Bitcoin is still early

[Lordosis]

I think Carnegie meant invest in your own company. I think that's what he meant by keep a close eye on the one basket. He was talking about the empire he created.

I really don't think he meant to pick another company and learn all about it and consider that safe. Or replace company with a currency. Or a cryptocurrency. Or gold or whatever.

Studying, or stare at it all you want you aren't going to know the future. Nobody knows nothing!

[jacoavlu]

Yup. That’s what they were saying. My other favorite was from a new grad attending telling the residents how safe Bitcoin is, but that he doesn’t invest in the stock market because it’s so easily manipulated. He sounded very informed to them. Very sure of himself.

My question is how do you really “value” Bitcoin? By the yearly income production of the underlying asset? By the comparison of the cost of living in it to the cost of renting?

As far as I can tell, you value it based on your own feelings.

It’s an interesting method, but not one I willing to risk a lot of capital on.

the new grad attending sounds dumb

few of us invest based on “valuation”. i don’t.

i choose an asset allocation and target that when i have money to invest

how about you?

[Jaqen Haghar MD]

the new grad attending sounds dumb

few of us invest based on “valuation”. i don’t.
i choose an asset allocation and target that when i have money to invest
how about you?

That person sure does, on occasion.

In order to say something is under-valued or over-valued, you have to make an assessment of value. I must confess that I do invest based on valuation. I try to buy things (like real estate, equities, or vehicles) when they are inexpensive, and avoid them when they are expensive. I must admit that I take a hybridized approach to investing.

Tax advantaged space, I steadily max with a specific asset allocation mostly in index funds. Post-tax surplus I tend to toggle around and lump sum, depending on my current comfort zone (debt vs market conditions vs other personal circumstances).

Right now, I believe that all assets, including Bitcoin, are overvalued and future returns are therefore likely to be lower than the historical averages. So I’ve actually been shoveling excess cashflow into paying off the house, which should be complete in a year or two, depending. It’s a conservative strategy, but offers me liability protection in this state, and is another form of insurance for my wife.

I view Bitcoin/Crypto as a high risk speculation, that has the corollary of potential high rewards (or losses). This comes from a common investing theory that risk and reward are inseparable entities. I have nothing against Bitcoin per say, other than this.

I’m cautious right now, as we appear to be in a period of investment euphoria, with Bitcoin/Crypto in many ways, having the characteristics of past witnessed bubbles.

But I’m not soothsayer, and am cautious and contrarian by nature, hence the hybridized approach.
Could be wrong about the whole thing. I’m prepared for that. And even if I’m right, bubbles can go on for a long time.

I wonder how this plays out for a lot of people, if they are instead, “wrong about the whole thing”. Some of them could get badly hurt.

[Nysoz]

Concentration builds wealth, diversification preserves wealth.

https://www.google.com/amp/s/finance.yahoo.com/amphtml/news/warren-buffett-3-6-stocks-131512554.html

Even as I’m sure how great Tesla is, I’m in the process of diversifying slowly to preserve some wealth. I’ll add more later but only when I’ve properly diversified.

If someone has conviction in something by all means place your bets. Just make smart bets and be prepared that if your bet is wrong, you’ll still be ok.

[Zaphod]

I wonder if he said that before or after his empire was created? Either way, probably not the smart move for the vast majority of people.

Big difference if you can also influence and force your basket to perform like many of the people who say similar things, different if youre a holder of it on secondary market and are simply moved by what it does and have zero influence.

[NapoleanDynamite]

Yup. That’s what they were saying. My other favorite was from a new grad attending telling the residents how safe Bitcoin is, but that he doesn’t invest in the stock market because it’s so easily manipulated. He sounded very informed to them. Very sure of himself.

My question is how do you really “value” Bitcoin? By the yearly income production of the underlying asset? By the comparison of the cost of living in it to the cost of renting?

As far as I can tell, you value it based on your own feelings.

It’s an interesting method, but not one I willing to risk a lot of capital on.

No...I am not valuing Bitcoin based only on my feelings.

The global gold "market cap" (gold is used as a store of value) which is the first piece of the pie that Bitcoin will take over, is about 12 Trillion. IMO Bitcoin will first overtake gold in "market cap". That alone is a 10X from here.

But that is just the tip of the ice berg IMO. The next piece of the puzzle is the global bond market. Bitcoin will eventually take a huge chunk of the global bond market if not all of it one day. But let's say that it only takes over about 5-10% of the global bond market. The current global bond market is somewhere between 100 Trillion and 400 Trillion depending on what you are measuring and where you are getting your data from. But let's conservatively say 10% of 100 Trillion. That is another 2X from the already 10X increase above. So that is 20X right now.

Next lets consider that Bitcoin may not be used only as a store of value going forward but also a unit of account. Again, the global value of all currencies is quite large and debated. But let's use the CIA's number of 80 Trillion and assume that it only takes 10% of that market.

Now let's think about the global real estate market and consider that some of this may one day get re-priced in Bitcoin. That's another 300 Trillion dollar market.

You can start to understand why Bitcoin is currently undervalued IMO. If you disagree with any of the above assumptions that I am making, then you might think that Bitcoin is highly overvalued.

So I agree that it's possible I might be wrong about each and every one of these things and Bitcoin has no inherent value. But if there is even a 5% chance that I am correct in this 2 minute analysis, then it is something everyone should consider. This is about risk evaluation and long term investment strategy. This is not about trading for a quick buck. I have made plenty of quick bucks.

Your other comments on the world being in an "Everything bubble" I actually agree with. I think it is very possible that we see a huge global problem (depression, WWIII, etc) over the next 1-20 years. But as you have mentioned, I have no idea when that will be. "Bubbles" can inflate for a lot longer than most people would ever imagine.

Regardless, I am happy to hold what was initially a small part of my portfolio in Bitcoin. And yes, even though I believe that the Equity market and Real Estate market are highly overvalued, I am still investing in them. I don't try to time much of anything. I just try and figure out what assets might be good to invest in and diversify into those area's.

[Zzyzx]

Regardless, I am happy to hold what was initially a small part of my portfolio in Bitcoin. And yes, even though I believe that the Equity market and Real Estate market are highly overvalued, I am still investing in them.

equities/real estate/crypto will receive the majority of inflows even if they assume more risk so long as interest rates are near 0 and Tbonds earn <2%. doesn't mean they're overvalued.

[NapoleanDynamite]

equities/real estate/crypto will receive the majority of inflows even if they assume more risk so long as interest rates are near 0 and Tbonds earn <2%. doesn't mean they're overvalued.

Notice that I have mentioned nothing about investing in bonds. It is just plain bad math at this time to invest heavily in bonds.

And yes, "overvalued" may not be the correct term. With the amount of debasement that is occurring, the value of the other assets is probably about on target. But based on historical metrics, they are very overvalued. Whether the Shiller PE is worth anything given the level of debasement can be debated. But it is at it's second highest value ever in 140 years of data.

[jacoavlu]

Now let's think about the global real estate market and consider that some of this may one day get re-priced in Bitcoin. That's another 300 Trillion dollar market.

i’m not sure you even understand what you are typing. please explain.

[Zzyzx]

Whether the Shiller PE is worth anything given the level of debasement can be debated. But it is at it's second highest value ever in 140 years of data.

PE reflects the vast majority of inflows into equities because all the safety investments yield far less than inflation.

[Sampter]

No...I am not valuing Bitcoin based only on my feelings.

The global gold "market cap" (gold is used as a store of value) which is the first piece of the pie that Bitcoin will take over, is about 12 Trillion. IMO Bitcoin will first overtake gold in "market cap". That alone is a 10X from here.

But that is just the tip of the ice berg IMO. The next piece of the puzzle is the global bond market. Bitcoin will eventually take a huge chunk of the global bond market if not all of it one day. But let's say that it only takes over about 5-10% of the global bond market. The current global bond market is somewhere between 100 Trillion and 400 Trillion depending on what you are measuring and where you are getting your data from. But let's conservatively say 10% of 100 Trillion. That is another 2X from the already 10X increase above. So that is 20X right now.

Next lets consider that Bitcoin may not be used only as a store of value going forward but also a unit of account. Again, the global value of all currencies is quite large and debated. But let's use the CIA's number of 80 Trillion and assume that it only takes 10% of that market.

Now let's think about the global real estate market and consider that some of this may one day get re-priced in Bitcoin. That's another 300 Trillion dollar market.

You can start to understand why Bitcoin is currently undervalued IMO. If you disagree with any of the above assumptions that I am making, then you might think that Bitcoin is highly overvalued.

So I agree that it's possible I might be wrong about each and every one of these things and Bitcoin has no inherent value. But if there is even a 5% chance that I am correct in this 2 minute analysis, then it is something everyone should consider. This is about risk evaluation and long term investment strategy. This is not about trading for a quick buck. I have made plenty of quick bucks.

Your other comments on the world being in an "Everything bubble" I actually agree with. I think it is very possible that we see a huge global problem (depression, WWIII, etc) over the next 1-20 years. But as you have mentioned, I have no idea when that will be. "Bubbles" can inflate for a lot longer than most people would ever imagine.

Regardless, I am happy to hold what was initially a small part of my portfolio in Bitcoin. And yes, even though I believe that the Equity market and Real Estate market are highly overvalued, I am still investing in them. I don't try to time much of anything. I just try and figure out what assets might be good to invest in and diversify into those area's.

Serious question. Do people actually believe Bitcoin is going to be the "one ring to rule them all"? Seems a little far fetched to me.

[jacoavlu]

Serious question. Do people actually believe Bitcoin is going to be the "one ring to rule them all"? Seems a little far fetched to me.

it is far fetched right? but it wasn’t that long ago that “money” was actually a real thing

[NapoleanDynamite]

i’m not sure you even understand what you are typing. please explain.

Typing between patients. But what I'm trying to convey is that if the entire global market one day gets re-priced in Bitcoin, then Bitcoin will be worth far more than it is right now. Hence in my opinion it is undervalued.

I'm not offering some guarantee or "crazy" prediction that this will occur. But I am saying that there is a non-zero chance that it will occur. If it does occur, then the value of 1 Bitcoin will be far more than the 63K it is priced at today.

[xraygoggles]

Serious question. Do people actually believe Bitcoin is going to be the "one ring to rule them all"? Seems a little far fetched to me.

Uh, no.

Realistically, over the long term, bitcoin has the potential to overtake gold MC, which would value it somewhere around 400-450k, assuming everyone in gold moves to bitcoin.

[Zaphod]

Typing between patients. But what I'm trying to convey is that if the entire global market one day gets re-priced in Bitcoin, then Bitcoin will be worth far more than it is right now. Hence in my opinion it is undervalued.

I'm not offering some guarantee or "crazy" prediction that this will occur. But I am saying that there is a non-zero chance that it will occur. If it does occur, then the value of 1 Bitcoin will be far more than the 63K it is priced at today.

No, it is indeed crazy and an affront to sovereignty.