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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’

#181

Post by anthonybsd »

ohhhlol wrote: post #52
jozzas wrote: post #29

Bitcoin is becoming a value store. With slow transaction confirmation and high fees, what are the real-world applications for Bitcoin supposed to be now? And for those applications, are there not other cryptocurrencies more specifically targeted at being better at that application?

> With slow transaction confirmation and high fees This is being solved, see https://en.wikipedia.org/wiki/Lightning_Network

Sigh, not this again. I have yet to see a working example of "off the chain" processing that is not plagued by all of the ills that bitcoin solves.

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

#182

Post by candiodari »

chiaro wrote: post #176
candiodari wrote: post #170

Earlier quoted context omitted.

Ah come on. We both know that the basic claims about gold are true: 1) Gold returns, over the very long term, are roughly in line with S&P500 returns (but ... we're talking decades, as in plural). 2) in the short term Gold returns are essentially zero. With both the good and bad that comes with: almost no volatility, and when there is volatility, it's sudden large jumps up. The one that isn't well known: 3) Most gove…

1) is hilariously off base. S&P500 has averaged about 10% nominal return, annual, since 1928. Gold returned a little under 5% nominal over the same period.

S&P500 has only 10% return if you ignore a number of things

a) your pick of the moment. You might be tempted to pick today as a neutral point in time. Of course, it's not. The S&P500 is at a complete all-time-high. It's literally never done this well, ever. Gold is not doing so well. In fact, gold has done quite poorly for about 5 years now, and perhaps a bit better over the last year (despite central bank interventions to keep it down I might add). Comparisons at this time, will of course be skewed towards the S&P returning more. In 2012 Gold would have been the outperforming asset, and trust me on this one: it will be again. When ? Good question.

Which will be the best investment for the next 10 years. The asset that's never ever been up this high, or the asset that has systematically kept it's value for 7000 (not a typo) years, but has been going down quite a bit for the last 5 years ? Much more difficult question isn't it ?

I think it's quite a safe bet to say that gold will, firstly, have much worse returns than the S&P500 over the next month or two, and much better returns than the S&P500 over the next 2-5 years.

When it comes right down to it, it's effectively a bet on government policy. If the FED restarts Yellen's "competitive devaluation" craze of 2011 (which is definitely a possibility), gold will have an amazing performance. Again, not going to happen over the next 2 months. Very likely going to happen within the next 5 years.

b) transaction costs from buying and selling when the index gets modified, which are not counted in the index (they are counted in things like SPY, which does indeed systematically underperform the index).

c) (closely related to b) the fact that quite a few stocks got thrown out when they either went bankrupt or the stocks dropped enough. This is not reflected in the index, but of course anyone actually invested would get dented in the process, more so than for transaction costs.

https://www.investopedia.com/articles/investing/022416/5-fam...

The trouble is there is no true answer to how much the S&P500 returned over the past century to an actual investor. One thing's for sure: it would be less than the index, and (especially in the earlier part of the century) significantly so.

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

#183

Post by [deleted] »

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.

[deleted]

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

#184

Post by rhino369 »

pas wrote: post #179
rhino369 wrote: post #140

Earlier quoted context omitted.

Nobody keeps bitcoin to store value. They keep it because they think it will appreciate in value. Why? Because of has went up in the past. If people lose faith that it will keep going up, then it stops holding value. It’s pure speculation based on the greater fool theory.

A lot of people do use it to store value, its deflatory nature makes it ideal for that.

Price is based on supply and demand. It's only deflationary if demand stays the same. But if people stop believing bitcoin is going to MOON, then demand can/will fall.

There are a limited number of beanie babies too.

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

#185

Post by longerthoughts »

gfodor wrote: post #174
siglesias wrote: post #51

Earlier quoted context omitted.

This is slightly specious. There is an expectation that AMZN or GOOG will eventually issue dividends or repurchase shares, and there's noting fundamentally preventing them from doing so. There's no way to form a valuation otherwise.

"Expectation" means that there is some probability If you knew with 100% there will never be a buyback or dividend by AMZN while you are a holder of their stock, arguably you are making the same trade as someone buying bitcoin or gold: expecting someone else to come along (who perhaps expects to have a longer lifespan) to pay you more for the stock than you did. Note: I am not arguing that buying AMZN is a bad idea,…

>arguably you are making the same trade as someone buying bitcoin or gold

I think the difference here is that people can intuitively justify changes in the value of a stock regardless of buybacks and dividends because company performance is a tangible, measurable factor (even if only by proxy of flawed but useful metrics). The value of gold is more vaguely determined by market perception/speculation (e.g. gold doesn't have quarterly earnings reports with detailed accounting). Ultimately something has value as long as people believe it has value, but I think the discomfort from folks like Bogle comes from the lack of a rigorous method for valuation vs. assets like equities.

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

#186

Post by longerthoughts »

sjg007 wrote: post #168
non_sequitur wrote: post #5

Earlier quoted context omitted.

7 years is a tiny sample size if you are hoping to retire off it (unless of course you cash out your millions during that time). His advice makes sense if you are looking at a 30 year retirement horizon - it may not be there in 30 years.

Interesting.. the stock market will probably be there, just not necessarily the individual stocks you are currently invested in. Unless ICOs take off... now despite all of scams, ICOs allow a global stock market. Now maybe participating in that is dangerous.. maybe not.

>the stock market will probably be there, just not necessarily the individual stocks you are currently invested in

Part of the beauty of index investing - names can rotate in and out of your benchmark based on whatever criteria the index uses (e.g. market value) but you're not bound to a company that drops from the index (you are, however, exposed between the time it becomes ineligible and the next rebalance).

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

#187

Post by XR0CSWV3h3kZWg »

Scoundreller wrote: post #147
XR0CSWV3h3kZWg wrote: post #106

Earlier quoted context omitted.

Now that is well written! Current price of bitcoin is ~9.9k total supply is well over 17 million. lets call it 10k and 20 million. We're sitting at ~ 0.2 trillion. For that you could buy paypal, square, moneygram and Western Union and still have plenty left over. That's fairly surprising. Bitcoin alone is within striking distance of the market cap of visa.

> total supply is well over 17 million How many of those 17 million have been effectively lost forever?

I'd love to see a write up, there are some that are well known to be lost, and plenty of stories of lost bitcoin. I'd love to a hard amount for the first and some estimates for the second.

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

#188

Post by longerthoughts »

erebus_rex wrote: post #73
betterunix2 wrote: post #33

Earlier quoted context omitted.

We'll see how well Bitcoin does during the next recession. Plenty of investments seem great when the markets and economy are doing well, but turn into disasters when the markets crash.

I wonder if a crash would be good for Bitcoin's price. I think it is a bubble but it seems like an asset that would gain traction in times of fear/uncertainty in the fiat economy.

I think it depends on the timing and scope of the crash. Given the current level of doubt, it's still a highly speculative asset that bears significant risk. History suggests a crash would spark a "flight to quality" in which people would likely dump bitcoin in favor of low-risk assets.

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

#189

Post by westurner »

ringaroundthetx wrote: post #68
barrkel wrote: post #16

Earlier quoted context omitted.

So did tulip bulbs in Holland in the 17th century. It's still not enough to make it a smart choice.

Bitcoin has greatly outperformed tulips.

I think they just grew more tulips to meet demand?

https://en.wikipedia.org/wiki/Tulip_mania

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

#190

Post by Spooky23 »

alejohausner wrote: post #123
akozak wrote: post #22

Earlier quoted context omitted.

I'm no financial advisor, but I'd fire the person who recommended I buy gold as a long term investment.

Actually gold is a very good long term investment. Here are some year-end closing prices: Year gold S&P500 1972: 64 118 2015: 1060 2044 Ratio: 16.5 17.3 True, gold does not have a yield, but it has gone up a lot over the years.

How about 11/30/12 as compared to 11/30/17? (Down 20%)
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