock market could ever produce when you pick a winner. I'm not sure of the best performer in the market YTD, but AAVE/LEND is 35x its value at the start of the year, REN is 7x its Jan value, YFI - which was distributed for free is 20x its value less than 3 months ago, THETA is 8x YTD, UNI - another distributed for free has a market value of $350m. This is all after a significant downturn/ correction over the last few weeks, and there are loads more like it I could pick.
You might wonder why on earth a company would give away shares for free?! Usually it is incentive to help get the company off the ground, or for providing value in some other way. A good example is paying shares of the company for people to provide liquidity to a new exchange. Exchanges don't work without liquidity, but by paying people shares in the company they are able attract huge amounts of liquidity, which allows them to out compete any centralised exchange. This is exactly what Uniswap (UNI) are doing right now and are disrupting the business of established companies like coinbase and binance. They already do more daily volume than coinbase. The same thing could eventually happen to stock market exchanges, as soon as stocks become tokenised. Something a few projects are already working on.
While I do see a lot of crypto companies disrupting a lot of traditional companies, I think both industries will merge and eventually all (stock) assets will be traded on the blockchain. Its a far cleaner way of doing things.
1. We are lucky enough to live in a country where banks provide significant safety and legal protections. Precisely why we shouldn't act as though we are a bank. You quite rightly point to the possibility banks may introduce some sort of charge. But don't compare that with the raft of significant charges that a BTC investor faces, particularly a private investor
2. The "hot" wallet is terrible. As a purely short-term in and out investment it is worse than almost every comparable investment. It needs to be regarded as a long-term investment. I love this idea that we don't need legal protections in place because the market will be self-interested to regulate itself. An idea discredited since the South Sea Bubble of 1720.
3. That supposed set of "ratings" you quote. From an international financier? Multi-billion fund manager? International Banker? No. A former Google software guy who is "interested" in Austrian economics. So-relevant qualifications/experience? None whatsoever.
Then look at his gradings. For a start, he does not compare like with like-he compares 1 cryptocurrency, but treats all currencies as though they were equal. Even though he expressly admits that the $US and the £Sterling are different and better. And uses the Indian Rupee and Weimar Germany as examples.
"Durable"? Ah-the 12-year-old hidden currency is already more durable that fiat currency. Really?
"Divisible/Portable". A-plus. Really? More so than money? In theory. But never in practice. Let's give a real example.
Suppose 1 BTC is worth £7,000. you have 1 BTC, and £7,000 in an online bank account.
With the bank account you have 700,000 separate units, any or all of which you can spend instantly without charge, and transfer instantly without charge to anyone or anywhere else. and that's a "B". Compare/contrast with Bitcoin. It is nowhere near as divisible or portable.
"Established History". Just 1 mark below. Really?
"Scarce". Using supply without demand is meaningless. Or I would be investing in Zambian Kwacha. It is a lot scarcer.
He actually states in that article that he expects Governments to start investing once the total value exceeds $1 Trillion. In any comparable investment with proper regulation, if anyone dared to suggest a benefit that would apply once something had quintupled in value, then they would be up before their regulator.
Risk does reduce over time. Of course. Not all but resolved after 20 years as that article suggests, but noticeably. I think cryptocurrencies are here to stay, but there will be massive changes ahead. Cynical me thinks the big investors will do better than the small ones.
1. I'm not sure what charges you mean - I can buy Bitcoin for zero fees on crypto.com, and hold it there in an insured account, for free + gain interest on it at a far greater rate than any bank. Same for stable coins (coins pegged to £ or $). 4.5% for BTC, and 10%+ for stable coins. Banks use your money without paying you really anything for it, where as crypto banks pass on most of the profits.
I will agree that network congestion is an issue with bitcoin and how to overcome it has been a topic of much debate. Transferring bitcoin is till much easier and cheaper than transferring gold though
2. Hot wallets are necessary, in the same way it is necessary for a bank to hold currency that could be robbed by a bank robber. It is up to the bank to ensure they manager their risk accordingly. Having said that, its natural for a new industry to face higher risks than a well established one. I agree we need legal protections, which is why I would either chose to be my own bank (its really not that hard), or use a regulated/insured company to have custody of my assets. There are plenty now.
3. Some of the ratings are subjective, and I agree that durability of the pound and the dollar probably deserves more than a "C". Bitcoin has probably already overcome most of its most difficult challenges. 12 years is a long time for hackers or governments to try and bring something down unsuccessfully, so i agree with the B rating there.
regarding "divisible" and "portable" - while I agree currently it is not ideal to send the smallest denominations of bitcoin due to the network fees involved, I would not bet against that being overcome. Like you say, the currency is only 12 years old and security is of higher concern than ease of use right now. (simple = secure, so any changes need to be thought though very carefully. There are many innovations in the space that bitcoin could adopt any one of). The likely approach will be a second layer on top of bitcoin that allows the smallest fraction of a bitcoin to be sent for next to nothing, then batch processed on the bitcoin network. High value transactions that are willing to pay the couple of dollars transaction fee for the highest security will still take place directly on the bitcoin network.
I disagree that anyone could send their £7000 anywhere. I myself have had my spending censored by the bank, and I'm a lucky UK citizen. There are many less fortunate than us with far more restrictions. I have never had any Bitcoin transactions censored, and nor will the ever be. It is possible to memorise your private key and leave a country with $billions, and no one can stop you. Try doing that in a country than doesn't want you to with anything else. So I agree with the portability score of A+
Established history. I somewhat agree with out retort though this is taking into account all fiat currencies. £ and $ are outliers so would be marked higher.
Scarceness: Clearly there is a demand for Bitcoin - I don't understand your comment there. Despite not being in a crazy bull market like 2017, the number of transactions has returned to the same level, and I personally would bet on it increasing further. A good demonstration of the advancement in technology is shown by the network fees: reaching $40/$50 a transaction in 2017 hype, but with the same volume today are only a couple of dollars. Supply is limited but no fiat currency has a limited supply because more can, and is, printed. Supply is actually decreased over time (halving), so as long as the demand stays the same or increased it should push the price up?
All it boils down to in my opinion, is Bitcoin standing the test of time. The more it does that, the more attractive it will be compared to any other currency as a store of value.
Big investors will do better than the small ones: I agree. However, I believe, and so do others (Preston Pysh - a value investor is where I got it from) that Satoshi Nakomoto intentionally made bitcoin volatile to begin with, so it would attract retail investors before institutions. I can't think of any other reason you would program a supply shock every 4 years, that reduces in significance each time. But at the same time program an adjustment in difficulty every 2 weeks (difficulty dictates how much processing power is required to produce the next block). Volatility is by design, to aid the transfer of wealth from institution to retail. The same concept is used in a lot of game theory situations. For example, volatility is the reason poker is more popular than chess - the playing field is levelled somewhat. In games like fortnite, they use "spread" for bullets to stop the highest level players hitting the target 100% of the time etc.
Everything seems to be happening very quickly at the moment, So I thought I'd give people an update on what has happened in the last 4 weeks, since the last post was made.
One of the biggest asian exchanges (OKex) has disabled withdrawals and the only person with the private keys (and therefor access to majority of the funds) has gone missing after "assisting the police with an investigation" - https://www.coindesk.com/okex-suspends-withdrawals
How did this thread die off, considering the meteoric rise of Bitcoin over the Christmas holidays! After a few dips, it's still doing well now at $34k!
I've just skimmed through this whole thread. Some interesting contributions on all sides.
I'm keeping tabs on the BTC price as I don't want too much of my net worth in cash with all the quantitative easing (i.e. theft) that's going on. For now I'm mostly invested in property (my flat), traditional stocks and a chunk in silver/gold, but I might dip my toe in the water if the price crashes again.
Wondered how long it would be before someone revived this thread
@thefa1lacy, BTC was still around $13k at the time of my last post. Its remarkable how many questions I have had about it from friends and family since breaking the previous ATH around $20k, when none of them were interested at $10k or below.
@tedson, I still think there is ALOT of room to grow & prices tend to recover extremely quickly after a dip in the middle of a bull run. In 2017 BTC went from under 1k at the start of the year to $20k by the end of the year. There were multiple 30% crashes along the way though, so you might be lucky and get one of these before its gone up a lot more. We did just dip from $35k to $28k though, so that might have been it for this leg. who knows. Dips make good times for institutional investment so they have the selling liquidity to buy a load without effecting the price too much to the upside in the process. Demonstrated by the largest ever single investment happening at the exact same time as the dip I'm talking about.
they bought at an average price above $30k, so clearly they think the price has not gone up too much already
Its a different landscape this time too with all the money printing + institutions buying, likely to hold long term. I'm not saying it will be the same as 2017, just letting you know what we could be in for ( i have no idea if you already know all this, sorry if you do)
Gold is a good store of value, but it still inflates at 2% a year, which could increase as tech gets better vs BTC fixed supply, easier to verify, easier to divide & easier to trade with over long distances. Through out history, the asset with superior properties as a store of value has ALWAYS won. Wouldn't be surprised if BTC eats a lot of the value that gold would of gained due to the extra money supply, as it seems to be gaining credibility very fast.
You may well be right about BTC eating into gold's value and I don't expect BTC to ever crash to below $10k (or maybe even $20k) again. But even so, now does not seem to be the time to buy, with the price having rocketed 200% in the last couple of months. Human greed and fear are pretty reliable, so I'm sure there'll be some sort of crash in the near future.
Man has just two password guesses left to access his £180m Bitcoin account
A computer programmer who lost his Bitcoin password has just two guesses left before he is locked out of his account forever.
Stefan Thomas has lost the slip of paper with the information to unlock his 7,002 digital coins, which yesterday were worth a reported £180million.
The tech worker told the New York Times he cannot remember the crucial code to a small hard drive, known as an IronKey, to unlock his account and cash in.
German-born Mr Thomas, who now lives in San Francisco, said if he doesn't get the password right within the next two tries, he will lose the fortune forever.
He told the newspaper how he had been the Bitcoin in 2011 in exchange for making an animation.
The crypto-currency's value has soared wildly since then.
Mr Thomas' Bitcoin were this week worth around a reported £25,637.95 each.
The computer programmer said he had written down his password a decade ago - but now he cannot find it.
The IronKey only gives users ten tries at a password to access their digital wallet before it locks an account forever.
“I would just lay in bed and think about it,” Mr. Thomas told the NYT. “Then I would go to the computer with some new strategy, and it wouldn’t work, and I would be desperate again.”
He said he plans to put his IronKey in a secure facility until a better way is found to crack it.
Mr Thomas among many Bitcoin investors who have found themselves ready to cash in but locked out of their accounts.
yeah, interesting story. I bet he would have been a lot more careful if he realised how much they could end up being worth.
There are a bunch of fairly simple solutions to avoid this whole mess now, which wont have been the case 10 years ago. I bet the vast majority of lost bitcoins are due to lack of care because of their minimal value at the time.
Beyond Bitcoin: Number two crypto Ethereum is climbing faster and has given rise to the 'DeFi' industry which has netted some lucky investors up to 11,000% returns in a year
Like Bitcoin, Ethereum is a decentralised currency, so it does not require a central bank or financial institution to issue it, but there is a lot more to it.
Computer engineer says his £230m Bitcoin fortune is sitting at bottom of landfill site after he threw away hard drive by mistake - now he is offering council £55m if they can dig it up
James Howells, 35, is offering Newport Council more than £55million - a quarter of the fortune - to dig up the rubbish tip in Wales after accidentally throwing out the hard drive in 2013.
Beyond Bitcoin: Number two crypto Ethereum is climbing faster and has given rise to the 'DeFi' industry which has netted some lucky investors up to 11,000% returns in a year
Like Bitcoin, Ethereum is a decentralised currency, so it does not require a central bank or financial institution to issue it, but there is a lot more to it.
I was actually fairly impressed with this article. Until they mentioned HEX that is Its a pretty well known ponzi/scam. The founder purposely only lists it on exchanges with low volume so he can manipulate the price.
Defi is going to be huge though. It is effectively in alpha/beta now, where you can actually use it but its not interfaced with traditional banking yet. You can get 15%+ on dollars, fairly easily + I have seen projects with yields far greater than that in the works.
If you know what your doing you can get some insane returns, like 1000%+ a year at times. All without risking your initial capital, other than a vulnerability in the program itself.
There is something known in the industry as a "dead cat bounce". This is where a stock that has been falling quickly has a (usually brief) resurgence. Before falling again.
There are a variety of reasons for this. Some people are so desperate not to lose all their money that they will accept a low offer. Some think it may survive. Others believe that, even if it doesn't, either someone will buy the assets or that it has enough assets to be worth more than the new (lower) share price.
So far, so good. Although experienced people who do this say that the timing of selling is even more important than that of buying.
Gamestop (like some others recently) is a step further. The buyers are claiming that they have found a way for the small investor to win, and there are long-term profits to be made. 2 schools of thought here:-
1. We live in a changing world, the rules may be changing; or 2. The buyers are just saying this to increase their profits from people who will believe you if you told them the word "gullible" was not in the dictionary
I'm a cynic. It's number 2. Every single time. Because sheep get shorn.
Comments
Iran have fairly recently allowed licences to be held for miners working off of excess power from nuclear power stations. That of course , might just be to have a pop at the USA.
But that does hint at what I’ve mentioned before, that if bitcoin is a great store of value,why don’t the countries buy it up and park it next to their gold reserves.
I have a few shots that I’ll put on another post, including one which suggests the South Koreans should get their backsides over to Venezuela.
Billions are being invested in blockchains similar to the bitcoin chain, which makes you wonder why.
In China, crypto wealth is reported to be leaving the country due to laws that might be implemented. It’s reportedly going out to addresses around the world using tether.
I think the price can be manipulated quite easily.
On low volume days that would be quite easy to do, especially if you have institutions getting involved. All the action around bitcoin makes it a big draw for futures etc. Those houses involved would definitely want it around.
The high hash rates are always from China, with the Xinjiang autonomous area having the highest hash rate in the world. BTW, that region is where the Uighurs are located, but it’s not clear who is actually mining it.
With the cost of mining likely to go up, some might look back and think about how much power has been used, especially the greenies,on which is essentially a computer against computer puzzle/ game. Although, there’s massive data storage too.
Currently to mine a bitcoin, the odds of matching the hash are 1 in 16 trillion,
Although there are a sea of computers banging away. I didnt know the exact requirements to mine one coin, but you probably know it’s matching a 64 digital hexadecimal number. Others
might not know that.
I’m wondering if the halving might be the carrot to keep players involved,and I think there might be about only 14 or 15m coins accessible/ circulating by the time all are mined.
That size might make them seem rare, but there’s only one Mona Lisa.
In fact, it would be quite easy for a country to have a foot in the enemies camp and control the price, if they fought that, for instance, the dollar was under threat.
Maybe it might be nation to nation battling it out in crypto wars😊
China were buying gold in 2018-2019, but lie well behind others in reserves, as my shots show.
China are the biggest producers and consumers, with India lying second in consumption.
India has a big influence on the price of gold, as its used as a gift at wedding and festivals, which are usually held in the fourth quarter. So with their country badly affected by the virus, will that have an impact?
That’s me done, the drugs are wearing off, but I think there might be the odd point I’ve made that
May be worthy of comment.
If stocks were a punt or even close to that the Warren Buffet wouldn't be a multi billionaire. It's widely acknowledged that over someones working life, stocks provide the best return of any asset class.
Bitcoin is a punt, because it's true value is subjective as opposed to being based on fundamentals.
Well, that depends on what you regard as a “ punt”.
My definition is putting money into something that could lead to oneself losing all their capital.
Going “ long only” is obv different than trading.
Most folks buy stocks for hopefully capital appreciation, and hopefully some dividends.
Are you using Warren Buffet as bench mark. That’s a bit like using Germany as a bench mark for the virus in Europe. Buffet has always been seen a value investor.
He actually paid less tax than his own secretary, mainly due to his frugal lifestyle.
There have been numerous companies , probably thousands that have gone t it’s up.
These, in most cases , mean the equity holders get wiped out, leaving the bond holders to divi up the assets.
Enron was worth $60 billion, priced at 70 times earnings,then went t it’s up.
DeLorean ( quirky car ) Lionel corp,Aldephia, Pets.com, Bear Sterns, some of the biggest failures.
If you’re lucky, a company that might be about to go under, might get bought out.
By buying a stock, you’re taking a chance on the economic outlook,expected growth, and hopefully your stock choice doesn’t have major competitors in the future.
Like @chicknMelts crypto, bitcoin in particular, you’re wealth lies in others bidding it up.
At this moment in time, there’s more chance of listed companies going to nought than crypto, imo.
Why would you construct a portfolio based on the expectation of how one company would perform?
If anything it's far more prudent to buy an OEIC or IT to minimise investment risk and at the same time employing a professional to manage your money. Even if you did buy stocks rather than investment funds, you'd be pretty unlucky to come across more than a few large companies going bust over your lifetime, and that's where basic investment strategy comes into play. Most active investors who manage their own portfolios usually employ techniques like stop losses to get out of investments that depreciate by a set percentage.
Comparing the probability of one company going broke versus a commodity/currency going to zero is a total apples and pears comparison.
There are folks that have one or two shares, by the way of private or state owned companies being listed, and being offered to them at a discount.They will likely be the few though.
It depends on what crypto is being compared to regarding stocks.
ETF’s, Index Funds, Fund Managers against Fund managers or solely the indices.
Then you can throw in “ insider information” etc, for stocks and for crypto, that can lead to rather large profits.Dirty Rotten Scoundrels.
It’s really the first time you’ve mentioned portfolios,that’s a whole topic on its own.
And Brokers trading just to keep their commission rate up. Dirty Rotten Scoundrels.
I think the market cap on crypto would be far less, as folks just buy into any old coin hoping for a few winners.
In my mind, the things to look out for are the finding of a Vaccine, obviously the USA election, more stimulus.
I think the markets will get hit if Biden gets in,as the markets will be then unsure.
There is a big difference between a broker and a financial adviser/wealth manager. People need to understand how UK financial services operate before making such misinformed comments
Max Keiser is a particular favorite of mine. Always has an interesting take on things.
I could put up endless examples of financial corruption, also plenty of quite recent hacks on numerous coin exchanges. I’ll save anybody from that fate though. Obviously Maddoff takes the gold medal.
The banks are at the centre of the economy, not the government, imo.
If Parliament shut down for a year, barely anybody would notice.
If a bank has trouble with their systems, for 15-30 minutes, there’s uproar.
I agree, asset inflation is rampant right now - it's the primary reason for Michael Saylor moving MicroStrategy's money from $ to BTC. A factor of how the money being printed is distributed?
Inflation can be viewed in a few different ways. Inflation includes things like Netflix subscriptions, packets of sweets and all sorts of other things that might stay the same cost, or even reduce in cost due to technological advances, or price reductions to attract business in an economic slow down.
I also agree more "average Joes" take part in the stock market now, which might be a good thing, but it also creates a bubble feel about the market when the stock prices are almost completely detached from performance of the company.
Most crypto's are similar to holding a stock - its part ownership of a company. The main difference is that you can invest from a much earlier stage, verses the stock market where only listed companies can be invested in, unless you are in a position of privilage (unless crowd funding is used). Crypto enables new types of business models, and anyone can invest from day one. Naturally the environment is much higher risk due to the companies being less established, but the rewards are also far greater than anything the stock market could ever produce when you pick a winner. I'm not sure of the best performer in the market YTD, but AAVE/LEND is 35x its value at the start of the year, REN is 7x its Jan value, YFI - which was distributed for free is 20x its value less than 3 months ago, THETA is 8x YTD, UNI - another distributed for free has a market value of $350m. This is all after a significant downturn/ correction over the last few weeks, and there are loads more like it I could pick.
You might wonder why on earth a company would give away shares for free?! Usually it is incentive to help get the company off the ground, or for providing value in some other way. A good example is paying shares of the company for people to provide liquidity to a new exchange. Exchanges don't work without liquidity, but by paying people shares in the company they are able attract huge amounts of liquidity, which allows them to out compete any centralised exchange. This is exactly what Uniswap (UNI) are doing right now and are disrupting the business of established companies like coinbase and binance. They already do more daily volume than coinbase. The same thing could eventually happen to stock market exchanges, as soon as stocks become tokenised. Something a few projects are already working on.
While I do see a lot of crypto companies disrupting a lot of traditional companies, I think both industries will merge and eventually all (stock) assets will be traded on the blockchain. Its a far cleaner way of doing things.
I will agree that network congestion is an issue with bitcoin and how to overcome it has been a topic of much debate. Transferring bitcoin is till much easier and cheaper than transferring gold though
2. Hot wallets are necessary, in the same way it is necessary for a bank to hold currency that could be robbed by a bank robber. It is up to the bank to ensure they manager their risk accordingly. Having said that, its natural for a new industry to face higher risks than a well established one. I agree we need legal protections, which is why I would either chose to be my own bank (its really not that hard), or use a regulated/insured company to have custody of my assets. There are plenty now.
3. Some of the ratings are subjective, and I agree that durability of the pound and the dollar probably deserves more than a "C". Bitcoin has probably already overcome most of its most difficult challenges. 12 years is a long time for hackers or governments to try and bring something down unsuccessfully, so i agree with the B rating there.
regarding "divisible" and "portable" - while I agree currently it is not ideal to send the smallest denominations of bitcoin due to the network fees involved, I would not bet against that being overcome. Like you say, the currency is only 12 years old and security is of higher concern than ease of use right now. (simple = secure, so any changes need to be thought though very carefully. There are many innovations in the space that bitcoin could adopt any one of). The likely approach will be a second layer on top of bitcoin that allows the smallest fraction of a bitcoin to be sent for next to nothing, then batch processed on the bitcoin network. High value transactions that are willing to pay the couple of dollars transaction fee for the highest security will still take place directly on the bitcoin network.
I disagree that anyone could send their £7000 anywhere. I myself have had my spending censored by the bank, and I'm a lucky UK citizen. There are many less fortunate than us with far more restrictions. I have never had any Bitcoin transactions censored, and nor will the ever be. It is possible to memorise your private key and leave a country with $billions, and no one can stop you. Try doing that in a country than doesn't want you to with anything else. So I agree with the portability score of A+
Established history. I somewhat agree with out retort though this is taking into account all fiat currencies. £ and $ are outliers so would be marked higher.
Scarceness: Clearly there is a demand for Bitcoin - I don't understand your comment there. Despite not being in a crazy bull market like 2017, the number of transactions has returned to the same level, and I personally would bet on it increasing further. A good demonstration of the advancement in technology is shown by the network fees: reaching $40/$50 a transaction in 2017 hype, but with the same volume today are only a couple of dollars. Supply is limited but no fiat currency has a limited supply because more can, and is, printed. Supply is actually decreased over time (halving), so as long as the demand stays the same or increased it should push the price up?
All it boils down to in my opinion, is Bitcoin standing the test of time. The more it does that, the more attractive it will be compared to any other currency as a store of value.
Big investors will do better than the small ones: I agree. However, I believe, and so do others (Preston Pysh - a value investor is where I got it from) that Satoshi Nakomoto intentionally made bitcoin volatile to begin with, so it would attract retail investors before institutions. I can't think of any other reason you would program a supply shock every 4 years, that reduces in significance each time. But at the same time program an adjustment in difficulty every 2 weeks (difficulty dictates how much processing power is required to produce the next block). Volatility is by design, to aid the transfer of wealth from institution to retail. The same concept is used in a lot of game theory situations. For example, volatility is the reason poker is more popular than chess - the playing field is levelled somewhat. In games like fortnite, they use "spread" for bullets to stop the highest level players hitting the target 100% of the time etc.
First UK listed company put 10% of their reserves into bitcoin https://www.forbes.com/sites/billybambrough/2020/10/24/exclusive-uk-listed-fintech-mode-now-holds-1-million-of-bitcoin/#:~:text=Mode has become the first,company Square SQ -1.2% .)
Bitcoin seems to have decoupled from the stock markets and is up approx 25% since the last post.
Paypay have announced they will allow their 300m users to buy, hold and pay with crypto - https://www.forbes.com/sites/ronshevlin/2020/10/25/paypals-new-service-is-a-50-billion-stimulus-check-for-bitcoin/
Brian Brooks of the OCC (Office of the Comptroller of the Currency, USA) claims that Decentralized finance will replace the need for traditional banking services - https://www.sarsonfunds.com/brian-brooks-of-the-occ-claims-defi-will-soon-replace-traditional-banking/
JP Morgan, who said bitcoin was a fraud and going to zero in 2017, have released a report completely backtracking on that stance. (https://cointelegraph.com/news/jpmorgan-turns-bullish-on-bitcoin-citing-potential-long-term-upside)
It hasn't all been positive though -
One of the biggest asian exchanges (OKex) has disabled withdrawals and the only person with the private keys (and therefor access to majority of the funds) has gone missing after "assisting the police with an investigation" - https://www.coindesk.com/okex-suspends-withdrawals
Last night $24m was stolen using an exploit in one of the defi projects. https://news.bitcoin.com/defi-protocol-harvest-finance-hacked-for-24-million-attacker-returns-2-5-million/
Never a dull day!
After a few dips, it's still doing well now at $34k!
I'm keeping tabs on the BTC price as I don't want too much of my net worth in cash with all the quantitative easing (i.e. theft) that's going on. For now I'm mostly invested in property (my flat), traditional stocks and a chunk in silver/gold, but I might dip my toe in the water if the price crashes again.
@thefa1lacy, BTC was still around $13k at the time of my last post. Its remarkable how many questions I have had about it from friends and family since breaking the previous ATH around $20k, when none of them were interested at $10k or below.
@tedson, I still think there is ALOT of room to grow & prices tend to recover extremely quickly after a dip in the middle of a bull run. In 2017 BTC went from under 1k at the start of the year to $20k by the end of the year. There were multiple 30% crashes along the way though, so you might be lucky and get one of these before its gone up a lot more. We did just dip from $35k to $28k though, so that might have been it for this leg. who knows. Dips make good times for institutional investment so they have the selling liquidity to buy a load without effecting the price too much to the upside in the process. Demonstrated by the largest ever single investment happening at the exact same time as the dip I'm talking about.
https://decrypt.co/53200/one-river-makes-one-of-the-largest-cryptocurrency-trades-in-history
they bought at an average price above $30k, so clearly they think the price has not gone up too much already
Its a different landscape this time too with all the money printing + institutions buying, likely to hold long term. I'm not saying it will be the same as 2017, just letting you know what we could be in for ( i have no idea if you already know all this, sorry if you do)
Gold is a good store of value, but it still inflates at 2% a year, which could increase as tech gets better vs BTC fixed supply, easier to verify, easier to divide & easier to trade with over long distances. Through out history, the asset with superior properties as a store of value has ALWAYS won. Wouldn't be surprised if BTC eats a lot of the value that gold would of gained due to the extra money supply, as it seems to be gaining credibility very fast.
A computer programmer who lost his Bitcoin password has just two guesses left before he is locked out of his account forever.
Stefan Thomas has lost the slip of paper with the information to unlock his 7,002 digital coins, which yesterday were worth a reported £180million.
The tech worker told the New York Times he cannot remember the crucial code to a small hard drive, known as an IronKey, to unlock his account and cash in.
German-born Mr Thomas, who now lives in San Francisco, said if he doesn't get the password right within the next two tries, he will lose the fortune forever.
He told the newspaper how he had been the Bitcoin in 2011 in exchange for making an animation.
The crypto-currency's value has soared wildly since then.
Mr Thomas' Bitcoin were this week worth around a reported £25,637.95 each.
The computer programmer said he had written down his password a decade ago - but now he cannot find it.
The IronKey only gives users ten tries at a password to access their digital wallet before it locks an account forever.
“I would just lay in bed and think about it,” Mr. Thomas told the NYT. “Then I would go to the computer with some new strategy, and it wouldn’t work, and I would be desperate again.”
He said he plans to put his IronKey in a secure facility until a better way is found to crack it.
Mr Thomas among many Bitcoin investors who have found themselves ready to cash in but locked out of their accounts.
https://www.msn.com/en-gb/money/other/man-has-just-two-password-guesses-left-to-access-his-180m-bitcoin-account/ar-BB1cI2Gw?ocid=msedgntp
There are a bunch of fairly simple solutions to avoid this whole mess now, which wont have been the case 10 years ago. I bet the vast majority of lost bitcoins are due to lack of care because of their minimal value at the time.
I have my key stored on a cryptosteel in more than one secure location.
https://cryptosteel.com/?v=79cba1185463
There are also the regulated crypto banks if your not comfortable being in charge of your own keys.
https://medium.com/anchorage/introducing-anchorage-digital-bank-the-first-federally-chartered-digital-asset-bank-7f9b9b4e0fd5
Hope you bought the dip @Tedson
Like Bitcoin, Ethereum is a decentralised currency, so it does not require a central bank or financial institution to issue it, but there is a lot more to it.
https://www.dailymail.co.uk/money/markets/article-9138547/Beyond-Bitcoin-Number-two-crypto-Ethereum-climbing-faster-given-rise-DeFi.html
James Howells, 35, is offering Newport Council more than £55million - a quarter of the fortune - to dig up the rubbish tip in Wales after accidentally throwing out the hard drive in 2013.
https://www.dailymail.co.uk/news/article-9146967/Computer-engineer-says-230m-Bitcoin-fortune-sitting-bottom-landfill-site.html
Defi is going to be huge though. It is effectively in alpha/beta now, where you can actually use it but its not interfaced with traditional banking yet. You can get 15%+ on dollars, fairly easily + I have seen projects with yields far greater than that in the works.
If you know what your doing you can get some insane returns, like 1000%+ a year at times. All without risking your initial capital, other than a vulnerability in the program itself.
https://cointelegraph.com/news/occ-s-brian-brooks-thinks-that-defi-can-root-out-bias-and-fraud-in-traditional-banking
https://www.ft.com/content/4f76d769-4460-450f-9373-1e54f7da6c19
https://www.dailymail.co.uk/news/article-9193697/GameStops-three-largest-shareholders-gotten-3BILLION-richer-two-weeks.html
There is something known in the industry as a "dead cat bounce". This is where a stock that has been falling quickly has a (usually brief) resurgence. Before falling again.
There are a variety of reasons for this. Some people are so desperate not to lose all their money that they will accept a low offer. Some think it may survive. Others believe that, even if it doesn't, either someone will buy the assets or that it has enough assets to be worth more than the new (lower) share price.
So far, so good. Although experienced people who do this say that the timing of selling is even more important than that of buying.
Gamestop (like some others recently) is a step further. The buyers are claiming that they have found a way for the small investor to win, and there are long-term profits to be made. 2 schools of thought here:-
1. We live in a changing world, the rules may be changing; or
2. The buyers are just saying this to increase their profits from people who will believe you if you told them the word "gullible" was not in the dictionary
I'm a cynic. It's number 2. Every single time. Because sheep get shorn.