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Vanguard Founder Jack Bogle Says ‘Avoid Bitcoin Like the Plague’

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Re: Vanguard Founder Jack Bogle Says ‘Avoid Bitcoin Like the Plague’

#111

Post by landryraccoon »

dsacco wrote: post #95
slg wrote: post #30

Earlier quoted context omitted.

Gold is certainly the ideal model for something like Bitcoin but in terms of projectable value gold has time on its side. I will happily invest in Bitcoin when its history as a store of value and a medium of exchange is measured in millennia.

> I will happily invest in Bitcoin when its history as a store of value and a medium of exchange is measured in millennia. So is USD out for you too, then? It's not even 300 years old yet. If you mean fiat currency in general, that's also out, as we haven't had that for multiple millennia yet either.

People invest in USD? What does that mean? Currency speculators might arbitrage USD if they think the exchange rate is inaccurate but nobody holds USD because they think the value will go up long term. Holding fiat currency means you lose money constantly due to inflation.

Re: Vanguard Founder Jack Bogle Says ‘Avoid Bitcoin Like the Plague’

#112

Post by makomk »

berberous wrote: post #26
non_sequitur wrote: post #11

“Bitcoin has no underlying rate of return,” said Bogle, 88, who started the first index fund in 1976. “You know bonds have an interest coupon, stocks have earnings and dividends, gold has nothing. There is nothing to support bitcoin except the hope that you will sell it to someone for more than you paid for it.” Didnt quite understand this quote - is he down on gold too?

Here is Warren Buffet's similar argument against gold from his 2011 annual investor letter [0]. The argument also applies to Bitcoin and other assets that are driven more by speculation than productive income streams: "The second major category of investments involves assets that will never produce anything, but that are purchased in the buyer’s hope that someone else – who also knows that the assets will be forever…

The thing about, say, cropland is that you can't take it with you. If the area where you own that cropland suffers from political instability or a government that decides to confiscate it for whatever reason, that land investment is effectively worthless. I believe it was fairly common for some religious and ethnic minority groups to keep some of their wealth in gold exactly because they could carry that with them if they were forced to flee.

Re: Vanguard Founder Jack Bogle Says ‘Avoid Bitcoin Like the Plague’

#113

Post by longerthoughts »

SilasX wrote: post #88
non_sequitur wrote: post #11

“Bitcoin has no underlying rate of return,” said Bogle, 88, who started the first index fund in 1976. “You know bonds have an interest coupon, stocks have earnings and dividends, gold has nothing. There is nothing to support bitcoin except the hope that you will sell it to someone for more than you paid for it.” Didnt quite understand this quote - is he down on gold too?

Bogle advocates buying broad stock and bond indexes[1], so yes, he's down on gold too. But that doesn't stop Vanguard from offering a precious metals and mining fund [2] or actively managed funds[3]. [1] https://www.npr.org/2015/10/17/436993646/three-investment-gu... [2] https://personal.vanguard.com/us/funds/snapshot?FundIntExt=I... [3] https://investor.vanguard.com/mutual-funds/actively-managed

At the end of the day asset managers' offerings will reflect investor demand even if it disagrees with the personal outlook of firm leadership. Also worth noting that Bogle has been retired for a while and likely has little influence over Vanguard's product offerings.

Re: Vanguard Founder Jack Bogle Says ‘Avoid Bitcoin Like the Plague’

#114

Post by bpicolo »

rebuilder wrote: post #91
bpicolo wrote: post #65

Earlier quoted context omitted.

> he has no idea what Bitcoin is Are you insane? He built Vanguard, the most successful investment product in history. They have 3 trillion dollars of assets managed and literally invented the retail index fund. You think he doesn't follow every aspect of the financial markets?

The Bitcoin bet is that traditional financial markets have it wrong, or don't serve the market Bitcoin serves. You judge how likely that is to be true.

And yet that doesn't factor into the discussion. He built Vanguard on the entire concept of "traditional finance has it wrong". He's an insanely smart dude. I'm confident he understands the market dynamics of bitcoin more than the average person gambling on bitcoin.

Re: Vanguard Founder Jack Bogle Says ‘Avoid Bitcoin Like the Plague’

#115

Post by hndamien »

rifung wrote: post #93
non_sequitur wrote: post #11

“Bitcoin has no underlying rate of return,” said Bogle, 88, who started the first index fund in 1976. “You know bonds have an interest coupon, stocks have earnings and dividends, gold has nothing. There is nothing to support bitcoin except the hope that you will sell it to someone for more than you paid for it.” Didnt quite understand this quote - is he down on gold too?

Yes because he believes you should invest in things which inherently generate value. Note that gold has inherent value in its use for conductivity or jewelry, but it doesn't create any more, which is the same at bitcoin. In other words, I think he would argue that there's nothing "wrong" with buying gold, but you buy gold as speculation and not as an investment.

It also used to have value as a medium of exchange. Not so much these days.

Re: Vanguard Founder Jack Bogle Says ‘Avoid Bitcoin Like the Plague’

#116

Post by chiaro »

AndrewBissell wrote: post #103
chiaro wrote: post #85

Earlier quoted context omitted.

Nah. Banks and big financial companies interested in the blockchain will spin up their own version without tying it to the unstable mess of bitcoin. e.g. https://ripple.com/ And people do by treasury bonds for their rate of return, when the investment must be as riskless as possible.

There's no point to a decentralized database like a blockchain when you run it from a handful of centralized chokepoints which are easily censored or pressured by political actors. You may as well just use a SQL database that everyone syncs up periodically. Bankcoins like Ripple are pointless. People buy treasury bills when they care more about return OF capital than return ON capital. Bitcoin and gold are also solid…

And yet, banks and financial institutions are vastly preferring blockchains that have been uniquely developed for their needs. There's very little appeal in simply accepting the transaction costs and times in bitcoin when you can spin up a version with whatever spec and interoperability you desire.

If by 'return of capital' you mean a propensity for an asset to retain its value, bitcoin is utterly inappropriate. Even gold is far too volatile and is only rationalised on those grounds against (very) long tail risk.

Re: Vanguard Founder Jack Bogle Says ‘Avoid Bitcoin Like the Plague’

#117

Post by lostsock »

IncRnd wrote: post #81
yters wrote: post #66

Earlier quoted context omitted.

Bitcoin is like a fiat currency without a fiat.

Bitcoin is unlike a currency in that it is difficult to have a transaction, today, using bitcoin. That will hopefully change, but that is how things are today.

How is it difficult to have a transaction?

Re: Vanguard Founder Jack Bogle Says ‘Avoid Bitcoin Like the Plague’

#118

Post by valarauca1 »

AndrewBissell wrote: post #103
chiaro wrote: post #85

Earlier quoted context omitted.

Nah. Banks and big financial companies interested in the blockchain will spin up their own version without tying it to the unstable mess of bitcoin. e.g. https://ripple.com/ And people do by treasury bonds for their rate of return, when the investment must be as riskless as possible.

There's no point to a decentralized database like a blockchain when you run it from a handful of centralized chokepoints which are easily censored or pressured by political actors. You may as well just use a SQL database that everyone syncs up periodically. Bankcoins like Ripple are pointless. People buy treasury bills when they care more about return OF capital than return ON capital. Bitcoin and gold are also solid…

I'd be tempted to agree with you if companies like Axoni aren't getting funded by many large banks, while Bank of America has file 20+ block chain related patents.

For -no interest- $20mil in funding and an industry work group seem like -interest-

Re: Vanguard Founder Jack Bogle Says ‘Avoid Bitcoin Like the Plague’

#119

Post by makomk »

econner wrote: post #35
bazizbaziz wrote: post #6

"There is nothing to support bitcoin except the hope that you will sell it to someone for more than you paid for it.” Genuinely asking, isn't this the plan for many people? How is bitcoin different than other commodities or property in this regard? Would Bogle say the same thing about those investments?

Yes, there's really nothing that gives Bitcoin value beyond new investors being willing to pay more for it than previous investors. Most people don't transact using it and the network is far too slow to support that use case anyway. It is a "store of value" that loses or gains half its value every few months. The community is torn with 3 separate forks & some of the earliest Bitcoiners have gone all in on Bitcoin Cas…

Bitcoin is processing roughly an order of magnitude more transactions than Bitcoin Cash right now. Though the fact that Bitcoin Cash is only running at about 1/100th of its nominal capacity hasn't stopped the community cheering for another hard fork to increase that capacity limit further, presumably because its price is driven by speculation about how much it could do if anyone actually cared about it.

Re: Vanguard Founder Jack Bogle Says ‘Avoid Bitcoin Like the Plague’

#120

Post by lostsock »

jorblumesea wrote: post #99

The biggest red flag is it's clear the exchanges don't have the liquidity for everyone to cash out. Since there are no banks to provide credit lines it's entirely dependent on people getting into the market to provide the fiat currency to cash out. A run on these exchanges will destroy the value of bitcoins and cause a panic.

How is it clear that the exchanges don't have liquidity?
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