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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

#421

Post by Mc_Big_G »

phkahler wrote: post #367
single_source wrote: post #330

Earlier quoted context omitted.

Yep, this is what people are not understanding. Too many engineers and not enough business owners on HN. The hardest part of starting a business is getting the network effects on your side, it isn't the tech.

Sure, but then why have a market for hundreds of coins? We dont have a public market for all the craigslist wannabes because they are not relevant at that level.

Not all exchanges list all coins. Also, we DO have a public market for craigslist wannabes...it's called the internet and you can launch one tomorrow.

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

#422

Post by okokok___ »

misnamed wrote: post #363
okokok___ wrote: post #153

Earlier quoted context omitted.

>bonds pay a risk premium - crypto, gold, etc... don't generate income, which by definition makes them speculative. What about staking? In this case, you're providing a service to the network and being compensated for it.

I know what it means but have no idea how profitable it is or whether those profits are guaranteed or fleeting. Best I can tell it's like any service (business, not investment): depending on demand and competition, you can make money for a time, then stop at some point. So far that has never been an issue for people investing in the global stock market (i.e. the global stock market persists even as individual stocks,…

>depending on demand and competition, you can make money for a time, then stop at some point.

This is literally anything economic on planet Earth.

>So far that has never been an issue for people investing in the global stock market

the global stock market is at its highest valuation ever, good luck with that. I'll keep buying Ethereum

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

#423

Post by acituan »

fractionalhare wrote: post #350
acituan wrote: post #184

Earlier quoted context omitted.

> 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…

> 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.

Sure, there are asymmetries in real life and information takes a while to dissipate to all agents, but unless you're a robo-trader doing high frequency temporal arbitrage, I don't buy for a second that you can beat the market on a continuous basis. You might think you do, but that would be just some hot-hand fallacy.

> This is essentially encapsulated by a Sharpe ratio (among other things).

You're conflating two things. Sharpe ratio is about a profit opportunity with regards to its well established degree of risk. Unexploited opportunity is when you asymmetrically discover a new return opportunity upon what was already priced.

In both cases it comes down to the belief that "I am smarter than other investors, and can profit from an angle they haven't thought". I will not assert a strong efficient market hypothesis, but in overwhelming majority of the cases, no, you're not.

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

#424

Post by [deleted] »

viraptor wrote: post #402
andrewmcwatters wrote: post #392

Earlier quoted context omitted.

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…

[deleted]

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

#425

Post by andrewmcwatters »

ur-whale wrote: post #420
andrewmcwatters wrote: post #410

Earlier quoted context omitted.

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…

>I don’t know where the concept of dividends dropping the value of a company came from, Well, there's taxes for example.

I should have been more clear in that first line. I don’t understand where the concept of a valuation of a company dropping 1:1 proportionally with its dividend payment came from.

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

#426

Post by im3w1l »

andrewmcwatters wrote: post #410
sithlord wrote: post #397

Earlier quoted context omitted.

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…

Basically companies have an optimal cash reserve. Below that optimum a dollar in the company increases future discounted cashflow of company by more than a dollar -> They should raise money. Above that optimum a dollar in the company increases the future discounted cashflows of the company by less than a dollar -> They should hand out money.

Because of transaction costs there is in practice a zone where they should neither raise nor give dividends.

Close to the optimum a dollar in dividend will change the value of the company by approximately one dollar.

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

#427

Post by humaniania »

beaner wrote: post #411
andrewmcwatters wrote: post #401

Earlier quoted context omitted.

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.

Many believe this to be a good thing. To discuss it we'd have to go all the way down the keynesian vs. austrian rabbit hole. Someone here might be up for it. I'm content to sit on the sidelines and watch it continue to succeed and speak for itself.

How could a lower velocity of money be a good thing when there's still underemployment?

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

#428

Post by humaniania »

spir wrote: post #145
iamspoilt wrote: post #30

Someone please explain this to me: How is any cryptocurrency even considered an investment vehicle? I would classify myself as Boglehead and I believe in the fundamentals of investing in stocks because in all it's technicality (and given the buy-and-hold strategy), you are investing in a business by owning a part of it which naturally means that you will and do get the returns on it, both in terms of profits (dividen…

One answer to this question is that Ethereum will soon become a "real investment" because fees will accrue to ETH holders and the huge expense of electricity-intensive proof of work mining will be discontinued forever. Here is how it'll work - in 2021, an improvement to the Ethereum network known as EIP-1559 will launch, causing a portion of all new transaction fees to be burned/destroyed, which is effectively a "sto…

They've been saying these things for a long time FYI.

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

#429

Post by dmoy »

andrewmcwatters wrote: post #425
ur-whale wrote: post #420

Earlier quoted context omitted.

>I don’t know where the concept of dividends dropping the value of a company came from, Well, there's taxes for example.

I should have been more clear in that first line. I don’t understand where the concept of a valuation of a company dropping 1:1 proportionally with its dividend payment came from.

Because it's roughly what happens, absent other factors on the ex div day.

https://www.investopedia.com/articles/investing/091015/how-d...

https://finance.zacks.com/stock-price-change-dividend-paid-3...

It's not 100% true, but it's a fair bit better approximation than the other end of the spectrum which is roughly "dividends create free money out of thin air".

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

#430

Post by dmitrygr »

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…

> whose value is not linked to anything intrinsic

The value of US currency is backed, whether you like it or not, by US's military might. Very much not nothing

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