OT: Stock and Investment Thread
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So then there is NOT a finite amount of bitcoins. Outside of being a quasi-currency, what are bitcoins used for? Does the solving of complicated mathematical problems provide any benefit other than the creation of bitcoins? And what has happened to any currency not used for any other purpose (as opposed to gold) that has appreciated to that degree in that short a time?
Another YouTube crypto channel that you may like. This guy is pretty no nonsense and educational. Also, I think his personal info is pretty transparent.
BTC limit is 21 million coins. Not all of it has been mined yet, but it is a finite amount.
Currently 6.25 bitcoins are mined about every 10 minutes (in my first post above). That reward will be reduced to 3.125 every 10 minutes starting some time in 2024
I’ve read that the 21M coins will be mind
I’ve heard 2040 and 2140 - not clear which is the correct year. One of the existential risks is that once all BTC is mined the owners will just sit on them which means the utility of BTC and transactional justification goes out the window.
Not for a while. I've heard estimates of 2080 to 2100. As of now, about 90% of BTC has already been created, so the new supply will be relatively small amounts.
I don’t understand the confusion. Read my previous posts which tells you the finite total (21 million) and how the rewards work. What does it matter when that 21 million is reached as long as the rewards become smaller and smaller, making mining more expensive unless the value of the coin makes it worthwhile. A crude analogy (pardon the pun) is drilling for oil depending on the price of oil, the obvious difference is the finite number of bitcoin
Perhaps my hesitation in BTC stems from the fact that in 2006 I was working on a bunch of deals for a prominent Wall Street firm where the job basically consisted of picking apart loan portfolios and putting the prime commercial properties in one pile (like Short Hills Mall) and the crappy properties in the other (e.g., certain buildings in Newark, Camden, etc.). There were hundreds of other properties outside of NJ that I was not familiar with. Long story short - the Wall Street firm then took the crappy properties and bundled them together in a mound of paperwork and sold them as fast as they could to a bunch of other financial firms. Even after working on the deals every day for 3 months I had no clue what was to come. And, neither did the financial firms that no longer exist today. When the financial crisis hit, it all made sense. Therefore, I’m simply trying to make sense of BTC because I have capital I’d like to deploy and my choices seem to be wait for a correction or enter the world of cryptocurrency.
Oil can be refined and fuel you car and be used in any number of tangible products. Why does solving complicated mathematical problems that lead to no benefit but bitcoins become more valuable?
If you're waiting for the stock market to take a dive before putting more money into it, this might not be the best time to get into crypto either since it's at an all-time high. I've been meaning to put more into crypto but have been adding to my mutual funds and ETFs instead lately because they are far less volatile. I got into crypto four years ago at what was then an all-time high, and have just now recovered. Actually I think I might still be in the red because a chunk of that was put towards an altcoin that fizzled into nothingness. I definitely learned my lesson that time, so I'm waiting for the next drop to buy more.
You may be waiting a long time for that correction. We likely won't get a true correction while we have zero interest rates and the feds pumping. I doubt this will change in 2021.
Agree - unless there is a trigger event I don’t foresee a huge drop especially with more stimulus money fueling the retail traders. I’ve trimmed some positions lately mainly because I felt it was time to take profits.
Yeah, but the longer it takes to happen the nastier it's going to be.
I'm all in with our retirement money, dumped any bonds and other fixed income options in our 7 retirement accounts (yes, we still do have a ton of cash, but we consider this separate and not investments). However, we are not adding to this cash pile. My 2 large annual bonuses this year (payout in a few weeks) are going right into the market. Keep rolling until the party ends!
The overall market boom for the past 10-11 months has mostly been due to international money and increased savings/discretionary money due to the limitations of COVID. The GME crowd is a nice story, but they don't have the money to move the market like this (not even close).
When my football buddies that never traded a stock in their lives pre-COVID are talking about how “awesome” and “fun” the stock market is I tend to believe we are in correction territory even if it’s only 10-15%. Most of these retail traders haven’t experienced a gut-wrenching correction.
I’m in a similar position. I’ve been all in for 15 years and buy aggressively on major dips and corrections. I do keep a fair amount of cash on hand but, like you, it’s bonus time and I need to find it a place to work. I was buying like crazy close to the COVID lows but the snap-back was so quick that I didn’t get to pick up all of the bargains I had lined up. Where are you planning to put your bonuses?
Before answering that question, there needs to be a little set-up. I am not a stock guy (except for my new fun/crypto account, which represents a very tiny amount of our investment assets). I am learning more about stock picking, but essentially I'm all about funds, ETFs, and indexes. We have a 16-year time horizon for retirement.
We have 7 retirement accounts (rollover IRAs, old 401k/403bs, current 401k, backdoor Roth IRA accounts, and our E-Trade brokerage account for overflow). We already made our 2021 backdoor Roth IRA contributions, so that is done. My current 401k is maxed (close to the $56k limit), so all of this extra money will hit E-Trade.
Our plan. Increasing our position in ARKK big time, currently 10% and I need to at least double this. SOXX and XSD will get a lot of new money (love these semiconductor ETFs). HAIL and IDRV (EV and smart mobility) also need more money and so does VWIGX (global growth). I am a big believer in innovation and disruption. So yes, I drank the ARK Kool-Aid. LOL!
E-Trade is our account that we like to play with and test things out (accounts for 12% of our assets). If all goes well, we move new funds into our big accounts. ARKK and SOXX/XSD recently landed in our main Rollover IRA.
Our other big retirement funds are PRGTX (Global Tech), Fidelity Growth Company (which has been amazing for decades), PRNHX, and a great new fund, FTEFX (Fidelity Disruptive Tech).
If you are a stock guy, check out the portfolios of these funds via Morningstar. You will find a lot of great ideas!
Thanks - sounds like we have a similar set of retirement accounts although I’m heavy on tech stocks with a mix of dividend and re-opening plays. I’ve also been building a decent size position in biotech. The only reason I didn’t buy ARKK was that approx. 11% of the fund is in Tesla (I’m a Tesla bear). I’ll def check out some of your other recommendations.
Check out the FTEKX and ARKK portfolios:
So, it’s growth and tech. Guess that doesn’t have the same ring as disruptive.
Tesla is now under 9% of ARKK's portfolio. Keep in mind, last week while TSLA went down 4%, ARKK still went up 2%. They are on a roll and picking a ton of winners.
Love pharma and biotech. We have been in PRHSX for a long time (T Rowe Health Sciences). I'm thinking about juicing our pharma/biotech position with a little ARKG as well. Likely going to move 25% of our PRHSX into ARKG, so it will be a 3:1 ratio.
It's "more aggressive" growth and tech.
But seriously, it's not about mainstream or old tech, but rather innovative tech and things that will have the potential to change society.
Gold is an element on the periodic table. It is formed through supernova explosions throughout the universe. So, if you are referring to the amount of gold in the universe, it is quite a bit larger than what we have on Earth,
On Earth, we’ve mined about 171,000 metric tons and have discovered another 57,000 metric tons. These tons are believed to have been delivered to the planet about 200 million years ago during an asteroid bombardment (during the Earths formation, more gold and precious metals were subsumed into the prime dial Earths core. So we’re not getting our hands in that stuff). Absent another bombardment, it’s not likely we will find much more recoverable gold than we’ve identified. It’s rare to find gold; hence, it’s value. As other have pointed out, it has uses other than a store of value such as jewelry or other decoration, along with a growing amount of industrial uses in technology. That said, all of the gold mined in history still exists. Might be in Mike Tysons’s tooth, or buried deep in an Egyptian tomb, but it’s there. It’s nearly indestructible but, at the same time, malleable and with an attractive color. We can chemically verify it, so there’s no dispute whether it’s gold or not. And you can’t make something that isn’t gold into gold.
Another attribute of gold is that, for 99% of human civilization, it was money. Not kind of like money, but actual money. Sure, you could issue pieces of paper and use those pieces of paper to facilitate trade. But those pieces of paper, whether issued by a government of a bank, were not money. They were notes. Redeemable, upon presentation to the issuing entity, into an agreed upon amount of gold. Not just in Roman civilization, or the Middle Ages. As recently as 1971, gold was the anchor of the international monetary system. In fact, that’s why our dollars say Federal Reserve Notes. Nixon decided that these notes weren’t redeemable anymore in 1971. But before Nixon, it’s also the item which prevented countries from running persistent current account deficits into perpetuity. If we bought more from one country than they from us, gold would flow to our trading partner. They had more money. And it would reside in their banking system, allowing more loans to be issued within that country. The country that lost gold would see its monetary base shrink, and its amount of available credit shrink. It’s economy would likely contract, and pressure would fall upon merchants or producers to sell what they could often resulting in price declines, Today, we call that deflation. And in the country with more gold (read, money)? It would grow, and grow quickly leading to spikes in demand and, ultimately, higher prices. Those higher prices (inflation) would meet their match when the other trading partner’s now relatively lower prices would seem attractive., Guess what would happen? Purchases of their goods would increase, and gold would flow back. And the cycle would continue. It was a self correcting monetary system, not without volatility. Of course, the volatility would not come from the price of gold. It, after all, was money.
Funny thing, too. If you track the increase in the price of gold over time, and compare that to the purchasing power of the dollar, you’ll see an interesting correlation. In other words, even though gold no longer backs the dollar, the price of gold bears a strong relationship over time to the purchasing power of the dollar. Think of the inverse of the dollar price of gold as the gold price of a dollar. Amazing, but the market still views the relationship holding.
So, with that context, how to compare to bitcoin? It has no history. It wasn’t created in the explosion of a far off star and miraculously found its way to Earth, Some dude or dudes conjured it. It is not money. It’s price moves have nothing to do with changes in the purchasing power of any currency. No merchant or country of scale accepts bitcoin as payment or prices it’s products or services in bitcoin. It exists in a computer, conjured by someone or something that no one knows. It’s program says there is a limited number of coins. Maybe that’s true. Maybe it’s not. Others harness massive computing power which uses a TON of electricity to crack codes to release more bitcoin. That’s not a joke, more global warming to find things that don’t exist in the real world. That is truly sad.
When asked to explain, then, how one should consider bitcoin as a store of value akin to gold, the responses center around “things change,” or people who scoff at crypto enthusiasm are “closed minded.” I’d offer a suggestion. If you want to convince people that bitcoin is legit, show how it can become a medium of exchange or a non volatile store of value akin to gold. No one has, and that’s why, speaking for myself, crypto is viewed as a speculative gamble. Supporting it is a religious belief. Now, many have made money with that religion, so there is that. But what price to sell? What price to buy? What’s it worth? How do you determine what it’s worth? Questions demanded by investors seeking assets at a discount to value, but not questions asked by religious devotees.
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How would you feel about a spac specializing in Bitcoin?
I totally hear you. Guys like Bob on this thread think I’m either obtuse, stupid, or a cryptocurrency hater (or all 3). I want to make money like the next guy. I’ve done plenty of research on BTC and cryptocurrency. I’m not dismissing it by any means, but there is no doubt that elements of it scream elaborate hoax that has made certain people rich and, in turn, created a self-effectuating cryptocurrency gold rush. MassMutual jumping in doesn’t impress me - my father worked for AIG during the financial crisis - AIG didn’t have a clue what they got themselves into. Musk isn’t surprising because he’ll do anything to keep the spotlight on Tesla and he made the BTC announcement right in the middle of perhaps the one week in EV history where every major auto manufacturer said they were shifting to EV and launching models. Wall Street is already talking about cryptocurrency derivatives because they are foaming at the mouth watching all of this money up for grabs. I will continue to do research but there are so many aspects of BTC that remain unknown or shrouded in complexity. With that said, blockchain and digital assets are here to stay. NBA Top Shots is interesting for sure especially when you find out that people are paying thousands of dollars for “licensed NBA replays” that Dapper Labs and the NBA are cashing in on. Personally, I’d much rather own a limited edition autographed card in my collection, but I fully accept that people will buy almost anything. Although, unfortunately for the NBA it’s not basketball fans buying Top Shots. It’s the guy trying to make a profit by reselling them for 100X the price of a digital pack. Same thing killed the card industry in the early 90s. Once the “card investors” pushed out the fans, and card manufacturers then flooded the market, it was game over.
My view on today’s market aligns with this excerpt from Klarman’s classic Margin of Safety, written in 1991 but timeless and appropriate:
“There is an old story about the market craze in sardine trading when the sardines disappeared from their traditional waters in Monterey, California. The commodity traders bid them up and the price of a can of sardines soared. One day a buyer decided to treat himself to an expensive meal and actually opened a can and started eating. He immediately became ill and told the seller the sardines were no good. The seller said, “You don’t understand. These are not eating sardines, they are trading sardines.”
Like sardine traders, many financial market participants are attracted to speculation, never bothering to taste the sardines they are trading. Speculation offers the prospect of instant gratification; why get rich slowly if you can get rich quickly? Moreover, speculation involves going along with the crowd, not against it. There is comfort in consensus; those in the majority gain confidence from their very number.
Today many financial-market participants, knowingly or unknowingly, have become speculators. They may not even realize that they are playing a “greater-fool game,” buying overvalued securities and expecting — hoping — to find someone, a greater fool, to buy from them at a still higher price.
There is great allure to treating stocks as pieces of paper that you trade. Viewing stocks this way requires neither rigorous analysis nor knowledge of the underlying businesses. Moreover, trading in and of itself can be exciting and, as long as the market is rising, lucrative. But essentially it is speculating, not investing. You may find a buyer at a higher price — a greater fool — or you may not, in which case you yourself are the greater fool.“
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Enough arguing about cryptos, let's ***** about Tesla now. GM coming out with a new Bolt model. Watch out Tesla!
Musk will drown out the news cycle on the GM Bolt with his own announcement that he’ll host a joint-conversation on ClubHouse with Putin and Satoshi Nakamoto.
That starting price is still too high. Need a mid 20k starting price EV to really dominate the market. I would still buy a CX-5 and take the 5k in savings.
Edit: not sure if it will qualify for the federal tax credit. But if it does, that might swing me.
2nd edit: income limit on the fed tax credit. Looks like it’s the CX 5.
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