For the bitcoin people a thought experiment. You can receive one of two packages but you will not be able to do anything with the contents for 20 years, and let's just assume you will be alive and healthy in 20 years.

Package 1: $1million U.S.
Package 2: 10 Bit coins

Which one would you take? And if you picked 2, what dollar amount would you accept instead of 2?

I'd take 1 million dollars over 75,000 dollars 100% of the time even if it precludes me from ever investing in bitcoin with any other money, which I think is part of your hypothetical.

To be more realistic, if you gave me 1 million in bitcoin that I could not touch for twenty years, I would still take the cash. It is far from certain that BTC will be the currency that will prevail. Fortunately, just as with stocks, people can buy and sell when the markets shift. Right now, it is booming. However, there will be a shift when BTC splits in the next week.

What is the free cash flow of 1 acre lot on in the ocean in Carmel? In 1975 you could buy a one acre lot on the ocean for $80,000. Now, the same lot is worth about 3 million plus. The value of any asset is set by the marketplace. An ounce of gold, an acre of prime real estate, a painting by Edvar Munch, a 1965 Mustang or a Bitcoin--all of the above have negligible cash flow and are worth what someone will pay for them. If you need to see net income, sales estimates and P/E ratios in order to put something in your portfolio then fine--put 100% of your savings in equities. That has worked pretty well over time but some see a value for diversification into other asset classes (such as gold, real estate or bitcoin) with a small percentage of their portfolio for speculation and/or as a back up in case equities crash.

The comments about bitcoin (BTC) being used by slave traders and drug dealers just shows how there is pervasive ignorance about cryptocurrency (which supports the bullish case). BTC was used for buying drugs on the Silk Road but the principal in that dark net site went to prison. BTC is not anonymous. Monero, Dash, Verge and some other crypto's are more likely to allow anonymity (especially if you stay on the Tor network).

The argument that the value of BTC could be wiped out if the US, China, Europe, Japan and Korea pass a law against using bitcoin or other crypto currencies--that actually is the most plausible of the bear case arguments. China did outlaw bitcoin and the price dropped then took off again. Government policy (in every nation) is determined by what is in the best interest of the rich and the powerful. The US may outlaw ether and bitcoin in the future but they haven't done so yet. Recently, Goldman-Sachs announced that they are looking into crypto investing. Crypto is still a minor part of the world finance picture so like a small seedling, it can be crushed into the ground. The longer it survives and grows in market size the closer we come to a tipping point at which the rich and powerful people own enough of these assets that they will not allow prevent governmental attack.

Ducats, tulip bulbs, plastics.
The only investments, you will ever need.

azulviejo said:

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Ducats, tulip bulbs, plastics.
The only investments, you will ever need.

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Ocean front property in Carmel can generate quite a bit of cash flow as a rental. Of your example it was pretty much gold, cash, and bitcoin that produce no cash flow.

dajo9 said:

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Ocean front property in Carmel can generate quite a bit of cash flow as a rental. Of your example it was pretty much gold, cash, and bitcoin that produce no cash flow.

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That was what I was going to write. When I get a written presentation for an investment property, there is an income and cash flow modeling at the heart of the presentation. Of course, real property for personal use has a sentimental aspect, including where one wants to live, the community one wants to join, the educational system, safety, etc., that doesn't really translate to a bitcoin.

Even though at least gold is tangible, I understand the comparison. What I will say is that gold has been historically one of the worst investment possible.

calbear93 said:

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dajo9 said:

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Ocean front property in Carmel can generate quite a bit of cash flow as a rental. Of your example it was pretty much gold, cash, and bitcoin that produce no cash flow.

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That was what I was going to write. When I get a written presentation for an investment property, there is an income and cash flow modeling at the heart of the presentation. Of course, real property for personal use has a sentimental aspect, including where one wants to live, the community one wants to join, the educational system, safety, etc., that doesn't really translate to a bitcoin.

Even though at least gold is tangible, I understand the comparison. What I will say is that gold has been historically one of the worst investment possible.

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I'd nominate the US dollar as being, historically, one of the worst investments possible haha.

dajo9 said:

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edwinbear said:

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dajo9 said:

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cubzwin said:

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Putting my toe in the water finally. Maybe I'll get a basket of different currencies to diversify risk.

https://blogs.wsj.com/moneybeat/2017/05/25/scorching-hot-bitcoin-drops-300-in-an-hour-and-still-rises-on-the-day/

http://www.cnbc.com/2017/05/24/ethereum-price-bitcoin-rally.html

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What is your expected future free cash flow from this investment and what is it based on?

Also, what is the expected future free cash flow of the asset?

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The same as gold's

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Gold - another investment you won't find in my portfolio

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Fair enough, but your prerogative to not include gold in your portfolio doesn't mean it doesn't have value.

dago,you are being ridiculous. If you bought a house in Carmel now for 4 million dollars and you put 10% down and charged market rent your cash flow after paying mortgage interest and property taxes would be very, very negative. Trust me on this. I own a house there and rent it. If you have 4 million in cash to buy the house then you could get positive cash flow from rent but given the time value of 4 million you would still be making a loser investment unless you think the property will appreciate. In that case you are betting on the unknowable which is the same as buying bitcoin.

As for the other examples--fine art, collectible cars, rare stamps or coins, baseball cards--they are all assets that have value defined by the market and historically they have appreciated but they have no cash flow. And their value is what someone else will pay for them.

Stocks do not have intrinsic value. That's why there is a buyer for every seller except during a flash crash. What will your Amazon and Google stock be worth if someone explodes a nuclear bomb over New York wipes out the data?

Only one thing has intrinsic value. Life.

cubzwin said:

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Stocks do not have intrinsic value.

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This is news to the investment community.

edwinbear said:

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calbear93 said:

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dajo9 said:

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Ocean front property in Carmel can generate quite a bit of cash flow as a rental. Of your example it was pretty much gold, cash, and bitcoin that produce no cash flow.

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That was what I was going to write. When I get a written presentation for an investment property, there is an income and cash flow modeling at the heart of the presentation. Of course, real property for personal use has a sentimental aspect, including where one wants to live, the community one wants to join, the educational system, safety, etc., that doesn't really translate to a bitcoin.

Even though at least gold is tangible, I understand the comparison. What I will say is that gold has been historically one of the worst investment possible.

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I'd nominate the US dollar as being, historically, one of the worst investments possible haha.

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Touche. True enough, but most people don't invest in the US dollar (maybe t-bills). They usually put it in a bank account to earn interest but still not an investment when inflation outpaces interest. My cash is just for liquidity until deployed in actual investment or for consumption.

I've been in Bitcoin since the mid $3000 level. Been good but now heavy into Ether and Litecoin as well.

cubzwin said:

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dago,you are being ridiculous. If you bought a house in Carmel now for 4 million dollars and you put 10% down and charged market rent your cash flow after paying mortgage interest and property taxes would be very, very negative. Trust me on this. I own a house there and rent it. If you have 4 million in cash to buy the house then you could get positive cash flow from rent but given the time value of 4 million you would still be making a loser investment unless you think the property will appreciate. In that case you are betting on the unknowable which is the same as buying bitcoin.

As for the other examples--fine art, collectible cars, rare stamps or coins, baseball cards--they are all assets that have value defined by the market and historically they have appreciated but they have no cash flow. And their value is what someone else will pay for them.

Stocks do not have intrinsic value. That's why there is a buyer for every seller except during a flash crash. What will your Amazon and Google stock be worth if someone explodes a nuclear bomb over New York wipes out the data?

Only one thing has intrinsic value. Life.

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I'm just making the point about what type of investment bitcoin is. It generates no cash flow. You have to hope somebody pays more for it later.

In regards to Carmel real estate, not every investment that generates cash flow is a good investment. But Carmel real estate still generates cash flow, unlike bitcoin, gold, art, etc.

We are currently in a euphoric bull market. I don't know how long it will last but I suspect when we are in the next cycle bitcoin will be remembered similar to .com's and subprime mortgages. But I have no crystal ball, I could be wrong.

dajo9 said:

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cubzwin said:

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dago,you are being ridiculous. If you bought a house in Carmel now for 4 million dollars and you put 10% down and charged market rent your cash flow after paying mortgage interest and property taxes would be very, very negative. Trust me on this. I own a house there and rent it. If you have 4 million in cash to buy the house then you could get positive cash flow from rent but given the time value of 4 million you would still be making a loser investment unless you think the property will appreciate. In that case you are betting on the unknowable which is the same as buying bitcoin.

As for the other examples--fine art, collectible cars, rare stamps or coins, baseball cards--they are all assets that have value defined by the market and historically they have appreciated but they have no cash flow. And their value is what someone else will pay for them.

Stocks do not have intrinsic value. That's why there is a buyer for every seller except during a flash crash. What will your Amazon and Google stock be worth if someone explodes a nuclear bomb over New York wipes out the data?

Only one thing has intrinsic value. Life.

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I'm just making the point about what type of investment bitcoin is. It generates no cash flow. You have to hope somebody pays more for it later.

In regards to Carmel real estate, not every investment that generates cash flow is a good investment. But Carmel real estate still generates cash flow, unlike bitcoin, gold, art, etc.

We are currently in a euphoric bull market. I don't know how long it will last but I suspect when we are in the next cycle bitcoin will be remembered similar to .com's and subprime mortgages. But I have no crystal ball, I could be wrong.

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The thing about Bitcoin is that when it spikes, it's because people are buying more. Often times when stocks spike, yes people are buying but more often it's because of short squeezes, which I don't think happens with Bitcoin.

edwinbear said:

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calbear93 said:

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dajo9 said:

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Ocean front property in Carmel can generate quite a bit of cash flow as a rental. Of your example it was pretty much gold, cash, and bitcoin that produce no cash flow.

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That was what I was going to write. When I get a written presentation for an investment property, there is an income and cash flow modeling at the heart of the presentation. Of course, real property for personal use has a sentimental aspect, including where one wants to live, the community one wants to join, the educational system, safety, etc., that doesn't really translate to a bitcoin.

Even though at least gold is tangible, I understand the comparison. What I will say is that gold has been historically one of the worst investment possible.

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I'd nominate the US dollar as being, historically, one of the worst investments possible haha.

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If we are just talking about currency and currency substitutes (like the Pound, Euro, gold or bitcoin), the US doller has been pretty damn solid against the other options.

cubzwin said:

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When I posted about getting into Bitcoin in May it was selling for $2300. Now it is over $7500. GivemTheAxe was comparing Bitcoin proponents to Bernie Madoff and saying anyone who bought Bitcoin was the object of P.T. Barnum's scorn. Over a 300% gain. Who's a sucker now ax in the neck?

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You do realize why you know you know Madoffs name right?

It is because people were making a ****ing huge amount of money off of his scheme.

It wasnt because his investment was declining...

LMFAO

cubzwin said:

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Stocks do not have intrinsic value. That's why there is a buyer for every seller except during a flash crash. What will your Amazon and Google stock be worth if someone explodes a nuclear bomb over New York wipes out the data?

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They will be worth 1/694.8m of Google, each.

Just like they are now.

Do you think the NYSE is just a centralized computer? Like The Dark Knight Rises? Bane is going to come in and take it all?

It's funny seeing this thread here as gambling with cryptocurrencies is currently my most obsessive hobby, having surpassed Cal fball/bball. If any of you are interested in sharing portfolio notes/investment ideas, shoot me a PM. I mainly dabble in the lesser known stuff.

LunchTime said:

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edwinbear said:

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calbear93 said:

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dajo9 said:

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Ocean front property in Carmel can generate quite a bit of cash flow as a rental. Of your example it was pretty much gold, cash, and bitcoin that produce no cash flow.

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That was what I was going to write. When I get a written presentation for an investment property, there is an income and cash flow modeling at the heart of the presentation. Of course, real property for personal use has a sentimental aspect, including where one wants to live, the community one wants to join, the educational system, safety, etc., that doesn't really translate to a bitcoin.

Even though at least gold is tangible, I understand the comparison. What I will say is that gold has been historically one of the worst investment possible.

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I'd nominate the US dollar as being, historically, one of the worst investments possible haha.

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If we are just talking about currency and currency substitutes (like the Pound, Euro, gold or bitcoin), the US doller has been pretty damn solid against the other options.

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True. You and I agree completely. I would still argue that no one invests in US dollar as a standalone asset. They invest in currency hedging and exchange rates, but not the dollar in itself. The dollar as an absolute investment will guarantee to have a negative return as a result of inflation. The only reason people keep cash is for liquidity and lack of investment options and not as an investment hoping for a return.

burritos said:

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dajo9 said:

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cubzwin said:

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dago,you are being ridiculous. If you bought a house in Carmel now for 4 million dollars and you put 10% down and charged market rent your cash flow after paying mortgage interest and property taxes would be very, very negative. Trust me on this. I own a house there and rent it. If you have 4 million in cash to buy the house then you could get positive cash flow from rent but given the time value of 4 million you would still be making a loser investment unless you think the property will appreciate. In that case you are betting on the unknowable which is the same as buying bitcoin.

As for the other examples--fine art, collectible cars, rare stamps or coins, baseball cards--they are all assets that have value defined by the market and historically they have appreciated but they have no cash flow. And their value is what someone else will pay for them.

Stocks do not have intrinsic value. That's why there is a buyer for every seller except during a flash crash. What will your Amazon and Google stock be worth if someone explodes a nuclear bomb over New York wipes out the data?

Only one thing has intrinsic value. Life.

---

I'm just making the point about what type of investment bitcoin is. It generates no cash flow. You have to hope somebody pays more for it later.

In regards to Carmel real estate, not every investment that generates cash flow is a good investment. But Carmel real estate still generates cash flow, unlike bitcoin, gold, art, etc.

We are currently in a euphoric bull market. I don't know how long it will last but I suspect when we are in the next cycle bitcoin will be remembered similar to .com's and subprime mortgages. But I have no crystal ball, I could be wrong.

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The thing about Bitcoin is that when it spikes, it's because people are buying more. Often times when stocks spike, yes people are buying but more often it's because of short squeezes, which I don't think happens with Bitcoin.

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It is not a question of buying more or buying less. It is a question of volume and demand outpacing supply. Unless there is a secondary or follow-on offering and other than with respect to issuances of reserved stock under an equity incentive plan, there will be the same number of shares issued and, short of a stock buyback by the issuer, outstanding. Short squeeze isn't what drives demand. The multiple and valuation drives demand. If the stock price is based on a certain multiple based on projected EBIT or DCF, and the most recent earnings, projections, or events change that financials or the reasons for the multiple (e.g., Amazon has a high multiple because of their expect growth as opposed to GM's multiple), there will be more people wanting to sell, putting pressure on the stock. Stock market isn't just gambling and squeezing shorts.

FrankBear21 said:

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I'm in Ethereum and Litecoin, but I have been focusing on Blockchain technology rather than crypto currency.

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I bought bitcoin to ride the wave up. I bought at $3,500 and sold at $7,300. Now that I have the house's money I am in Ethereum primarily. I think it is a better platform. Ultimately you have to decide if you want to be in Bitcoin (like Amazon) or Ethereum or others (Alibaba).

Amazon is the flashy one that is making the most bang for the investment buck but I feel as if Ethereum is a better technology.

Just my 2 cents

If you want $10 of free bitcoin just message me. I'll send you a link.

= said:

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The thing about Bitcoin is that when it spikes, it's because people are buying more. Often times when stocks spike, yes people are buying but more often it's because of short squeezes, which I don't think happens with Bitcoin.

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I don't think you can short squeeze bitcoin but I think the spikes are from computer algorithms and program buying that some of these websites have.

dajo9 said:

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cubzwin said:

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dago,you are being ridiculous. If you bought a house in Carmel now for 4 million dollars and you put 10% down and charged market rent your cash flow after paying mortgage interest and property taxes would be very, very negative. Trust me on this. I own a house there and rent it. If you have 4 million in cash to buy the house then you could get positive cash flow from rent but given the time value of 4 million you would still be making a loser investment unless you think the property will appreciate. In that case you are betting on the unknowable which is the same as buying bitcoin.

As for the other examples--fine art, collectible cars, rare stamps or coins, baseball cards--they are all assets that have value defined by the market and historically they have appreciated but they have no cash flow. And their value is what someone else will pay for them.

Stocks do not have intrinsic value. That's why there is a buyer for every seller except during a flash crash. What will your Amazon and Google stock be worth if someone explodes a nuclear bomb over New York wipes out the data?

Only one thing has intrinsic value. Life.

---

I'm just making the point about what type of investment bitcoin is. It generates no cash flow. You have to hope somebody pays more for it later.

In regards to Carmel real estate, not every investment that generates cash flow is a good investment. But Carmel real estate still generates cash flow, unlike bitcoin, gold, art, etc.

We are currently in a euphoric bull market. I don't know how long it will last but I suspect when we are in the next cycle bitcoin will be remembered similar to .com's and subprime mortgages. But I have no crystal ball, I could be wrong.

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This assumes that there's a requirement or necessity to "cash out" back into a fiat currency. I think what many proponents of Bitcoin would say, however, is that by the time the buying power of Bitcoin can be measured in the tens or hundreds of thousands of dollars, there's no need to cash out because it'd already be widespread enough that you'd be able to transact with it directly.

Also, unlike stocks, you can actually own your own bitcoin or ether in a private, secure wallet. People think they own stocks but they just an an "IOU" from their broker.

https://www.americanbanker.com/news/you-dont-really-own-your-securities-can-blockchains-fix-that


If your broker goes bankrupt (hello Lehman Bros.) you could be left with nothing but worthless IOUs. Cryptocurrency is an alternate asset class. Gold is also an alternate asset class. Many of the gold to crypto comparisons are spurious but it is correct to say they are both alternative assets whose value does not correlate with the S&P 500.

cubzwin said:

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Also, unlike stocks, you can actually own your own bitcoin or ether in a private, secure wallet. People think they own stocks but they just an an "IOU" from their broker.

https://www.americanbanker.com/news/you-dont-really-own-your-securities-can-blockchains-fix-that


If your broker goes bankrupt (hello Lehman Bros.) you could be left with nothing but worthless IOUs. Cryptocurrency is an alternate asset class. Gold is also an alternate asset class. Many of the gold to crypto comparisons are spurious but it is correct to say they are both alternative assets whose value does not correlate with the S&P 500.

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Customer assets are legally required to be held separately from the investment firm assets. So, when Lehman went bankrupt it's customers were fine.

Most "customers were fine" but not all of them. Owners of Lehman ETN's were screwed. Also, there is a 3 day settlement when you purchase equities. If you bought 1000 shares of Apple less than 72 hours before the Lehman bankruptcy then money was deducted from your bank account but you never became a stock holder of record--you became a creditor of a bankrupt financial institution. Luckily, or maybe because of Paulson's skilled management, only Lehman Brothers went bankrupt. Stock prices collapsed but after about 3 years they started to come back. If Bank of America and Bear Stearns and other large investment banks had collapsed along with Lehman the domino effect would have been even more devastating and long lived.

All this history aside, it makes sense to have assets that are not directly correlated to the S & P 500. Cryptocurrency and precious metals have no cash flow but they provide portfolio diversification. I appreciate that you don't have gold or crypto or other "non-cash flow assets" in your retirement portfolio and that has been a very profitable strategy for the past 8 years (especially since the election of Trump) but in the same way it is a wise investment decision to not spend $1400 a month for health insurance for you and your family as long as everyone stays healthy.

cubzwin said:

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Most "customers were fine" but not all of them. Owners of Lehman ETN's were screwed. Also, there is a 3 day settlement when you purchase equities. If you bought 1000 shares of Apple less than 72 hours before the Lehman bankruptcy then money was deducted from your bank account but you never became a stock holder of record--you became a creditor of a bankrupt financial institution. Luckily, or maybe because of Paulson's skilled management, only Lehman Brothers went bankrupt. Stock prices collapsed but after about 3 years they started to come back. If Bank of America and Bear Stearns and other large investment banks had collapsed along with Lehman the domino effect would have been even more devastating and long lived.

All this history aside, it makes sense to have assets that are not directly correlated to the S & P 500. Cryptocurrency and precious metals have no cash flow but they provide portfolio diversification. I appreciate that you don't have gold or crypto or other "non-cash flow assets" in your retirement portfolio and that has been a very profitable strategy for the past 8 years (especially since the election of Trump) but in the same way it is a wise investment decision to not spend $1400 a month for health insurance for you and your family as long as everyone stays healthy.

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Yes, if you bought an asset issued by Lehman Brothers you were in trouble, just as any investor is in trouble if they buy an asset issued by an organization that goes bankrupt.

As for your settlement issue, can you provide a source for that - it's the first I've heard of that being an issue.

As for your 2nd paragraph you erroneously make the assumption that all cash flow assets are correlated to the S&P 500. I'm a big believer in diversification. It can be achieved without gold and crypto.

Characterizations of why bitcoin is going up may be true/just psychological rationalizations/ or a little bit of both. I suppose it doesn't matter the reasoning why it is going up. Good for people who have made money on it. People like me who poo poo it(either blatantly/rhetorically/intellectually) probably deep down are just jealous. Ok I don't know about other people, I'm jealous if you've made 6 figures plus on a four digit investment. And if you're bragging about it here, then yes I feel FOMO'd.

If you're not sold on Bitcoin you may want to look into some Bitcoin one off plays such as Overstock (OSTK) and Square (SQ)

They have had phenomenal years as well.

Brainsmile said:

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If you're not sold on Bitcoin you may want to look into some Bitcoin one off plays such as Overstock (OSTK) and Square (SQ)

They have had phenomenal years as well.

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Honestly, I'd like to use my mad money account for a marijuana etf. None exist in the USA that I know of though Dec. 26 there's supposed to be one. There is one on the Toronto exchange HMMI.

https://hacked.com/new-marijuana-etf-hits-new-york-stock-exchange/

Buying stock in CME is another way to make some money. They are going to offer futures trading on BTC so you can use leverage and buy options (regardless of whether you think the price will rise or fall). The price of CME has risen steadily since the option trading plans announced.

Frankly, i think the fact that Overstock accepts bitcoin has been priced into the stock already. Square and Box look like good companies to invest in.

Bitcoin just passed $9,000

http://news.berkeley.edu/2017/11/29/blockchain-lab-receives-campus-first-bitcoin-donation/

"The Blockchain Lab at the UC Berkeley received the campus's first ever donation in Bitcoin, worth more than $50,000."