[GregWeld]

So with the latest news regarding China's ban on BitCoin.. Let's revisit my "investing 102" reasons for NOT wanting to plug this type of an "investment" or put more value on it other than the gambling hype associated with this type of an investment.


By my latest count -- most on here are relative newbs to investing or are complete investing virgins. Thus the reason for so many pages devoted to breaking down investing in it's simplistic form… i.e., saving some money - putting it to work - making it work for you. Compounding over time and ending up with some real money.


Most of you are just beginning and perhaps most have a main goal of retirement some time in the not too distant future. With a goal like that - gambling isn't the best way to get to that goal.

I'm not against BitCoin one bit (pun?)! I'm really not. If a guy is 20 or 30 something - has a great job - has 100K in his retirement account - isn't in debt up to his eyeballs… and wants to play with 5 or 10K trading BitCoins… I'm fine with that. Maybe a guy can score big and double or triple or quadruple his money and his 5 becomes 20! AWESOME! But what I think is closer to the "Investing 102" reader is that most are not there YET. And what I've spent an awful lot of time on in this thread is to try to get folks to recognize the difference between INVESTING and GAMBLING. To most - gambling means taking some pocket money and going to a casino for the night - if they win big - they buy dinner and have some fun. Sadly - most find out that they don't build these big casinos on the winners of the world. They're built with the losers money. The winners are for show - to suck the life out of the losers.

BitCoin saw a drop on Friday of 20% or more - 30% in some markets. Why? Because the Chinese government banned it. BOOM! 20 or 30% of your "investment" just got blown away. THAT IS WHAT I'M AGAINST! I'm not against the fact that you might get lucky and ride this bad boy to the top.

Here's what happens to many (most) investments like this….it can be flipping houses - in the late 90's it was dot.bomb investing… in Holland years ago it was Tulips… As the "winners" win -- more and more people decide it's time for them to pile on -- driving the price up -- which is a self-fulfilling vacuum sucking more people in driving the price higher - UNTIL - the bottom drops out. Do some folks make a killing?? Hell yes! Do most lose? Yep. The problem is that the only reason the price is going up - is because someone paid more than the last guy did… and as long as that's sustainable - everyone is good… but the minute the selling starts -- people can't get out fast enough. THE REASON FOR THAT is because nobody really wants to own the stuff - they just want the price to go up over what they paid! Thus the gambling part! When you buy - you're just gambling (betting/hoping) that tomorrow the price will be higher. You really own nothing. There's not a nickel of income produced. It's simply that MAYBE the price will go up.

A 20 or 30% overnight price drop is gut wrenching to most folks. Yeah it might go back up - THIS TIME - and when it does - it'll suck some more people in… but when is it the end? Who knows!

Most folks go to the casino and at some point they have a "gain"…. but by the end of the night - most have put all the gain back, including the cash they started with…