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

#401

Post by andrewmcwatters » Thu, Dec 03, 2020, 10:31 PM UTC

doggosphere wrote: post #399

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 "save" in a fiat "currency" whose value is not linked to anything intrinsic, whose supply can magically be increased at the discretion of a few powerful individuals, and whose value has been declining relative to almost any tradeable assets. What a time to be alive. No wonder the M2 money supply is at an all time high. No one has any idea of what the intrinsic…

Central banking as it exists in the US is designed to encourage spending. One person’s spending becomes another’s income. Having finite dollars and increasing demand leads to a currency that only increases in value. If an asset increases in value, there is an incentive to acquire it and not part with it.

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

#402

Post by viraptor » Thu, Dec 03, 2020, 10:31 PM UTC

andrewmcwatters wrote: post #392

viraptor wrote: post #389

Earlier quoted context omitted.

That applies to small companies where you're significant in any way. It does not apply for ~anyone investing in stock market. The larger companies neither care what you think nor know that you exist. Your investment has no impact on it and the price you get is a result of collective belief influenced by predicted valuations. If you invest in large companies on the public stock market, it's about the same as investing…

I think you make a fair argument, but it breaks down immediately under two separate but related counterarguments. 1. If companies don’t care what they’re valued at, it makes M&A infeasible. A business could never be sold. 2. Selling equity is done to raise cash. If no one cares what the business is valued at, equity is worthless, and 1. is infeasible.

That's not quite what I wrote. The larger companies don't care about you as the retail investor, but they of course care about valuation. But the valuation is often based on some belief / future predictions. Otherwise we wouldn't have large changes and following corrections. The value of the business does not change that much - the collective idea about the value, opportunity, chance of speculation, and other things influenced by the validation is what changes. Also no company would complain about having too high valuation as long as it's consistently too high.

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

#403

Post by px43 » Thu, Dec 03, 2020, 10:35 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,…

> You’d literally make more money today taking your cash and starting a business than dumping it in some of these worthless pursuits.

Well yeah, starting a business is literally the riskiest thing you can do with a wad of cash. Much riskier than cryptocurrencies, riskier than most casinos. Of course it's going to have higher potential upside, but 75% of companies go completely broke within their first 15 years.

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

#404

Post by beaner » Thu, Dec 03, 2020, 10:36 PM UTC

andrewmcwatters wrote: post #380

vmception wrote: post #355

Earlier quoted context omitted.

> It’s supposed to be a currency. And yet it’s not. It doesn’t exhibit any of the traits of a currency I’d want to spend at least. ah that argument, I read that recently, those are skeumorphs, here is a quote > When it comes to this asset class, there are still people that argue against the concept of Bitcoin, mostly in reaction to one of its sales pitches without ever noticing what this really is. For example, peopl…

The creator was trying to make “electronic cash” that evaded central banking manipulation from what I can tell. Except there’s a fixed supply. There isn’t a fixed supply of value in the world.

This doesn't mean anything, you need to make an argument as to why you believe that for an asset to be successful as a currency, its number of units needs to expand or contract in relation to value being produced.

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

#405

Post by JxLS-cpgbe0 » Thu, Dec 03, 2020, 10:36 PM UTC

x87678r wrote: post #361

JxLS-cpgbe0 wrote: post #123

Earlier quoted context omitted.

> It seems like a ponzi to me A Ponzi Scheme relies on a central authority, BTC by definition has none. Maybe you were trying to say "market manipulation" or "securities fraud?"

No definitely ponzi. Maybe a central authority is in the definition for ponzi, but I think this is exactly Ponzi without a CA. The whole thing isn't fraud or manipulation because again there is no one single owner, though looking at all the junk on social media there is definitely lots of both.

> this is exactly Ponzi without a CA

Which would be...not a Ponzi Scheme. What makes you say that besides "junk on social media?"

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

#406

Post by andrewmcwatters » Thu, Dec 03, 2020, 10:38 PM UTC

px43 wrote: post #403

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,…

> You’d literally make more money today taking your cash and starting a business than dumping it in some of these worthless pursuits. Well yeah, starting a business is literally the riskiest thing you can do with a wad of cash. Much riskier than cryptocurrencies, riskier than most casinos. Of course it's going to have higher potential upside, but 75% of companies go completely broke within their first 15 years.

You’d also find that most public companies don’t increase their earnings growth substantially over extended periods of time, causing one to lose value correspondingly.

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

#407

Post by ZephyrBlu » Thu, Dec 03, 2020, 10:41 PM UTC

andrewmcwatters wrote: post #352

vmception wrote: post #335

Earlier quoted context omitted.

> 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 ass…

You’re seeking some deeper meaning here than one that exists. It’s supposed to be a currency. And yet it’s not. It doesn’t exhibit any of the traits of a currency I’d want to spend at least. Maybe you’re OK with that, so have fun. It’s fundamental existence doesn’t work for me.

Currency is just a vehicle for the transfer of value. What traits should a currency have?

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

#408

Post by jkhdigital » Thu, Dec 03, 2020, 10:41 PM UTC

andrewmcwatters wrote: post #401

doggosphere wrote: post #399

Earlier quoted context omitted.

I'm enjoying sitting on the sidelines and watching people "save" in a fiat "currency" whose value is not linked to anything intrinsic, whose supply can magically be increased at the discretion of a few powerful individuals, and whose value has been declining relative to almost any tradeable assets. What a time to be alive. No wonder the M2 money supply is at an all time high. No one has any idea of what the intrinsic…

Central banking as it exists in the US is designed to encourage spending. One person’s spending becomes another’s income. Having finite dollars and increasing demand leads to a currency that only increases in value. If an asset increases in value, there is an incentive to acquire it and not part with it.

No matter how much I read on the subject, I always feel like the true nature and complexity of money eludes me. I don’t mean to disparage your comments, but I believe they reflect a lack of appreciation for the magnitude of the subject.

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

#409

Post by doggosphere » Thu, Dec 03, 2020, 10:42 PM UTC

andrewmcwatters wrote: post #401

doggosphere wrote: post #399

Earlier quoted context omitted.

I'm enjoying sitting on the sidelines and watching people "save" in a fiat "currency" whose value is not linked to anything intrinsic, whose supply can magically be increased at the discretion of a few powerful individuals, and whose value has been declining relative to almost any tradeable assets. What a time to be alive. No wonder the M2 money supply is at an all time high. No one has any idea of what the intrinsic…

Central banking as it exists in the US is designed to encourage spending. One person’s spending becomes another’s income. Having finite dollars and increasing demand leads to a currency that only increases in value. If an asset increases in value, there is an incentive to acquire it and not part with it.

Yes, the problem with this power is the inevitable folly of short term fixes (through interest rates and government stimulus) by mortgaging future value. The pressures and short term thinking of believing you can fix your economy catches up to everyone eventually.

We are in an era where saving does not exist, where interest rates are negative.

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

#410

Post by andrewmcwatters » Thu, Dec 03, 2020, 10:43 PM UTC

sithlord wrote: post #397

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,…

You don't buy stocks because the company "makes money" you buy stocks because the expectation is that they will make more money in the future than they are now. Also, stocks don't really produce cash flow either - A dividend drops the price of each stock by the equivelent amount. So if you get a 3% dividend a year, the stock price is dropping by the same amount. I will say, it is easier to quantify that Apple/Google/…

No, that’s pretty much the number one reason someone would purchase equity in a company.

I don’t know where the concept of dividends dropping the value of a company came from, but from a transactional point of view it doesn’t make sense. Sure, there are more earnings that have not been retained for increasing future earnings, but the value does not drop correspondingly. That’s just not how companies are valued.

3% of earnings going to shareholders just does not at all mean the company drops by 3% in value. Companies are valued in a number of different ways, but not one of them is based on a 1:1 proportion of earnings. Earnings multiples, yes, but what you’re suggesting is companies drop equivalent to being valued at a P/E ratio of 1.

A company making 1 billion in earnings is not worth 1 billion dollars. Certainly not a majority of the time, at least.

I am well aware of this myth, but not from where it originates. Yes, certainly cash on hand drops which affects valuations, but not by as much as you’re suggesting.

I don’t understand your comment about stocks not producing cash flow. You’re buying part of a company. You’re not buying the certificate.