Tony,

I am showing my ignorance about bitcoin because I never did any research before posting. You were discussing in an earlier post how bitcoin moved up from a few cents to $70+ so I was just assuming it was a stock. Just for my knowledge how is bitcoin traded? I know it is not a currency future. Does it trade on an exchange?

I have nothing against speculation as I have done my fair share of speculating in the futures and options markets, but when you were discussing the stock market being risky, it appeared to me that you were comparing bitcoin to be on the same risk scale as the stocks we have been discussing in this thread.

I don't disagree that the stock market is a little scary to invest in after it has run up so much. However, I do not believe in the doom and gloom predictions some are making now. I have seen too many of these guys make claims that they called the top before. In reality, they called the top 2000 points ago and have been wrong for a long time. When the market finally does correct, and it will, they will say that they were right and called the top, but they won't tell you that they have been calling for a top for the last year all the while the market kept going higher. It like the saying "a broken clock is right twice a day".

The other thing I have learned is that sometimes, some of these so-called gurus actually make a pretty good prediction and hit the timing right. Then everyone thinks that this guru knows everything and follows every word they say. The problem is, they are usually never right again.

Just my opinions, not trying to start an argument. I have been pretty silent for a while and thought I might like to be a bit more involved in the discussions for the time being.

I was fooling around in my Schwab account this morning - just kind of reviewing the quarter that just finished (January / February / March) and compared some of the names I own in this account vs the Benchmark S&P 500

We always are talking about "investing" vs trading vs gambling etc -- so I find real actual numbers to do the talking vs the "I think" kind of statements...


Large Company - Benchmark S&P 500 46.21%



AT&T (T) has a 3 year cumulative return of 71.75%


Altria (MO) " " " " 98.93%


American International Group (AIG) " 84.76%


Consolidated Edison (ED) " " 57.79%


Kinder Morgan Partners (KMP) " 62.77%



Small Company uses the Russell 2000 Benchmark -- 50.94%



National Retail Partners (NNN) " 92.61%


StoneMor Partners LP (STON) " 69.36%


There's a few more in my personal account - but you get the drift.... it's too much typing to do them all... and by the way NONE of these are recommendations for anyone to own - they're just examples from my own account. If you have a Schwab account you can find this info for your own stocks and might find it interesting to see how you're doing versus a benchmark.

This is THREE STINKING YEARS.... and while none have actually doubled a couple are close. So beating a dead horse.... do you really need to gamble to make a few bucks? Will these numbers "hold" going forward? Who knows....
Have we had an extraordinary run since 2008.... Yeah... but we also went down "too much" so we have to average back up. Over the longer terms - we want good steady averages - and we shouldn't get caught up in the bumps and lumps along the way.

Brawk, brawk. :lol: :poke:

$108 today! :rules: (we will see $110 here soon)

It trades between individuals. There are miners (using software to "create" bitcoins, and there are buyers and traders. So someone like you or me are better off just buying them. Later you can sell them off, cash them out, or just keep them. They are literally a virtual currency. It's value comes from miners and people buying them (available). The interesting thing is, they can not be inflated. There is only a fix amount 21 million. So once they're gone, that would be it. Scarcity is built in, unlike the dollar/euro, where that is created by central banking and diluted.

I didn't really want to compare one between the other.. they are different, both hold pros and cons, both hold risks.

I've been listening to guys like Tom Woods, Peter Schiff, Ron Paul. These guys arent "stock" market guys really. Peter Schiff owns Euro Pacific Capital, but they are more Austrian economists who study monetary policy, and how markets react to that. All of them predicted the housing bubble and are giving us warnings about the dollar/euro. Their view is that you can't have this artifiical growth, create this massive bubble and have that correct the economy. Sort of like spending money to get out of debt, it doesn't work. So they think the dollar is being diluted, the market is being pumped up once again, the growth is an unsustainable, unnatural bubble that will pop once again. I happen to agree with that. There are a lot of countries getting out of the dollar. Because of all that, I think its wise to diversify in other things like Bitcoin, holding precious metals, property, etc. Just my .0002 bitcoins.

Here's an article today from Peter Schiff about the market situation

Flying High on Borrowed Wings
http://lewrockwell.com/schiff/schiff214.html

And for anyone who's never heard of him, here's a classic video mash up of him telling the future, not many were listening.

Words beyond wisdom. Money won't buy you health. Steve Jobs can attest to that.

Part of financial planning should be the "what if's" of future health costs. My father's passing was a real eye-opener for me in that his sudden departure was in many ways a blessing. He left life on his own terms and it did not have to destroy his estate to pay for in-home or nursing care (I didn't care if he died broke, but HE did.)

There are no easy or inexpensive options here. In the long run, if one wants to protect their assests and pass them on to their children the the best thing to do is talk to a tax and financial professional/lawyer and start planning now. There are timeline rules for what can, and cannot, be done for asset protection.

Carl...

I was 50 years old 3 years ago when suddenly I was on my Death bed and NO Will or Trust.:sieg: :lostmarbles:

My Wife called a Trust attorney and his Notary and he drove through heavy traffic at 400.00 an Hour plus the Notary wages, to rush to my Deathbed to notarize a Will and Trust at the last moment..

I did pull through and I am fighting hard, But I almost left my family at the hands of our thieving Government...:disgusted:

PLEASE, EVERYONE...No matter what your age, prepare and set up a Trust and Will and Advanced Health Directive for you and your Loved ones...

When something goes wrong, it happens fast and unexpectedly...

Investing does no good if the Government is just going to take it and leave your Family without your hard earned money..:G-Dub:

Here's an alternative I've started to do lately in addition to my retirement stocks.

Peer to peer lending via Prosper.com or LendingClub.com. Essentially you are buying notes for unsecured loans, in tiny slices.

I used prosper in the past and was less than pleased but with lending club it's been great minus one thing, how long it takes from the point where I put up money, until the note is issued. It is decidedly not an invest and forget endeavor.

Anyways, the idea is that people want to borrow money, to do things like consolidate other loans like high interest credit card debt, home improvement, small business loans etc. These are the types of loans you could get at a bank, but eliminating the bank means that people can borrow at a lower interest rate.

Other people, have money and want to earn a return. You can invest as little as 25$ per loan and the company in between services the loan and you collect the interest (minus fees).

In the case of lending club, the interest rates are between 6 and 25% based of course on the risk that the person who receives the loan will default. They have plenty of information to convey the risk, including their own scoring system, the persons FICO, various credit history details (how many late payments etc), their debt to income ratio, and so forth. They also have an area where the person can describe what they are using it for, but it's generally not ideal to let emotion control who gets your money.

The key thing here is that you need to diversify here just the same as anything else, by both investing in enough notes and spreading out your risk profile. The more notes you have, the less impact an individual note defaulting has on the overall portfolio.

The other big thing is that it is a loan, so the payments you receive each month, are principal + interest. Similar to dividend re-investing, but more importantly you have to re-invest these, since you get principal back.

The pros here are:

High interest rates - my blended rate is 10%, but you can go riskier and get 12-15%
Easy to use and manage
Lending club seems on top of rejecting shady applications, they say they accept only 10% of applications, and then they do more checking once a loan is funded.

The cons are:

Long delays to fund loans - Two weeks for me to fund 80% of the loans I have tried.

Lots of maintenance. If you had the suggested 20k+ invested, you'd have to re-invest in 20+ new notes every month, which generally involves checking every few days to see what has funded or not.

The tax issues are more complicated than most although they have streamlined the reporting they give you in terms of the interest you received, defaults etc.

Not very liquid. You can sell your notes, but it takes time to do so.

If I had more money, I'd do this I think. I believe in helping people and if one of the ways I could do that was to lend someone money, I'd consider it. However, I'd only be willing to put up money I could lose and not see again without hurting myself. While I'm not really a fan of big banks, they have their lending criteria for a reason.

Remember that INTEREST is taxed as INCOME.... and you're adding to your income -- so let's say that you make a $1500 a week... at your regular job...and have withholding at the appropriate tax rate. Now a year goes by and you've added 20 grand in INTEREST INCOME. So be careful of 'bracket jumping' your income!

That's why dividends are so popular - they're not added to your income... and are taxed at a fixed rate of 20%...


72,500 is the top at 15%... make 72,501 and you're now paying 25% on that last dollar earned.

In most states there is also a STATE income tax.... so you've got to factor that in as well.

I'm not arguing against doing this kind of diversification etc... What I'm pointing out to ALL that read - is that don't forget that income taxes play a HUGE roll in your overall investing strategy! Don't overlook them! They will and do, affect your net return.

Indeed, the tax side of things is complex but they do have IRA accounts which avoid that.

They also say you shouldn't have more than 10% of your money in this sort of thing because I imagine if there was another recession the defaults probably go up.