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

reuters.com

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

#341

Post by vmception »

andrewmcwatters wrote: post #332
vmception wrote: post #308

Earlier quoted context omitted.

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…

> This isn’t a discussion about some ECON 500-level course topic.

It is.

> 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.

It is.

You brought it up. You threw in conjecture. And every rebuttal is more complex than you decided to be willing to pursue. That doesn't become false by saying we aren't talking about something that we absolutely are, and all of your hyperbole keeps reinforcing your willing self-proclaimed but obvious ignorance.

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

#342

Post by Yizahi »

anythingdude321 wrote: post #167
Imnimo wrote: post #149

Earlier quoted context omitted.

The supply of capital-B Bitcoin is 21M, but at any time, anyone can create Bitcoin2, which is an exact clone of Bitcoin but with a fresh chain. Any Bitcoin2 token has exactly the same utility as a Bitcoin token in principle - the only difference is that, for now at least, lots of people are mining Bitcoin and no one is mining Bitcoin2. If there comes a day when a lot of people think there should be 42M bitcoins, inst…

yes but the beauty is that, due to the lack of a central authority, the game theory of the situation virtually ensures that no one would ever do that — that is, take bitcoin2 seriously

Well Bitcoin does have almost central authority - if Top 3 mining pools decide to change their software in literally any way, then everyone else will comply of will be left in the dust. It's not that hard for 3 people to agree on a common action plan.

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

#343

Post by fractionalhare »

pashamur wrote: post #213
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…

That's also ignoring the cost of capital, as leveraging risk adjusted returns has to take that into account. You don't get the same rate of return if you use margin, say, in order to leverage. If you use a 3x or other leveraged fund, then you run into tracking issues (look at https://www.etf.com/etfanalytics/etf-comparison/SPXL-vs-SPY ) where you see tracking break down), you can lose everything (remember XIV?), and…

That is a good point, but that all applies to riskier investments as well. Whether or not that specific example will beat out something like cryptocurrencies does depend on margin and transaction costs, this is true.

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

#344

Post by misnamed »

tcoff91 wrote: post #218
misnamed wrote: post #134

Earlier quoted context omitted.

The thing I don't get (and I have the same skepticism about gold ETFs) is that if one is trying to hedge extreme scenarios (e.g. high inflation or even monetary collapse) ETFs being 'protected' could easily fall through. I sort of understand holding one's own gold or Bitcoin, but through and ETF just seems like all the speculation with none of the crisis portability.

For those who aren't very dilligent, the risk of losing one's coins due to loss or theft is likely much higher than the risk of hyperinflation or monetary collapse. Being your own bank is a huge pain in the ass it turns out. Also inheritance planning is much more simple with an ETF.

I guess I just don't see the value from either side, then. The best supposed features of Bitcoin are lost in ETF form.

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

#345

Post by thesimon »

ravingraven wrote: post #253
joosters wrote: post #151

Earlier quoted context omitted.

It's because you don't live in the EU. Millions of people have had instant money transfers for years now.

I live in the EU. I don't have instant money transfers (they are within the day but not instant). Across EU countries it still takes days.

Wrong banks then. I can instantly transfer money between my accounts in Ireland, Portugal, Germany, Latvia, Belgium and The Netherlands.

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

#346

Post by adverbly »

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,…

(difficulty to execute hardest to easiest) - Starting the right business

- Picking the right businesses to invest in

- Investing in Crypto(used to be easier than it is now)

- Convincing shmucks to invest in the wrong business

- Investing in index funds

ROI if executed successfully(highest to lowest) - Starting the right business

- Convincing shmucks to invest in the wrong business

- Investing in Crypto

- Picking the right businesses to invest in

- Investing in index funds

strategic money making popularity scores

Don't try this at home. Very few people do this well. Those that do make a lot of money.

- Picking the right businesses to invest in

- Starting the right business

The "Dominant Strategy" of the market right now

- Convincing shmucks to invest in the wrong business

If you know what you're doing

- Investing in Crypto

What shmucks should do

- Investing in index funds

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

#347

Post by misnamed »

pashamur wrote: post #247
misnamed wrote: post #131

Earlier quoted context omitted.

If you want to hedge against inflation, I suggest TIPS and maybe a bit of gold. I would also point out that the market expectation clearly isn't aligned with currencies being 'in trouble' - very low inflation in general right now.

Generally, the only way to make outsized returns in the market is to go against market expectations, otherwise you would just make market returns. So yes, a bet on crypto is a bet against the market consensus, sort of by definition :)

A good way to get high returns is to simply use a low-cost, tax-efficient combination of stock and bond index funds. After taxes and fees, the results compound in your favor. I have no interest in gambling on even higher returns - those are plenty for me. If you want to maximize your chances of getting rich as well as getting poor, yes, you can put it all on Bitcoin, or Tesla, or 32 at the roulette wheel, but I'm more interested in growing a nest egg than taking those risks.

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

#348

Post by modeless »

root_axis wrote: post #322
modeless wrote: post #307

Earlier quoted context omitted.

You can't "prove" that Earth's gold supply won't increase with asteroid mining either. We can disagree on the relative difficulty of asteroid mining vs. changing Bitcoin's consensus rules, but you must at least concede that they are both possible.

Right... No matter how many people wish it to be so, the amount of gold on the planet cannot be arbitrarily increased, instead, you'd have to go to extremes likes mining astroids in space, a feat of engineering that is only possible in theory.

Mining asteroids is quite possible in practice. In fact we've already taken material from asteroids and returned it to Earth. The only question is how long it will take for the technology to advance enough for profitability; there are no fundamental issues preventing it. It really seems inevitable assuming no civilization-ending disasters. And it can increase Earth's gold supply arbitrarily up to many times the current supply. And it only takes one company to do it. Anyway, if our only disagreement is on the relative feasibility of changing Bitcoin consensus vs. asteroid mining, I'm happy to continue to disagree with you on that.

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

#349

Post by misnamed »

spurgu wrote: post #191
misnamed wrote: post #125

Earlier quoted context omitted.

A deflationary asset class encourages hording, not spending or using in other ways. There's also no real limit to the number of crytocurrencies that might appear later (see: MySpace replaced by Facebook), unlike gold. As for inflation: safe government bonds have historically kept up with that over the long haul, so no big loss there.

Imagine a society not based on consumerism and quarterly report increases. Gasp! Back in the day people used to get interest (covering more than inflation) from holding money in their bank accounts. What's changed?

Rates have been declining for years (decades, really), but so has inflation. The spread hasn't actually changed that much.

> Imagine a society not based on consumerism and quarterly report increases. Gasp!

I have literally no idea what that would look like or how Bitcoin would play a role. I guess hodlers who bought early would be rich and normal people poor?

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

#350

Post by fractionalhare »

acituan wrote: post #184
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…

> You don't need to take on higher risk for a higher return The lower the risk of an instrument, the more it will be saturated with investors, the more thinly per-investor share of profit will be spread. Therefore there is no such thing as "low risk, high returns", unless it is a scam. There is no unexploited profit opportunity that is risk free, if one thinks they have found one, they must have just missed accountin…

I didn't say "low risk, high returns." It is a spectrum. What you've said in your first two sentences sounds fine as a textbook principle. But the real world is messier and opportunities don't just vanish: if you do the math on a basic risk parity strategy with the S&P and some uncorrelated ETF, you can see it will beat the market on a risk adjusted basis. Very often you can then leverage this up to a higher absolute return than SPY while keeping lower volatility and beta overall.

> There is no unexploited profit opportunity that is risk free

This is essentially encapsulated by a Sharpe ratio (among other things). On the contrary, it is not especially difficult to produce a relatively high Sharpe ratio, accounting for transaction and margin costs, if you don't have a large amount of money to invest (large means single digit billions or more). This is especially, but not exclusively, the case if you don't care to compound your returns.

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