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  • #61
    Originally posted by nycEMMD View Post

    I truly believe that. The risk of either going to 0 is astronomically small but if we're talking minuscule odds, I really believe the chance of VTSAX going to 0 is higher than BTC going to 0 and disappearing.
    tell me a scenario vtsax goes to zero and btc doesn’t

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    • #62
      Originally posted by jacoavlu View Post

      tell me a scenario vtsax goes to zero and btc doesn’t
      The odds of VTSAX going down to 0 are astronomically small so any scenario where VTSAX would go to 0 are really far fetched. Something like worldwide communism, where there would be no private enterprise. Also as a technicality, complete outlaw of mutual funds But yeah, chances of either VTSAX or BTC going to 0 is astronomically small so any scenario I can think of is going to come out sounding crazy

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      • #63
        Originally posted by nycEMMD View Post

        It still boggles my mind that some people don't invest in BTC. The mental gymnastics they have to go through to justify their reasoning is baffling
        I don’t invest in crypto for the same reason I don’t invest in syndications and real estate funds: I don’t invest in asset classes that I don’t fully understand and feel comfortable with. I also don’t need to invest in it to meet my goals. Is it that really that baffling?

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        • #64
          Originally posted by TheDangerZone View Post

          I don’t invest in crypto for the same reason I don’t invest in syndications and real estate funds: I don’t invest in asset classes that I don’t fully understand and feel comfortable with. I also don’t need to invest in it to meet my goals. Is it that really that baffling?
          agree 100% Cue the "you just dont understand if you learned more you'd for sure invest in it" responses like I got in a different thread. The bolded part is basically what I said.

          The last few pages of this one I agree w jacoavlu and Zaphod- both had well though out responses.

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          • #65
            Originally posted by jacoavlu View Post

            it may be reasonable to exclude any particular asset from a portfolio with a reasonable explanation as to why. which necessitates some understanding of the asset.

            to simply dismiss bitcoin at this point, from the standpoint of a financial advisor particularly catering to clients with plenty of money, is irresponsible.

            a young client may reasonably be 90/10 or 80/20 with low debt and a stable job. a strong case could be made that a small allocation to bitcoin from the equities slice is very prudent at this point.

            it is a far less risky asset at $50k than it was at $5k or $500

            these decisions don’t exist in a vacuum. to not buy bitcoin is to buy something else. we are not talking about leverage. a small allocation to bitcoin has a nearly inconsequential downside. the upside is who knows.
            Bitcoin is akin to leverage. If you increase leverage you are increasing the possible upside and downside, the variance of returns. The annual volatility of btc is similar to and more than 3x index leverage. This isnt terribly difficult, you dont get massive returns without increased volatility.

            Bitcoin is simply leverage, and you pay for it with volatility.

            Its just a very simple way to frame risk, etc...etc...

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            • #66
              Originally posted by Zaphod View Post

              Bitcoin is akin to leverage.
              i disagree with your base premise

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              • #67
                Originally posted by nycEMMD View Post

                I truly believe that. The risk of either going to 0 is astronomically small but if we're talking minuscule odds, I really believe the chance of VTSAX going to 0 is higher than BTC going to 0 and disappearing.
                it boggles my mind that anyone can actually believe theres a larger chance of every single publicly traded company in the united states of america becoming worthless than the same thing happening to something that 99.999% of people in the world don't understand and do not use for its intended purpose.

                the fact that interest in bitcoin so obviously comes from its ridiculously outsized "returns" rather than its actual utility as a currency sets off giant red flags to me. in general, people love it because recently its been a get rich quick scheme. anyone who can make a good amount of money (most everyone on this board) and invest it reasonably with just a modicum of patience has absolutely ZERO need to hold bitcoin. obviously holding it at 5% or whatever isnt going to matter so knock yourself out, but i hope to god that bitcoin bulls don't rely on it for their actual retirement

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                • #68
                  Originally posted by Turf Doc View Post

                  it boggles my mind that anyone can actually believe theres a larger chance of every single publicly traded company in the united states of america becoming worthless than the same thing happening to something that 99.999% of people in the world don't understand and do not use for its intended purpose.

                  the fact that interest in bitcoin so obviously comes from its ridiculously outsized "returns" rather than its actual utility as a currency sets off giant red flags to me. in general, people love it because recently its been a get rich quick scheme. anyone who can make a good amount of money (most everyone on this board) and invest it reasonably with just a modicum of patience has absolutely ZERO need to hold bitcoin. obviously holding it at 5% or whatever isnt going to matter so knock yourself out, but i hope to god that bitcoin bulls don't rely on it for their actual retirement
                  agree. the truth is basically none of us need to invest in anything. we could work and hold cash savings and we would be fine. right?

                  especially in the grand scheme of things. i mean we’re super fortunate just being in the US (most of us). we could go broke and we’d basically be “fine”

                  be thankful we don’t live in venezuela. or turkey. where inflation is out of control which makes for a silent confiscation of the citizens wealth.

                  then you have to wonder, is there a nonzero chance something like that could it happen to us? and if so, what to do about it?

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                  • #69
                    Originally posted by jacoavlu View Post

                    i disagree with your base premise
                    Thats fine, its not exactly true, it just is as a financial construct and set of characteristics associated with it true. Allows a good comparison and way to frame the investment type for me.

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                    • #70
                      Originally posted by Zaphod View Post

                      Thats fine, its not exactly true, it just is as a financial construct and set of characteristics associated with it true. Allows a good comparison and way to frame the investment type for me.
                      there is no construct needed. keep it simple.

                      bitcoin is an asset, a digitally native bearer asset, which has not existed before. it’s young and has a fixed supply and is being valued in a relatively unregulated free and open market 24/7/365. hence, volatility

                      but a buy and hold investor that isn’t using leverage need not worry about that.

                      leverage exists in basically all markets. levered sp500. levered gold. levered bonds. levered commodities.

                      people not trading and not using leverage should focus on fundamentals

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                      • #71
                        Originally posted by jacoavlu View Post

                        there is no construct needed. keep it simple.

                        bitcoin is an asset, a digitally native bearer asset, which has not existed before. it’s young and has a fixed supply and is being valued in a relatively unregulated free and open market 24/7/365. hence, volatility

                        but a buy and hold investor that isn’t using leverage need not worry about that.

                        leverage exists in basically all markets. levered sp500. levered gold. levered bonds. levered commodities.

                        people not trading and not using leverage should focus on fundamentals
                        yet its price and vol is severely impacted by leverage. things cant go up 200% a year in a straight line, it attracts leverage, which increases volatility etc...The amount of leverage allowed to exist in the space drives this volatility whether you use it or not.

                        The leverage construct part is simple. It has x% return and y% volatility over any time frame. These numbers are in line with 3-5x leverage on say the S&P. After all, it isnt the leverage that is dangerous in and of itself, its what it does to your expected returns. 20x levered on a house? No big deal, not callable nor marked to market and no cash injections required to keep a minimum maintenance level.

                        Bitcoin has all the return characteristics of a highly levered equity instrument. It does actually make sense to view it as such because the only actual determinant of your returns are the price trend/path and volatility drag. Being digital, a rock, nft, or tied to something useful doesnt change the effect of those parameters on your returns.

                        Leverage is a large part of the driver of the return, even if you dont use it others are, or else you wouldnt have the volatility and definitely wouldnt have crazy flash liquidations etc....

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                        • #72
                          i assume jacoavlu is saying that it's literally not leveraged, but would probably agree that the pros and cons of bitcoin resemble what you get when you leverage other asset classes as you have alluded to

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                          • #73
                            Originally posted by Zaphod View Post

                            yet its price and vol is severely impacted by leverage. things cant go up 200% a year in a straight line, it attracts leverage, which increases volatility etc...The amount of leverage allowed to exist in the space drives this volatility whether you use it or not.

                            The leverage construct part is simple. It has x% return and y% volatility over any time frame. These numbers are in line with 3-5x leverage on say the S&P. After all, it isnt the leverage that is dangerous in and of itself, its what it does to your expected returns. 20x levered on a house? No big deal, not callable nor marked to market and no cash injections required to keep a minimum maintenance level.

                            Bitcoin has all the return characteristics of a highly levered equity instrument. It does actually make sense to view it as such because the only actual determinant of your returns are the price trend/path and volatility drag. Being digital, a rock, nft, or tied to something useful doesnt change the effect of those parameters on your returns.

                            Leverage is a large part of the driver of the return, even if you dont use it others are, or else you wouldnt have the volatility and definitely wouldnt have crazy flash liquidations etc....
                            agree vol is affected by leverage

                            disagree price is affected by leverage

                            if i don’t use leverage and buy and hold long term the folks trading with leverage don’t matter to me. they accelerate pumps and get liquidated on dumps. doesn’t affect me.


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                            • #74
                              Originally posted by jacoavlu View Post

                              agree. the truth is basically none of us need to invest in anything. we could work and hold cash savings and we would be fine. right?

                              especially in the grand scheme of things. i mean we’re super fortunate just being in the US (most of us). we could go broke and we’d basically be “fine”

                              be thankful we don’t live in venezuela. or turkey. where inflation is out of control which makes for a silent confiscation of the citizens wealth.

                              then you have to wonder, is there a nonzero chance something like that could it happen to us? and if so, what to do about it?
                              you're right, if you worked a normal length career and saved 20% in cash you'd be wealthy compared to 90+% of people in america, no doubt about it. you could argue that therefore it's unecessary to invest even in stocks and bonds like its unnecessary to invest in bitcoin, but i wouldnt take it that far... investing in the former is so easy and lifechanging enough to make it worth it, without unnecessary risk/volatility like the latter (imo)
                              Last edited by Turf Doc; 10-24-2021, 11:15 AM.

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                              • #75
                                to be more clear

                                vol and price are affected by leverage but price is not determined by leverage. price is determined by the marginal buyer or seller. whether or not they’re using leverage.

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