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Discuss Latest WCI Blog Post: Should I Invest in Cryptocurrency?

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  • Discuss Latest WCI Blog Post: Should I Invest in Cryptocurrency?

    Knowing what we know about cryptocurrency and its volatility, should you invest in it? Let's explore the issue here.

    The post Should I Invest in Cryptocurrency? appeared first on The White Coat Investor - Investing & Personal Finance for Doctors.



    Click here to view the article!
    Helping those who wear the white coat get a fair shake on Wall Street since 2011

  • #2
    Well written.

    I don’t fully understand crypto. Another reason for me to stick to my boring index funds.

    Comment


    • #3
      Does anyone know someone leaving their jobs to trade crypto? That seems like a pretty good top signal to me!

      Comment


      • #4
        I don’t do crypto. Now I know why. Thanks. Because of WCI’d influence over the last 5 years I’ve sloughed off most of my ‘I think I can do better’ asset groups/stocks.

        Comment


        • #5
          Apologies if this triggers anyone, but I was becoming a young adult during the dot com boom and bust and then just starting real investing as the housing market tanked. This crypto stuff reminds me of the crazy speculation in websites and housing, respectively, and the former even moreso, and at 40 years old, I feel more confident than not that this is going to go up in flames during my lifetime, but not before it becomes even bigger than it already is now, and therefore triggering a massive recession and decimating people's retirement savings who got on the bandwagon and invested way too much in crypto. I admit to not understanding it. I have tried. People pushing it sent me articles and I tried to read them without bias and trying to learn something new. I'm not the smartest person out there but I'm closer to being the smartest person out there than the dumbest. And it all went over my head. Thousands if not millions of people are investing in this and they either truly do not understand it or they drank so much of the koolaid that they are 100% convinced they understand it but they don't and we can't get them to be humble and/or back to reality.

          Comment


          • #6
            The main question one must answer before investing in a given cryptocurrency is whether it will go up in value between when you buy and when you sell. Unlike a company, a bond, or a property, there is no way to value a cryptocurrency, so there is no way to know when it is a good deal to buy and a good deal to sell. It is purely speculative. It's a guess. There is a price at which a Bitcoin is a good deal. There is also a price at which it is not a good deal. However, I don't know what either of those prices are. Neither do you. Neither does anyone else. How much of your nest egg do you want to bet on your guess?

            Lots of crypto posts on the blog lately.

            Disclosure I hold bitcoin as part of my long term AA. Buy and hold only. I found this passage strange. If we are primarily buy and hold index fund investors, even if we could try to come up with a proper price for those investments, we don’t try to do so. We simply always buy toward our AA goal and don’t worry about the current price. Time in > timing right? Crystal ball is cloudy and all that. Maybe we rebalance occasionally.

            So to say that “there is a price at which bitcoin is a good deal” but then say we shouldn’t invest in it because we can’t value it, seems contrary to our fundamental investing principles.

            There are other arguments made in the post which I don’t disagree with.

            Comment


            • #7
              If you want a small allocation of your portfolio to cryptocurrency as a speculative investment, then yea it's fine. 1-5% is the usual recommendation. But like any other allocation you have, you should rebalance quarterly/yearly. Sure you will miss out on gains during bubbles, but will also buy when there's a bear market.

              Lot of people online try to time and day trade it - including me in 2020-21 during the epic bubble - which may work out short term, but unlikely to be successful long-term.

              Comment


              • #8
                Originally posted by xraygoggles View Post
                If you want a small allocation of your portfolio to cryptocurrency as a speculative investment, then yea it's fine. 1-5% is the usual recommendation. But like any other allocation you have, you should rebalance quarterly/yearly. Sure you will miss out on gains during bubbles, but will also buy when there's a bear market.

                Lot of people online try to time and day trade it - including me in 2020-21 during the epic bubble - which may work out short term, but unlikely to be successful long-term.
                Rebalancing is a smart thing to do....unless an asset class goes to zero. Might want to put some limits on your rebalancing if you're invested in an asset class with that possibility.
                Helping those who wear the white coat get a fair shake on Wall Street since 2011

                Comment


                • #9
                  Is there an objective market measure of FOMO?

                  Comment


                  • #10
                    Originally posted by burritos View Post
                    Is there an objective market measure of FOMO?
                    frequency of anti crypto posts?

                    Comment


                    • #11
                      Originally posted by jacoavlu View Post
                      The main question one must answer before investing in a given cryptocurrency is whether it will go up in value between when you buy and when you sell. Unlike a company, a bond, or a property, there is no way to value a cryptocurrency, so there is no way to know when it is a good deal to buy and a good deal to sell. It is purely speculative. It's a guess. There is a price at which a Bitcoin is a good deal. There is also a price at which it is not a good deal. However, I don't know what either of those prices are. Neither do you. Neither does anyone else. How much of your nest egg do you want to bet on your guess?


                      Lots of crypto posts on the blog lately.

                      Disclosure I hold bitcoin as part of my long term AA. Buy and hold only. I found this passage strange. If we are primarily buy and hold index fund investors, even if we could try to come up with a proper price for those investments, we don’t try to do so. We simply always buy toward our AA goal and don’t worry about the current price. Time in > timing right? Crystal ball is cloudy and all that. Maybe we rebalance occasionally.

                      So to say that “there is a price at which bitcoin is a good deal” but then say we shouldn’t invest in it because we can’t value it, seems contrary to our fundamental investing principles.

                      There are other arguments made in the post which I don’t disagree with.
                      I also have buy-and-hold crypto in long-term AA. Purely speculative, I admit. Just to preface.

                      But the key difference between the situations you bring up are that the stock market goes up over long time periods, and for well known and understood reasons. Empirical evidence and economic theory both support this, so the rationale for long-term buy-and-hold is sound, at any price.

                      This is not true for crypto, as far as we know. Neither by empirical evidence, nor economic theory. The long-term value may be zero. Or it may not. We don't know.

                      This is not the case for the equities market.

                      Comment


                      • #12
                        Originally posted by JBME View Post
                        Apologies if this triggers anyone, but I was becoming a young adult during the dot com boom and bust and then just starting real investing as the housing market tanked. This crypto stuff reminds me of the crazy speculation in websites and housing, respectively, and the former even moreso, and at 40 years old, I feel more confident than not that this is going to go up in flames during my lifetime, but not before it becomes even bigger than it already is now, and therefore triggering a massive recession and decimating people's retirement savings who got on the bandwagon and invested way too much in crypto. I admit to not understanding it. I have tried. People pushing it sent me articles and I tried to read them without bias and trying to learn something new. I'm not the smartest person out there but I'm closer to being the smartest person out there than the dumbest. And it all went over my head. Thousands if not millions of people are investing in this and they either truly do not understand it or they drank so much of the koolaid that they are 100% convinced they understand it but they don't and we can't get them to be humble and/or back to reality.
                        I agree and remember both .com frenzy and housing bubble. Despite trying I am not able to understand the concept of crypto which further exasperates my FOMO but also supports that I have no business throwing my hat in this ring.

                        Comment


                        • #13
                          Originally posted by bovie View Post

                          I also have buy-and-hold crypto in long-term AA. Purely speculative, I admit. Just to preface.

                          But the key difference between the situations you bring up are that the stock market goes up over long time periods, and for well known and understood reasons. Empirical evidence and economic theory both support this, so the rationale for long-term buy-and-hold is sound, at any price.

                          This is not true for crypto, as far as we know. Neither by empirical evidence, nor economic theory. The long-term value may be zero. Or it may not. We don't know.

                          This is not the case for the equities market.
                          this is all fine, but a different argument
                          the key phrase that doesn’t make sense to say is “there is a price at which bitcoin is a good deal”

                          at that point you’re applying different principles than the rest of your portfolio




































                          Comment


                          • #14
                            I dont care if people place a small percent of their assets in crypto.
                            I do care when people tell me I MUST place some of my assets in it otherwise I "just havent read enough about it brah" or am dumb.
                            The ones who will get hurt though are the ones who are placing ALL their assets in crypto, due to FOMO. That is what reminds me of dot com and housing that I lived through. I was in college and people were day trading with their student loans on dot coms. At least the student loan rate was lower then, but yeah, not smart. A lot of the younger crypto investors/loud advocates are too young to know the lessons learned from those earlier events, but "this time is different".

                            I own no crypto, but dont fault people who utilize a small amount of play money to it.
                            Last edited by billy; 04-18-2022, 03:59 PM.

                            Comment


                            • #15
                              No EARNINGS, NO INTEREST, NO RENTS, NADA NADA NADA
                              put 1% of assets in it if you like SPECULATION
                              The most basic concept is never to invest in something you do not completely understand

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