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Vanguard Founder Jack Bogle Says ‘Avoid Bitcoin Like the Plague’

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Re: Vanguard Founder Jack Bogle Says ‘Avoid Bitcoin Like the Plague’

#141

Post by kelnos »

thucydides wrote: post #110
jorblumesea wrote: post #79

Earlier quoted context omitted.

US Treasury bonds are backed by the military and economic might of a superpower, and the fact that it's an IOU that's almost bulletproof. That's a really big part of their value. It's the safest investment possible which is why governments funnel money into treasuries. Bitcoin just has the power of faith in the network and that liquidity will exist when you want to cash out. Neither of which is certain. Bitcoin reall…

I've heard many people say this, and it seemed sensible enough at first. But on further thought, I sincerely can't make sense of it. Dollars are just green pieces of paper. We accept them for goods and services because... everyone ELSE agrees to accept them for goods and services. It's circular. How is the might of the US military relevant here? If you lived in South Korea, would you accept the South Korean won, or w…

The enduring "value" of the US dollar -- for people who live/work in the US, anyway -- is more that it's the only currency you can pay your US taxes in. Its legitimacy as a currency for everything else stems from that.

Re: Vanguard Founder Jack Bogle Says ‘Avoid Bitcoin Like the Plague’

#142

Post by johnwheeler »

alejohausner wrote: post #123
akozak wrote: post #22

Earlier quoted context omitted.

I'm no financial advisor, but I'd fire the person who recommended I buy gold as a long term investment.

Actually gold is a very good long term investment. Here are some year-end closing prices: Year gold S&P500 1972: 64 118 2015: 1060 2044 Ratio: 16.5 17.3 True, gold does not have a yield, but it has gone up a lot over the years.

This is the worst investment thesis ever.

Re: Vanguard Founder Jack Bogle Says ‘Avoid Bitcoin Like the Plague’

#143

Post by monktastic1 »

csomar wrote: post #38
UncleMeat wrote: post #21

Earlier quoted context omitted.

Why? Why was this common sense? What other things should people have invested 1% of their portfolio in? Is every thing that has the possibility of increasing in value dramatically worth investing 1% of my portfolio?

Diversification. Preferably your portfolio will have a tech allocation and crypto could be part of it. Certainly there are many things that will appreciate ten folds in a year; and most things that don't. Had I opted for diversification in my investment, I'd have seen my wealth even triple that now. And this is not in crypto only.

I think the question is: given that you can find at least 100 long shots out there, how could you know this was among the <= 100 that you should put 1%+ into?

Re: Vanguard Founder Jack Bogle Says ‘Avoid Bitcoin Like the Plague’

#144

Post by loeg »

alejohausner wrote: post #123
akozak wrote: post #22

Earlier quoted context omitted.

I'm no financial advisor, but I'd fire the person who recommended I buy gold as a long term investment.

Actually gold is a very good long term investment. Here are some year-end closing prices: Year gold S&P500 1972: 64 118 2015: 1060 2044 Ratio: 16.5 17.3 True, gold does not have a yield, but it has gone up a lot over the years.

This is a cherry-picked example and ignores dividends, which are a huge factor over 43 year periods.

Re: Vanguard Founder Jack Bogle Says ‘Avoid Bitcoin Like the Plague’

#145

Post by chiaro »

alejohausner wrote: post #123
akozak wrote: post #22

Earlier quoted context omitted.

I'm no financial advisor, but I'd fire the person who recommended I buy gold as a long term investment.

Actually gold is a very good long term investment. Here are some year-end closing prices: Year gold S&P500 1972: 64 118 2015: 1060 2044 Ratio: 16.5 17.3 True, gold does not have a yield, but it has gone up a lot over the years.

The yield is a pretty big thing to miss. Also gold and stock prices are anti-correlated, with gains in the former chasing weakness in the latter. This makes cherrypicking dates pretty easy to do.

Re: Vanguard Founder Jack Bogle Says ‘Avoid Bitcoin Like the Plague’

#146

Post by longerthoughts »

landryraccoon wrote: post #111
dsacco wrote: post #95

Earlier quoted context omitted.

> I will happily invest in Bitcoin when its history as a store of value and a medium of exchange is measured in millennia. So is USD out for you too, then? It's not even 300 years old yet. If you mean fiat currency in general, that's also out, as we haven't had that for multiple millennia yet either.

People invest in USD? What does that mean? Currency speculators might arbitrage USD if they think the exchange rate is inaccurate but nobody holds USD because they think the value will go up long term. Holding fiat currency means you lose money constantly due to inflation.

Pretty sure the point was to highlight that people hold faith in the value of USD as a currency in spite of its youth, not to discuss its merits as a long-term investment.

>nobody holds USD because they think the value will go up long term

People can and do implicitly invest in USD. For example, I might use an FX hedge on a foreign investment to protect against foreign currency volatility in favor of exposure to USD because I have more faith in its value during the lifespan of my investment.

>Holding fiat currency means you lose money constantly due to inflation

Sure, but it's also protected against losses in a market downturn. Cash is outperforming if market returns are negative and in excess of inflation loss (which becomes more likely as poor market performance slows inflation). Not arguing that people should hold cash out of fear, but your characterization of cash seems a little simplistic.

Re: Vanguard Founder Jack Bogle Says ‘Avoid Bitcoin Like the Plague’

#147

Post by Scoundreller »

XR0CSWV3h3kZWg wrote: post #106
berberous wrote: post #26

Earlier quoted context omitted.

Here is Warren Buffet's similar argument against gold from his 2011 annual investor letter [0]. The argument also applies to Bitcoin and other assets that are driven more by speculation than productive income streams: "The second major category of investments involves assets that will never produce anything, but that are purchased in the buyer’s hope that someone else – who also knows that the assets will be forever…

Now that is well written! Current price of bitcoin is ~9.9k total supply is well over 17 million. lets call it 10k and 20 million. We're sitting at ~ 0.2 trillion. For that you could buy paypal, square, moneygram and Western Union and still have plenty left over. That's fairly surprising. Bitcoin alone is within striking distance of the market cap of visa.

> total supply is well over 17 million

How many of those 17 million have been effectively lost forever?

Re: Vanguard Founder Jack Bogle Says ‘Avoid Bitcoin Like the Plague’

#148

Post by jorblumesea »

lostsock wrote: post #120
jorblumesea wrote: post #99

The biggest red flag is it's clear the exchanges don't have the liquidity for everyone to cash out. Since there are no banks to provide credit lines it's entirely dependent on people getting into the market to provide the fiat currency to cash out. A run on these exchanges will destroy the value of bitcoins and cause a panic.

How is it clear that the exchanges don't have liquidity?

The way the system works provides little in any sense of a line of liquidity. Unlike normal banking the exchanges operate ledgers where the fiat currency they have on hand is directly tied to how many people have put fiat currency into the exchange network. Given the extremely rapid rise of the price of BTC, it's extremely unlikely they have anywhere close to the amount of fiat currency if large numbers of people cash out.

Re: Vanguard Founder Jack Bogle Says ‘Avoid Bitcoin Like the Plague’

#149

Post by [deleted] »

nerdponx wrote: post #59
non_sequitur wrote: post #11

“Bitcoin has no underlying rate of return,” said Bogle, 88, who started the first index fund in 1976. “You know bonds have an interest coupon, stocks have earnings and dividends, gold has nothing. There is nothing to support bitcoin except the hope that you will sell it to someone for more than you paid for it.” Didnt quite understand this quote - is he down on gold too?

There is nothing to support bitcoin That's what I've been realizing latey: there is something to support Bitcoin, and that something is the blockchain. The reason banks and big financial companies are interested in it is not for its speculative value. They are interested in the fact that it is both decentralized and immutable. As long as financial corporations are willing to exchange Bitcoin for USD, then Bitcoin is…

[deleted]

Re: Vanguard Founder Jack Bogle Says ‘Avoid Bitcoin Like the Plague’

#150

Post by tooltalk »

thucydides wrote: post #110
jorblumesea wrote: post #79

Earlier quoted context omitted.

US Treasury bonds are backed by the military and economic might of a superpower, and the fact that it's an IOU that's almost bulletproof. That's a really big part of their value. It's the safest investment possible which is why governments funnel money into treasuries. Bitcoin just has the power of faith in the network and that liquidity will exist when you want to cash out. Neither of which is certain. Bitcoin reall…

I've heard many people say this, and it seemed sensible enough at first. But on further thought, I sincerely can't make sense of it. Dollars are just green pieces of paper. We accept them for goods and services because... everyone ELSE agrees to accept them for goods and services. It's circular. How is the might of the US military relevant here? If you lived in South Korea, would you accept the South Korean won, or w…

> ... everyone ELSE agrees to accept them for goods and services. It's circular.

If you think about it, there is nothing circular about US dollar's supremacy. If you reside in the US, you are bound by the Legal Tender law -- meaning, by law, you have to accept US dollars as a valid payment for meeting financial obligation. The US dollar is also the defacto reserve currency of the world. All important commodities, for instance oil, are priced and traded in USD -- though there have been a number of bilateral agreements between oil-producing nations and consuming nations (eg, Iran-Turkey, Russia) to breakout of this, the USD still rules the day. If you want to understand how the US dollar became the reserve currency of the world, you do necessarily have to understand the WW2 (ie, military conflict), the Brettonwood agreement that came after the war, the collapse of the agreement in the 70's, and what US has been doing militarily and diplomatically to maintain their dollar hegemony since, but, in short, it isn't just about some arbitrary blind trust in the US dollar by the world (or circular reasoning) that we ended up with the system that we now have.

> How is the might of the US military relevant here? If you lived in South Korea, would you accept the South Korean won, or would you refuse your salary because their military is too weak compared to the United States? I would take my salary in South Korean won because all of my neighbors and strangers will take it in exchange for goods and services. Circular.

IMO, this is a terrible example to demonstrate your point. In case of national security threat or economic crisis, it's not uncommon to see smart monies fleeing to gold or other safer currency (eg, Swiss Franc, Japanese Yen, or USD). South Koreans are less likely to hold their own currency if the US decides to withdraw all 30K US troops and break any agreements in place to militarily assist the South in case of military conflict.

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