Bitcoin is still early

[jacoavlu]

As far as Bitcoin, that is speculation. I’m not sure it qualifies as a “behavioral error” because I don’t think it’s unreasonable to speculate with a small portion of my portfolio (it’s 1%) - it’s my sole and only speculative holding; everything else is in index funds and some bonds.

I think someone in your position making a 1% allocation is perfectly reasonable.

[NapoleanDynamite]

As far as Bitcoin, that is speculation. I’m not sure it qualifies as a “behavioral error” because I don’t think it’s unreasonable to speculate with a small portion of my portfolio (it’s 1%) - it’s my sole and only speculative holding; everything else is in index funds and some bonds.

Admittedly my investment plan needs to be updated; it was constructed before cryptocurrencies existed. 😉 It does allow up to 4% for riskier investments....

It is not unreasonable to have 1% of your AA in Bitcoin if you are approaching retirement. However I still find this statement funny. I have had this argument so many times, it is silly at this point. The literal definition of speculation is: investment in stocks, property, or other ventures in the hope of gain but with the risk of loss.

So for anyone to say that bitcoin is their "sole and only speculative holding" and then to follow that up with "everything else is in index funds and some bonds" does not understand the definition of speculation.

Everyone wants to keep using the term "speculation" with bitcoin. Yes, it is speculation. So is everything else everyone has invested in. It is literally the only reason to invest in anything. One is speculating that that asset will go up. Heck, even holding cash is technically speculating. Someone holding cash under their mattress is speculating that cash will outvalue other things to invest in. For everyone, please just stop with the "speculation" discussion. It is a silly argument by definition.

Now, if someone wants to state that they perceive bitcoin as a more "risky" speculation than their speculation on index funds....then that is an argument that can be made. It may prove to be right or wrong. I personally think it is incorrect to state that bitcoin is a more risky asset right now. But that is my opinion. But by definition they are all speculation.

[jacoavlu]

It is not unreasonable to have 1% of your AA in Bitcoin if you are approaching retirement. However I still find this statement funny. I have had this argument so many times, it is silly at this point. The literal definition of speculation is: investment in stocks, property, or other ventures in the hope of gain but with the risk of loss.

So for anyone to say that bitcoin is their "sole and only speculative holding" and then to follow that up with "everything else is in index funds and some bonds" does not understand the definition of speculation.

Everyone wants to keep using the term "speculation" with bitcoin. Yes, it is speculation. So is everything else everyone has invested in. It is literally the only reason to invest in anything. One is speculating that that asset will go up. Heck, even holding cash is technically speculating. Someone holding cash under their mattress is speculating that cash will outvalue other things to invest in. For everyone, please just stop with the "speculation" discussion. It is a silly argument by definition.

Now, if someone wants to state that they perceive bitcoin as a more "risky" speculation than their speculation on index funds....then that is an argument that can be made. It may prove to be right or wrong. I personally think it is incorrect to state that bitcoin is a more risky asset right now. But that is my opinion. But by definition they are all speculation.

maybe it's all shades of gray but the argument for calling bitcoin a speculative investment further out on the spectrum is the argument that "it doesn't produce anything" which is different than investment in equities or private business, bonds, real estate, farmland etc. In this way bitcoin is more analagous to investment in monetary gold

[chucki]

Speculation is the hope of buying something at Price A and then selling it a higher Price B. All investments are therefore speculative, if there is a plan to cash out or increase in value.

I now think 1% AA to BTC is too small. I was actually listening to a WCI pod months ago and he said if you believe in anything 1% is too low, you won't get much benefit out of it. Ironically, that helped reinforce my AA plans even though WCI hates BTC.

[xraygoggles]

It is not unreasonable to have 1% of your AA in Bitcoin if you are approaching retirement. However I still find this statement funny. I have had this argument so many times, it is silly at this point. The literal definition of speculation is: investment in stocks, property, or other ventures in the hope of gain but with the risk of loss.

So for anyone to say that bitcoin is their "sole and only speculative holding" and then to follow that up with "everything else is in index funds and some bonds" does not understand the definition of speculation.

Everyone wants to keep using the term "speculation" with bitcoin. Yes, it is speculation. So is everything else everyone has invested in. It is literally the only reason to invest in anything. One is speculating that that asset will go up. Heck, even holding cash is technically speculating. Someone holding cash under their mattress is speculating that cash will outvalue other things to invest in. For everyone, please just stop with the "speculation" discussion. It is a silly argument by definition.

Now, if someone wants to state that they perceive bitcoin as a more "risky" speculation than their speculation on index funds....then that is an argument that can be made. It may prove to be right or wrong. I personally think it is incorrect to state that bitcoin is a more risky asset right now. But that is my opinion. But by definition they are all speculation.

I'm not quite sure what you are saying here. Surely, you realize the difference between investing in a speculative asset like Bitcoin, which does not produce any earnings, dividends, rents, or interest, and Apple (for example)? Yes, you expect both to increase in value, but there is no "greater fool theory" behind Apple. It's purely mathematics: earnings come out, stock is re-priced immediately after hours to reflect its true value.

Similarly, bonds have value because they are backed by the US govt (Treasuries I'm referring to). USD has value because the govt accepts it as currency to pay your taxes, and everyone has to pay taxes. Monopoly of force in libertarian lingo.

Bitcoin IS a speculative asset. I'm still long crypto, but I'm not naive enough to think it has some intrinsic underlying value. It's whatever someone else agrees to pay for it. Last year it was worth 1/7th the price. I hope next year it's worth another 7x, but it may not.

[NapoleanDynamite]

Speculation is the hope of buying something at Price A and then selling it a higher Price B. All investments are therefore speculative, if there is a plan to cash out or increase in value.

I now think 1% AA to BTC is too small. I was actually listening to a WCI pod months ago and he said if you believe in anything 1% is too low, you won't get much benefit out of it. Ironically, that helped reinforce my AA plans even though WCI hates BTC.

I agree that 1% is too small....but 1% is better than 0%. Eventually people have to get off of zero.

[NapoleanDynamite]

I'm not quite sure what you are saying here. Surely, you realize the difference between investing in a speculative asset like Bitcoin, which does not produce any earnings, dividends, rents, or interest, and Apple (for example)? Yes, you expect both to increase in value, but there is no "greater fool theory" behind Apple. It's purely mathematics: earnings come out, stock is re-priced immediately after hours to reflect its true value.

Similarly, bonds have value because they are backed by the US govt (Treasuries I'm referring to). USD has value because the govt accepts it as currency to pay your taxes, and everyone has to pay taxes. Monopoly of force in libertarian lingo.

Bitcoin IS a speculative asset. I'm still long crypto, but I'm not naive enough to think it has some intrinsic underlying value. It's whatever someone else agrees to pay for it. Last year it was worth 1/7th the price. I hope next year it's worth another 7x, but it may not.

You are discussing value and use case which are different that what I am referring to. Again you refer to a "speculative asset like Bitcoin" but then compare it to rents, stocks etc. ....Bonds, stocks, real estate, bitcoin...whatever...they are all "speculative assets". Stocks (like the Apple example) are literally in the definition of speculation.

All I am saying is that the narrative that Bitcoin is speculative asset but that nothing else is speculative is technically wrong. By definition it is wrong. They are all speculative!

Some may have value, or dividends, or produce rent etc...but they are still speculative.

[jacoavlu]

arguing semantics is pointless

there are a lot of arguments against bitcoin that are just lazy. "It's speculative" is one of them.

[Dont_know_mind]

Not offended; appreciate your thoughts. You are right about the asset allocation change at the beginning of Covid. I made some decisions that were uncharacteristic, including selling a high percentage of equities in early Feb 2021, a decision that goes against all my rules. Fortunately I was able to buy back after the market drop, although not until the market had retraced half its losses. I was lucky there, and then overly emotional in permanently altering my AA as I near retirement. So I am certainly not inoculated against behavioral errors. (I have subsequently reflected on my AA and moved it to 50% where I intend to stay).

As far as Bitcoin, that is speculation. I’m not sure it qualifies as a “behavioral error” because I don’t think it’s unreasonable to speculate with a small portion of my portfolio (it’s 1%) - it’s my sole and only speculative holding; everything else is in index funds and some bonds.

Admittedly my investment plan needs to be updated; it was constructed before cryptocurrencies existed. 😉 It does allow up to 4% for riskier investments....

Only you know you and what is optimal for your situation.

Personally, I don’t see any asymmetric risk in Bitcoin. But maybe there is. What I do see is possibly hubris. Michael Saylor’s recent tweet: “Bitcoin is a swarm of cyber hornets serving the goddess of wisdom, feeding on the fire of truth, exponentially growing ever smarter, faster, and stronger behind a wall of encrypted energy.”

Something I am allergic to is getting on the backend of a move having missed out on the front end. No thanks!

I prefer Ben Felixes take on this:

https://youtu.be/UZnVt_CvL3k

Even IF Bitcoin is a technological revolution, how is it different to the internet, railways, electricity, the bicycle, the automobile and the other revolutionary technology in the last 100 years?

I think it is likely this thread will not age well when we revisit it in 2 years. Good luck to anyone invested in Bitcoin.

[Panscan]

I don’t understand even if it’s a technological revolution? Investing in tech revolution is massively profitable unless you’re buying in at that top. Are we at the top with BTC? I think that’s very unlikely.

I think in 2 year btc will hang out in low 100k

if you think now is the top then you’re basically saying net no one is going to get into BTC, ie more institutions and corporations are going to leave than ones who enter. this seems extremely unlikely to me.

[TechnoDonut]

Only you know you and what is optimal for your situation.

Personally, I don’t see any asymmetric risk in Bitcoin. But maybe there is. What I do see is possibly hubris. Michael Saylor’s recent tweet: “Bitcoin is a swarm of cyber hornets serving the goddess of wisdom, feeding on the fire of truth, exponentially growing ever smarter, faster, and stronger behind a wall of encrypted energy.”

Something I am allergic to is getting on the backend of a move having missed out on the front end. No thanks!

I prefer Ben Felixes take on this:

https://youtu.be/UZnVt_CvL3k

Even IF Bitcoin is a technological revolution, how is it different to the internet, railways, electricity, the bicycle, the automobile and the other revolutionary technology in the last 100 years?

I think it is likely this thread will not age well when we revisit it in 2 years. Good luck to anyone invested in Bitcoin.

Dude, you just don't understand!

I've spent quite a few hours, since my last post, trying to make some sense of blockchain and the blockchain token markets. One thing I'm struck by is how confident the blockchain supporters are. They know that this infant technology will revolutionize literally everything about the world. They tout the tremendous returns over the past 11 years, even though that's barely a blip in financial market time.

All I know is that I can't easily buy food, beer, gas, or ammo with bitcoin. I guess you could say the same thing about gold. At least gold has some material uses, and I could - in a pinch - club someone with it.

[jacoavlu]

All I know is that I can't easily buy food, beer, gas, or ammo with bitcoin.

lazy criticism

[xraygoggles]

Dude, you just don't understand!

I've spent quite a few hours, since my last post, trying to make some sense of blockchain and the blockchain token markets. One thing I'm struck by is how confident the blockchain supporters are. They know that this infant technology will revolutionize literally everything about the world. They tout the tremendous returns over the past 11 years, even though that's barely a blip in financial market time.

All I know is that I can't easily buy food, beer, gas, or ammo with bitcoin. I guess you could say the same thing about gold. At least gold has some material uses, and I could - in a pinch - club someone with it.

FWIW, I'm more bullish on Blockchain technology as a whole, rather than Bitcoin in particular. Also, Bitcoin is not really seen as a currency anymore, at least by institutions. They aren't buying it because they plan on using it to buy a house or a Tesla. It's seen as a hedge, and for asset diversification in the portfolio.

But I do think both will stick around. For 10 years? Probably. 100 years? That, I'm not so sure of.

[xraygoggles]

Dude, you just don't understand!

I've spent quite a few hours, since my last post, trying to make some sense of blockchain and the blockchain token markets. One thing I'm struck by is how confident the blockchain supporters are. They know that this infant technology will revolutionize literally everything about the world. They tout the tremendous returns over the past 11 years, even though that's barely a blip in financial market time.

All I know is that I can't easily buy food, beer, gas, or ammo with bitcoin. I guess you could say the same thing about gold. At least gold has some material uses, and I could - in a pinch - club someone with it.

This is a cool chart I found, that was cited by BNY Mellon.
https://www.mellon.com/documents/264...=1615498375904

Looking at the current developing narrative, it's clear that IF the correlation between Bitcoin and S&P becomes more and more positive over time, it could lose its value as a hedge. Currently, I believe the correlation is right around 0 or so.

[Nysoz]

For those not wanting to buy bitcoin, you have a chance to win some soon. Chipotle is apparently doing a giveaway for national burrito day (I think thursday?).

Apparently you have to guess a 6 digit code and have 10 tries to get up to $25k in bitcoin... or maybe a free burrito.