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

#131

Post by misnamed » Thu, Dec 03, 2020, 5:36 PM UTC

wsc981 wrote: post #126

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…

I see Bitcoin as a hedge against the USD and EUR as I feel the currencies will be in trouble in the coming years. I see Bitcoin as a store of value. Keeping some of my assets in Bitcoin keeps some of my assets out of the hands of governments and banks and will not be affected by devaluation. There's no risk of a bail-in [0] for example. I don't invest all my assets in Bitcoin, currently perhaps 10% of my net worth. I…

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.

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

#132

Post by onlyrealcuzzo » Thu, Dec 03, 2020, 5:37 PM UTC

nostrademons wrote: post #67

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…

It's analogous to investing money in USD or GBP before those countries were given a license to print as many USD and GBP as they wanted. Before then (1931 for the pound and 1933 for the dollar, though they maintained de-facto parity with gold until 1971), dollars and pounds were considered good investments. That's why we had bank runs: people thought their money would be safer under their mattress, and preferred to o…

You can't print gold, and BTC is appreciating much faster than gold (or any commodity or store of value or even other cryptocurrencies).

It is not appreciating because fiat money is being devalued. That can account for -- at max -- 20% of the price increase.

It's appreciating because of speculation.

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

#133

Post by jamesmehaffey » Thu, Dec 03, 2020, 5:38 PM UTC

misnamed wrote: post #56

jamesmehaffey wrote: post #45

Earlier quoted context omitted.

If you are using blockchain tokens to run an application, then you are essentially paying A large network of computer operators for their combined processing capacity. This means their electricity, maintenance cost, etc. instead of investing in servers that will be old by the end of the year. So purchasing cryptocurrency is in fact a very real investment. Think of it like an airline purchasing jet fuel three months a…

A great investment if the cost of fuel goes up, but a bad one of if it goes down. Processing power is getting cheaper and cheaper.

It really just comes down to the idea that blockchain networks are cheaper, more secure, more reliable and more scalable than traditional server arrangements. That’s not just my opinion; most of the top tech companies are ploughing huge amounts of money into it. market investors will do what they always do, but all I know is that I would rather have a crypto wallet with some stored value than an old, inefficient server sitting in the corner.

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

#134

Post by misnamed » Thu, Dec 03, 2020, 5:39 PM UTC

levosmetalo wrote: post #78

Great news. Right now what is holding me from investing in Bitcoin are: - horrible fees - slow transaction - risk of total loss (by loosing wallet, or exchange getting hacked) - no regulation With the Bitcoin ETF I would be getting the following benefits - lower trading fees on stock market compared to stock exchange - fast transactions - no risk of total loss, since ETF shares are protected (at least in Europe by UC…

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.

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

#135

Post by finikytou » Thu, Dec 03, 2020, 5:40 PM UTC

elevenoh wrote: post #77

finikytou wrote: post #28

this + the entry of tesla within S&P + the destruction of small businesses is the perfect recipe for chaos and years of reviving 2008 era

Could you elaborate? We're definitely in an accelerated-transition period w/ an uptick in inequality, if that's what you mean.

cryptos just like tesla stock are roller coasters. the sp500 is an indicator of stability used by most of investors to jauge the health of the markets. add tesla to the sp500 (day after day spiking up and down like no other stock) and you create instability. the crypto has always been instable so managing indices on it... and at the same time you see that many people lost their jobs, went into loans they re not able to refund. not even talking about the fall of the dollar.

I think all added its gonna be bad.

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

#136

Post by Osiris » Thu, Dec 03, 2020, 5:41 PM UTC

dandanua wrote: post #120

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…

It shouldn't be called an investment. Investment supposed to be spent on the production of new value. Bitcoin, despite its good intentions, is a pyramid scheme — its price grows only because of newcomers. I wrote a blog post about why it's a bad "investment" — https://dandanua.github.io/posts/why-i-wouldnt-recommend-usi...

Since there is a limited supply of Bitcoin, people are buying Bitcoin now with the hope that there will be more demand for the limited supply in the future. There is a hope that Bitcoin becomes "useful", thus driving demand. Since supply is fixed, demand causes an increase in value.

So, it's a speculative "investment". I suppose whether it's an "investment" depends on your definition of "investment".

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

#137

Post by misnamed » Thu, Dec 03, 2020, 5:41 PM UTC

jamesmehaffey wrote: post #133

misnamed wrote: post #56

Earlier quoted context omitted.

A great investment if the cost of fuel goes up, but a bad one of if it goes down. Processing power is getting cheaper and cheaper.

It really just comes down to the idea that blockchain networks are cheaper, more secure, more reliable and more scalable than traditional server arrangements. That’s not just my opinion; most of the top tech companies are ploughing huge amounts of money into it. market investors will do what they always do, but all I know is that I would rather have a crypto wallet with some stored value than an old, inefficient serv…

I mean if you're literally talking about the difference between 'buying physical servers' and 'buying Bitcoin' ... well, it seems to me you're missing out on a range of other options, like: investing in companies developing new hardware, for starters. Personally, I just lease what I need at going rates, which get ever cheaper. And by cheaper I mean: in dollar terms - so to keep up with that, I don't see the need to hold highly volatile Bitcoins when I can just hold inflation-adjusted Treasury bonds.

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

#138

Post by SilasX » Thu, Dec 03, 2020, 5:41 PM UTC

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…

Someone please explain this to me:

How is any negative-yielding bond even considered an investment vehicle? I would classify myself as a Boglehead and I believe in the fundamentals of investing in bonds because it all its technicality (and given the buy-and-hold strategy), you are indirectly lending to a government by buying its bonds, which naturally means that you will and do get returns on it, both in terms of the interest (coupon payments) and value growth (further decline in those bond yields).

That being said, again, why would negative yield bonds ever be considered a good investment vehicle? Isn't it analogous to me investing in my money in a depreciating car, which will only lose value unless the car happens to have a random spurt of high demand that lets me unload it at a profit?

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

#139

Post by misnamed » Thu, Dec 03, 2020, 5:43 PM UTC

fractionalhare wrote: post #68

iamspoilt wrote: post #55

Earlier quoted context omitted.

Exactly my point. They add certain value to the economy and have fundamentals. From my understanding, I don't even consider Gold (a limited resource) a long-term investment.

Gold is a good portfolio asset for reducing overall risk in a long term investment strategy. You can beat the market over time with less risk by holding the S&P 500 and gold and weighting each according to respective volatility. This also has a lower beta exposure than just holding stocks. Gold (and commodities more generally) have fundamentals - just different ones from equities. You can't take advantage of the univ…

We have fairly little data on gold as a freely available modern asset class (around 50 years), but yes, in small amounts it can limit volatility and potentially even increase returns (or at least: risk-adjusted returns). That said, over the long haul, independently, it has tended to roughly track inflation. I'm not against it, just see it as something of limited utility to an ordinary investor.

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

#140

Post by cocoa19 » Thu, Dec 03, 2020, 5:44 PM UTC

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…

It shouldn't be considered an investment vehicle if we follow Benjamin Graham's philosophy (father of value investment, Warren Buffet's mentor).

I'd say it should be called a speculative vehicle. The word speculative carries a negative connotation, so financial companies won't make money off of bitcoin trades, so hence the name investment vehicle. It's as manipulative as the name almond milk, which is not really milk.