Crypto

[Luke]

Anyone here onboard? I get a lot of pro-crypto stuff on my Twitter timeline everyday, but don't often hear dissenting voices. Aside from the one in my head exclaiming nothing's real.

[Fat Cat]

I have no answers but I'm interested in the topic as well.

[Grandpa's Spells]

Caveat: I strongly believe people vastly overrate their ability to pick individual assets over time because the data shows they underperform compared to index funds.

I had early exposure to bitcoin from the poker community as Bitcoin basically hits all gambler receptors. A few of those guys are insanely wealthy now and are convinced they are investing geniuses. A few years ago, I was talking to a not-absurdly-wealthy friend who probably had 90%+ of his net worth in BTC right after the $17k>>>>$3k drop, joking about the "I was told there would be lambos" meme, and of course he's up >10x since then.

I'm happy for friends, but never bought because it's one of those things that is so obviously speculation while people use hand-wavy logic to say it's not. Knowing if a single asset is over or undervalued takes quite a bit of sophistication, and the biggest proponents are not that. BTC is used for speculation, moving money unseen, and crime, in that order. It's a pain to use in actual transactions because the volatility is such that when you get paid your money may drop 80% in value overnight. The energy required to mine it is a problem and would be a huge one if it were to scale up. Even if you think crypto/blockchain is the future, why BTC specifically is the right horse seems unexplained.

Worse, BTC is predominately held by just a few people, and is strongly suspected to have it's price strategically manipulated by one of the largest holders, which creates a lot of problems for smaller would-be buyers. The history of crimes/scams/copycats also make this look pretty hard to examine.

Finally, the really sophisticated investors who not-coincidentally all took a pass during the glory day of Madoff, Theranos, etc., all pass on crypto.

I think somebody who has taken a responsible approach to their retirement and is speculating with 5-10% in crypto/Tesla/etc. is probably not making a huge blunder but the odds of BTC going the way of the Danish tulip seem fairly high.

[nafod]

Zero doubt I’d be one of the guys who forgot his password.

[Fat Cat]

Bitcoin basically hits all gambler receptors.

I LOL'd cuz it's so true.

[newguy]

You have to look at the difference between investing and speculating, growing wealth for the long term vs short term, and how much time you want to study this.

Do not gamble/invest with more money than you can afford to lose.

Robinhood is a great little app and you can get fractional shares. You will not need 30,000 to go in on bit coin.

Bitcoin was hovering between 9 and 10 earlier in the year. I went in a few times at 50 dollars each time it dropped below 9. I think four times total. (200 invested average cost of 9655) Bitcoin has given me a 270% return at 580 profit.

Should I cash out? Should I hold?

I don't know. I'm not good enough to predict all this.

But in the end I don't really care because I didn't pull 10,000 out of my house to invest in it. I didn't use my savings account.

Now.....do I wish I had? Maybe. Maybe not.

But I prioritize stress free living and trying to protect myself against disasters. If bitcoin crashes to zero it doesn't change my life. I have set point where i know I will buy again.

I have my long term savings, money I will need, money I care about consistent growth, etc. in different venues.

But like anything, if you want to do it start reading, start studying, look at patterns, etc.

[Sangoma]

As with any investment or trade there needs to be a plan consisting of several components.

Entry. When do you decide to buy - a stock, a future, ETF, cryptocurrency etc.? It could be fundamental or technical. Fundamental: Australian Reserve Bank raises interest rates, and it becomes more attractive to keep your money in Australia than in USA because you earn more interest. You buy Australian dollar because it increases in value. Or some company publishes a report that makes its shares more attractive. Value investing falls under this category. I have no idea how to value Bitcoin. Technical - the price starts going up, reflecting the sentiment of big money. One very robust system of trading stocks buys when the price breaks through the high of the last 52 weeks and sells when it retraces 20% from its peak (couple of more conditions, but that's the gist of it). It beats the index considerably.

Stops. Your trade goes against you, when do you accept you were wrong and get out? 5, 10 or 20% is reasonable for unleveraged trades, but you must know what you are doing when using leverage. There is a lot of math you have to understand.

Exits. When do you get out if you are right? Trailing stop - decline from the max profit by predetermined percentage, or trailing stop is one way. Traders often use profit objective connected with the risk. Could be time: if the stock is not profitable for some time you get out and put your money elsewhere.

The plan has to have a positive mathematical expectancy. Most "investors" buy on a whim, on the advice of an expert or a friend or emotionally, out of fear of missing out. Most of them freeze when their investment goes against their expectations.

It's not hard to beat the index, and there is a lot of academic research everyone can use for their purposes.

[Sangoma]

In terms of Bitcoin I think it is reasonable to wait for a correction, given the rate of the recent increase.

Below is the Bitcoin/US Dollar price chart with 50 day moving average, from April 2017. Historically you can see how steep increases in price or moving average eventually stalled or were followed by a decline. That's reversion to the mean. Also, when the price gets too far away from moving average it tends to come back to it. Chart from https://www.tradingview.com/chart/?symb ... P%3ABTCUSD

My view - either a correction will happen or the price will stall for a while. If anything, I would take a small short position in Bitcoin right now.

[Luke]

Thanks for the responses!

I'm with newguy and Sango in terms of what the fuck do you do when it's going gang-busters? Thanks heaps, Spells, for outlining it like that. I'm definitely not good enough to predict either.

It's really, really hard for me not to get into the cynical - borderline conspiracy theory side - of it all when considering there could be Silicon Valley bros operating the switches (the Winkelvoss twins are insufferable). And the point about those high-level investors dodging it is well taken. I think I'm going to remember that for awhile. If world governments eventually want to use the tech to bring everyone on board for digital currency, yeah why would it be Bitcoin?

It's steering the conversation off a bit, but since Robinhood was mentioned, I've been considering a setup like that. I've (sadly) inherited a bit of money lately and am thinking of next steps. It would be a very, very fractional part of a first step - I want to learn more about investing - but something sensible and that wouldn't suck much in the way of gains out in fees would be ideal, obviously. Or would it make more sense just to look at formally putting something in S&P?

Sangoma, you're in my part of the world, does your medical degree allow you to dole out financial advice too? Even if not, play on.

[Fat Cat]

Or would it make more sense just to look at formally putting something in S&P?

I'm not giving any advice, but I have done--by my modest standards--very well with standard index funds as my main thing, and a mixture of real estate and one or two targeted investments as more aggressive plays. My one rule is to never play a game I don't understand, and cryptocurrency is something I do not understand.

EDIT: Actually, the more I think of it, real estate has been the biggest moneymaker for me.

[newguy]

Thanks for the responses!

I'm with newguy and Sango in terms of what the fuck do you do when it's going gang-busters? Thanks heaps, Spells, for outlining it like that. I'm definitely not good enough to predict either.

It's really, really hard for me not to get into the cynical - borderline conspiracy theory side - of it all when considering there could be Silicon Valley bros operating the switches (the Winkelvoss twins are insufferable). And the point about those high-level investors dodging it is well taken. I think I'm going to remember that for awhile. If world governments eventually want to use the tech to bring everyone on board for digital currency, yeah why would it be Bitcoin?

It's steering the conversation off a bit, but since Robinhood was mentioned, I've been considering a setup like that. I've (sadly) inherited a bit of money lately and am thinking of next steps. It would be a very, very fractional part of a first step - I want to learn more about investing - but something sensible and that wouldn't suck much in the way of gains out in fees would be ideal, obviously. Or would it make more sense just to look at formally putting something in S&P?

Sangoma, you're in my part of the world, does your medical degree allow you to dole out financial advice too? Even if not, play on.

First off, you have to know that yes...all the cynical borderline consipiracy theories are true. At least to an extent. The market is manipulated, there are frauds, potential frauds, books are cooked, etc. etc. etc.

None of it matters to you. You are not a hedgefund and you are not going to set things up so that if the market crashes tonight you lose your house and have to prostitute yourself out on onlyfans.

That's the first order of business. Bitcoin could be an absolute sham. I don't care. I either cash out and pocket 600 dollars or it crashes back down to 10 and I don't make dime. Or it crashes to zero and I lose a very insignificant investment.

I went in a little on zoom back in March thinking...."I bet a lot of people are going to be using it." It hit a high of 500 a share and I thought "should I sell now? Nah. I think it will hit 600." It didn't. At all. Oh well. Again....none of this is money that if it all disappeared tomorrow changes my life AT ALL.

The money like that, you have more freedom with. I have big picture knowledge and that is good enough for what I am doing there. This is speculation at it's finest. And you can do very well speculating just by timing the market and not really worrying about much. When things are down, buy. When they go up, sell. None of my "March" speculations have failed me. Well Apple is kind of pissing me off...... I could cash out now, pocket a decent little amount. And then the next time the market crashes jump back in again.

Obviously if the money I put in was in the tens of thousands the profits would be bigger. But that would be amounts it would hurt to lose.

IF this is money you want to grow...money you are going to be depending on later, you need to take a much more nuanced view of it. That is a whole different game. That's investment. You need some knowledge, faith, and patience. Make good decisions, ride it out. Right now 100% of my "investment money" (not pension, not savings) is in stock index funds through the program available at my job. If the market crashes, I'm fine. I have enough time to wait it out. In ten years....not as much time to wait it out. I'll start making adjustments then. You definitely want to look into IRAs, etc. for that type of investment, depending on how much money you are talking about with the inheritance.

If it is money you actively want to use money/stock to make money, then that is trading and requires a whole different level of time, commitment and study.

[Sangoma]

Luke, let's say there more people giving investment advice than successful investors. One of the reasons I refrain from doing that. I reckon the bulk of the investment should be something low risk. Property in Australia is a good one, especially in Sydney. Index funds is another one, at least if you go bust you are not alone! But then again, there are nuances everywhere. There are lots of mom and dad property investors in Oz, but few of them are really successful. If it was as simple as buying a unit and selling it at a huge profit couple of years later there would be many more Aston Martins on the streets.

The best thing is to educate yourself as much as possible about investing/trading. The most important part of managing money is that you have to be comfortable with the system you choose. Some guys are happy to buy value and see the price of the stock go down and stay there for years. My head is better geared for short term/swing/algorithmic trading. I also like property. You may like the logic of fundamentals or flipping units off plan. Or trading options, who knows.

I can give you titles of investment books I like, but you have to figure out your method yourself.

Edit. Risk management is by far the most important aspect. That's what Newguy is talking about. I heard plenty of stories where people lost big money in the stock market. The question always is: did you put everything in one speculative stock? Did it collapse overnight? What did you do when it dropped 10%? 20%? 50%? Sitting watching it melt, hoping for it to come back? "You haven't lost until you sold" is one of the silliest slogans in the market. So diversification, position sizing, proper use of leverage if you intend to use one, stops - all this is to achieve the primary goal, to protect the capital.

[Bram]

About 8-9 years ago, me and my roommates enrolled in an entrepreneur class via Stanford.

They recommended you buy one bitcoin (going at 500$ then). One roommate had just read Warren Buffet's value investing book and argued it had no inherent value. Now he's a multi-millionaire, and crypto expert, who's created his own cryptocurrency. The other roommate I heard had 13 million$+ back when bitcoin was around 14K. And Brammy bought nothing :)

Gambling for sure, just like much of the market. Sometimes it pays off.

[Sangoma]

Making money is not different from training: consistency trumps everything else. It is easier to make money betting with the odds as opposed to trying to beat them.

[Shafpocalypse Now]

One thing

Are you selling bitcoin for dollars. Or dollars for bitcoin?

Bitcoin is still basically worthless in, say, a shithole country

[newguy]

Luke, let's say there more people giving investment advice than successful investors. One of the reasons I refrain from doing that. I reckon the bulk of the investment should be something low risk. Property in Australia is a good one, especially in Sydney. Index funds is another one, at least if you go bust you are not alone! But then again, there are nuances everywhere. There are lots of mom and dad property investors in Oz, but few of them are really successful. If it was as simple as buying a unit and selling it at a huge profit couple of years later there would be many more Aston Martins on the streets.

The best thing is to educate yourself as much as possible about investing/trading. The most important part of managing money is that you have to be comfortable with the system you choose. Some guys are happy to buy value and see the price of the stock go down and stay there for years. My head is better geared for short term/swing/algorithmic trading. I also like property. You may like the logic of fundamentals or flipping units off plan. Or trading options, who knows.

I can give you titles of investment books I like, but you have to figure out your method yourself.

Edit. Risk management is by far the most important aspect. That's what Newguy is talking about. I heard plenty of stories where people lost big money in the stock market. The question always is: did you put everything in one speculative stock? Did it collapse overnight? What did you do when it dropped 10%? 20%? 50%? Sitting watching it melt, hoping for it to come back? "You haven't lost until you sold" is one of the silliest slogans in the market. So diversification, position sizing, proper use of leverage if you intend to use one, stops - all this is to achieve the primary goal, to protect the capital.

Can you share the titles you have found worthwhile? Those that have helped you devlope your short term/swing trading strategies?

[Sangoma]

To be honest there have been plenty, many of them pretty technical. The most comprehensive is Perry Kaufmann's Trading Systems and Methods.

The least technical book is The Reminiscences of the Stock Operator by Edwin Lefevre. Which is the professional biography of Jesse Livermore, one of the legendary Wall Street traders. It is considered a must read for anyone interested in technical trading.

Free audio version: https://www.youtube.com/playlist?list=P ... 3pUYGEZYmY
There are free pdfs on the Net as well.

Otherwise any book on technical analysis of the stock market is a good start.

I also like Inside the Black Box by Rishi Narang. It's about quantitative trading - pop technical read.

[newguy]

To be honest there have been plenty, many of them pretty technical. The most comprehensive is Perry Kaufmann's Trading Systems and Methods.

The least technical book is The Reminiscences of the Stock Operator by Edwin Lefevre. Which is the professional biography of Jesse Livermore, one of the legendary Wall Street traders. It is considered a must read for anyone interested in technical trading.

Free audio version: https://www.youtube.com/playlist?list=P ... 3pUYGEZYmY
There are free pdfs on the Net as well.

Otherwise any book on technical analysis of the stock market is a good start.

I also like Inside the Black Box by Rishi Narang. It's about quantitative trading - pop technical read.

Thank you for the recs good sir.

I am going to push you a bit more if you don't mind.

Someone who is not stupid, and seriously wants to learn how to swing trade to make money..... are these your three you would give them to start?

[Sangoma]

Check your pm.

[Luke]

Wow - sorry been away from the forums for a bit:

I find Australia's preoccupation with property and house ownership annoying. It was noted at a work seminar with international people how much of an obsession we have with house prices vs. the rest of the world.

My attitude I think is fuelled by:

- A contempt for people in the industry - real estate agents to brokers - I see so much money going to them for so little talent/work.

- A disinterest in renovating or building places. I can see every little thing being a massive cost.

Also, at 36 - I truly wonder if I've got enough time to pay off a Sydney mortgage.

Can't beat them, join 'em I guess though? It seems the government is cucked by the market at all times and will never let it go under?

Thanks for the trading advise, I have a lot to learn. But then this Game Stop thing aye. Hahahah.