S&P Dow Jones Indices to launch cryptocurrency indexes in 2021 • Hacker News Board

Re: S&P Dow Jones Indices to launch cryptocurrency indexes in 2021

#331

Post by Afton » Thu, Dec 03, 2020, 9:07 PM UTC

pshc wrote: post #309

Afton wrote: post #286

Earlier quoted context omitted.

One of the ways I don't feel bad about not making millions in BTC even though I was aware of it long ago is the absolute certainty that I would have simply lost the paper wallet, had a hard-drive failure, etc, etc. There is just no way I would have held onto my keys for the 7 years that I was aware of it. I imagine that the breakage here for early investors is probably pretty high. I never did cash out on my dogecoin…

It’s not impossible to make copies of and secure private keys if you have a plan. (But even if you had bought some and preserved it, would you have had the tenacity/foresight to hold onto the BTC for 7+ years?)

> It’s not impossible to make copies of and secure private keys if you have a plan

I was 100% discussing my scenario. I would absolutely not have enacted a careful plan with multiple fall-backs. Which is it's own kind of self-indictment tbh, but one that I am at peace with. :D

Re: S&P Dow Jones Indices to launch cryptocurrency indexes in 2021

#332

Post by andrewmcwatters » Thu, Dec 03, 2020, 9:08 PM UTC

vmception wrote: post #308

andrewmcwatters wrote: post #301

Earlier quoted context omitted.

I’m not asking why, because anyone can find instances of mania in history such as this. Beanie babies. Tulips. The law of large numbers, in this case—the speculative experiment of seeking returns from assets that do not produce value, will iron this out. History does not repeat, but it rhymes often enough for those who know the tune to sing along.

Rattling off references to other asset bubbles only shows how little you know about those asset bubbles and undermines the credibility of your strongly held opinions on what makes an asset worth paying attention to. For starters, you should probably start over on whatever you think you know about the tulips. Primarily its relation to tulip derivatives and the spot market of tulips, and the government's role in the du…

I don’t know what you’re getting at. It would be like trying to better understand the microeconomic factors behind Beanie Babies. It’s an exercise in futility. They’re toys and they ended up being resold at prices that made no sense to the common man.

Of all the endless knowledge that humanity produces, you have to ask yourself whether or not there’s meaning in pursuing topics endlessly.

They’re flowers. This isn’t a discussion about some ECON 500-level course topic.

There’s an academic argument to be had about whether or not the accounts of the event are credible, but that’s not what we’re talking about here.

Re: S&P Dow Jones Indices to launch cryptocurrency indexes in 2021

#333

Post by allendoerfer » Thu, Dec 03, 2020, 9:10 PM UTC

Erlich_Bachman wrote: post #242

nofunphil wrote: post #229

Earlier quoted context omitted.

Buying Bitcoin is becoming similar to buying gold. It’s a Store of Value. Why is gold an investment? Because it’s scarce and we have, as a society, decided it’s an investment. There may be nuances here, but that’s the basic idea. Bitcoin is digital gold. Most other tokens are similar buying fiat currencies which can help if you local fiat currency is hyper-inflating. But then some tokens give access to de-fi which a…

Yep, store of value is actually a useful function for many indivudals and companies, and we are betting on that storing of value will become more and more valueable as we progress. Storing of value is not just "hoarding", useless activity. It is an important ingredient in making many of the business processes and just things work in general. It is a very impotant function. And thus if we have tools that make that fun…

If I am investing and seeking returns I will tolerate a certain level of risk and volatility, if they are justified by the returns I am getting.

If I want to store value, what I am looking to avoid at all costs is volatility and risk. That's why instituations are even accepting to lose a little bit of value in return for security by buying bonds from Northern European countries.

It's kind of in the definition of the word "storing": If you want to store water you won't put your bucket of water on to a race car, even though it might drive through a heavy rain.

Re: S&P Dow Jones Indices to launch cryptocurrency indexes in 2021

#334

Post by colejohnson66 » Thu, Dec 03, 2020, 9:11 PM UTC

andrewmcwatters wrote: post #276

I’m enjoying sitting on the sidelines and watching people “invest” in a digital “currency” that you cannot spend, does not produce cash flow, and whose values are determined by other shmucks buying it from previous shmucks. What a time to be alive. No wonder the S&P 500 CAPE ratio is beyond the 1929 high. No one has any idea of what the intrinsic value is of anything. Investing in companies that don’t make a profit,…

> I’m enjoying sitting on the sidelines and watching people “invest” in a digital “currency” that you cannot spend, does not produce cash flow, and whose values are determined by other shmucks buying it from previous shmucks.

Is that any different than a stock though? You can’t spend stocks, they don’t produce cash flow (ignoring dividends), and their value is what other’s are buying and selling it for.

Just as I can offer to sell my share for $10,000 despite it trading at $100, I can do the same with Bitcoin. There’s a reason some people call Bitcoin an “investment.”

Now, before anyone thinks I’m advocating Bitcoin, I’m not. I’m just pointing out the similarities to the stock market.

Re: S&P Dow Jones Indices to launch cryptocurrency indexes in 2021

#335

Post by vmception » Thu, Dec 03, 2020, 9:14 PM UTC

andrewmcwatters wrote: post #328

MarkPNeyer wrote: post #318

Earlier quoted context omitted.

The tulip derivative bubble lasted for a few months; beanie babies were a year or two at most. Bitcoin is over ten years old. Do you have any examples of a bubble which - lasted more than 5 years - recovered from previous drops in value of more than 50 %? What kind of evidence would convince you that bitcoin were different from these past bubbles?

The dot-com bubble played out over a decade. Bitcoin’s price history has only been significant for 3 years. It otherwise looked like any other penny asset.

> It otherwise looked like any other penny asset.

Before 3 years ago, it wouldn't have looked like "any other penny asset" it would have had a similar chart as now because its prior booms and busts 3 years prior to that all had similar degrees of amplitude. Just zoom in on a chart and pretend that it is summer 2017 with no future price history available, just like all the traders at the time had.

Regarding "penny asset" again, in price 3 years ago and 6 years ago Bitcoin would have been hundreds of dollars, which is not like penny assets, and even if comparing "penny stocks" to a digital commodity the marketcap of bitcoin 3 even 6 years ago would be greater than 99.9% of anything in the penny stock markets (bulletin boards, pink sheets), of which - of course - commodities and commodities derivative do not trade on.

You speak in hyperbole for emphasis and that's generally fine, but that only works if you know what you are talking about and it is pretty clear you just conflate concepts over and over again.

Its fine if you personally don't want to or don't have the risk profile to be in this market, yes you are missing a lot of alpha from sitting on the sidelines. No, you don't have any insight to support you sitting on the sidelines. But again, it is a completely valid choice to do so.

Re: S&P Dow Jones Indices to launch cryptocurrency indexes in 2021

#336

Post by Yizahi » Thu, Dec 03, 2020, 9:14 PM UTC

NicoJuicy wrote: post #302

andrewmcwatters wrote: post #276

I’m enjoying sitting on the sidelines and watching people “invest” in a digital “currency” that you cannot spend, does not produce cash flow, and whose values are determined by other shmucks buying it from previous shmucks. What a time to be alive. No wonder the S&P 500 CAPE ratio is beyond the 1929 high. No one has any idea of what the intrinsic value is of anything. Investing in companies that don’t make a profit,…

And where halve of the raise on crypto is because of tether...

I'd say not less than 75% of this year Bitcoin raise is because of tethers. They are printing "money" like crazy since early summer.

Re: S&P Dow Jones Indices to launch cryptocurrency indexes in 2021

#337

Post by chki » Thu, Dec 03, 2020, 9:16 PM UTC

pradn wrote: post #293

andrewmcwatters wrote: post #276

I’m enjoying sitting on the sidelines and watching people “invest” in a digital “currency” that you cannot spend, does not produce cash flow, and whose values are determined by other shmucks buying it from previous shmucks. What a time to be alive. No wonder the S&P 500 CAPE ratio is beyond the 1929 high. No one has any idea of what the intrinsic value is of anything. Investing in companies that don’t make a profit,…

If the value of a cryptocurrency is dependent on the community of the faithful, it's possible to "start the engines of faith", and keep it going for a long time. Fine art has been a large component of generational wealth in the West for the past six centuries. Of course, art has value as aesthetic objects; the same can be said for the potential use of cryptocurrency, however nebulous it may be. Religions, too, demand…

That's a good point, also described in the book Sapiens by Harari: In a way Religion, currency and contract law (and many other things) are all "made up". They have institutions (priests, central banks, lawyers) with magic words (amen, price stability, due diligence) and a certain combination of magic words creates a new reality out of thin air. Think about how weird it is to "sign" an important contract and thereby changing you own future or the future of your company irrevocably.

While I'm definitely not a fan of crypto currency and wouldn't seriously consider investing a single Euro into this mess, it's certainly misguided to simply laugh at it being "not real", because a lot of important things are. Obviously the gp makes some other important points.

Re: S&P Dow Jones Indices to launch cryptocurrency indexes in 2021

#338

Post by andrewmcwatters » Thu, Dec 03, 2020, 9:17 PM UTC

colejohnson66 wrote: post #334

andrewmcwatters wrote: post #276

I’m enjoying sitting on the sidelines and watching people “invest” in a digital “currency” that you cannot spend, does not produce cash flow, and whose values are determined by other shmucks buying it from previous shmucks. What a time to be alive. No wonder the S&P 500 CAPE ratio is beyond the 1929 high. No one has any idea of what the intrinsic value is of anything. Investing in companies that don’t make a profit,…

> I’m enjoying sitting on the sidelines and watching people “invest” in a digital “currency” that you cannot spend, does not produce cash flow, and whose values are determined by other shmucks buying it from previous shmucks. Is that any different than a stock though? You can’t spend stocks, they don’t produce cash flow (ignoring dividends), and their value is what other’s are buying and selling it for. Just as I can…

If I buy a company, I literally can choose what to do with its earnings. That’s the point of valuing businesses. You’re not buying the stock. You’re buying a portion of the business.

Say you have a drywall company in town. You and the owner are good friends and the owner wants to retire but doesn’t have a family member who is interested in the enterprise. He seeks out buyers. You mention to him you’re interested but you have to ask yourself how much you’re willing to pay for the business, its fleet, tools, leads and customer database, current lease agreements, employees, etc.

Someone has to value that, because it intrinsically has value. It’s not worthless. You can’t rebuild a multimillion dollar business over night.

So it turns out if you have this entity that produces cash flow, it’s worth something. So how much are you willing to pay for each dollar of earnings? At the end of the day, that’s what a business produces for its owners.

Re: S&P Dow Jones Indices to launch cryptocurrency indexes in 2021

#339

Post by zgydfwekor » Thu, Dec 03, 2020, 9:19 PM UTC

colejohnson66 wrote: post #334

andrewmcwatters wrote: post #276

I’m enjoying sitting on the sidelines and watching people “invest” in a digital “currency” that you cannot spend, does not produce cash flow, and whose values are determined by other shmucks buying it from previous shmucks. What a time to be alive. No wonder the S&P 500 CAPE ratio is beyond the 1929 high. No one has any idea of what the intrinsic value is of anything. Investing in companies that don’t make a profit,…

> I’m enjoying sitting on the sidelines and watching people “invest” in a digital “currency” that you cannot spend, does not produce cash flow, and whose values are determined by other shmucks buying it from previous shmucks. Is that any different than a stock though? You can’t spend stocks, they don’t produce cash flow (ignoring dividends), and their value is what other’s are buying and selling it for. Just as I can…

Why are we ignoring dividends? That's a significant piece of stock valuation

Re: S&P Dow Jones Indices to launch cryptocurrency indexes in 2021

#340

Post by fractionalhare » Thu, Dec 03, 2020, 9:19 PM UTC

anythingdude321 wrote: post #174

fractionalhare wrote: post #92

Earlier quoted context omitted.

That's not necessarily a good idea. You don't need to take on higher risk for a higher return. It's usually better to leverage risk-adjusted returns rather than chase high total returns with commensurate risk. You can take on more risk that if you have the appetite, but if that's the case you could also just use levered beta (e.g. 3x levered S&P 500). This would significantly improve your portfolio while still being…

if you leverage your risk for a higher return you _also_ increase your risk

Yes, but you can choose how much risk to take on using your leverage weight. You don't have to accept the baseline risk of the inherently riskier asset. It's easier to start with a less risky portfolio and weight it accordingly than it is to derisk a portfolio which is intrinsically riskier.