Investing 102

[Tony_SS]

Originally Posted by Bucketlist2012

Did I just read that Bitcoin went from 266 to 150 in one day ???

I don't follow or own it, but man that is a crash for sure..

Yes it did, big time! Amazingly Mike Adams, predicted it the day before it happened. And oddly someone called "Bitcoinbillionare" on Reddit was giving away over $13k in Bitcoins over the day. Mike is calling this a central bank stress test to determine how much it would take to crash the bitcoin market. And thus did just that and they achieved their goal: extreme price volatility has hurt bitcoin credibility. One does not just attempt to compete with the dollar and euro, and get away with it.

[GregWeld]

Originally Posted by Tony_SS

Yes it did, big time! Amazingly Mike Adams, predicted it the day before it happened. And oddly someone called "Bitcoinbillionare" on Reddit was giving away over $13k in Bitcoins over the day. Mike is calling this a central bank stress test to determine how much it would take to crash the bitcoin market. And thus did just that and they achieved their goal: extreme price volatility has hurt bitcoin credibility. One does not just attempt to compete with the dollar and euro, and get away with it.

Well the REAL difference in actual currencies is that they're backed by countries that make things - or produce things - and have tax payers (so actual revenue) etc. Of course we all know that the "full faith and credit" of some of these countries is complete BS.... and that only works IF they have enough cash flow to pay their gianormous debt load... But what I'm saying is there is a monumental difference between a national currency and a digital "game"/"trading scheme" for lack of a better definition which solely relies on the greater fool theory (i.e., someone else will pay more than you did).

I'm not saying that Bitcoin can't or won't catch on and become an actual currency that can be used for everyday functions... I'm not a guy that believes in ANYONES predictions. That's just guessing or wishful thinking. But you never know!

Personally - I think Bitcoin would catch on and would more likely become a currency if there were more of them and they were worth LESS.... and were used to buy things and pay bills --- rather than just (for the most part) being traded amongst the "faithful few".

[GregWeld]

BY THE WAY ----- Bitcoin is trading at $120 this morning....


Last night when I check the "Bitcoin charts" --- which might as well be peering into the sky and counting stars (hahahahahahaha) it was trading at $170.


I don't care one iota about this thing... it's just interesting to watch and perhaps LEARN from it. I hate to see anyone loose out on a great investment - but I really hate to see people just flat ass be stupid.

The whole thing reminds me of guys that go out and buy a clapped out Fred Flintstone car because they can't afford to buy a version of it that actually runs and drives etc..... yet their dream is to build a Ridler car. Dude! Really! If you can't afford to buy a $25K car --- how are you going to turn that $5K car that needs floors - quarters - roof - cowl - chassis... into ANYTHING.


So it's like investing.... we all want to be "rich" (hell - we all want to drive Ridler winners).... but if you're trying to build your nest egg --- is it smarter to gamble it --- or invest in real stuff?

[Tony_SS]

Originally Posted by GregWeld

Well the REAL difference in actual currencies is that they're backed by countries that make things - or produce things - and have tax payers (so actual revenue) etc. Of course we all know that the "full faith and credit" of some of these countries is complete BS.... and that only works IF they have enough cash flow to pay their gianormous debt load... But what I'm saying is there is a monumental difference between a national currency and a digital "game"/"trading scheme" for lack of a better definition which solely relies on the greater fool theory (i.e., someone else will pay more than you did).

I'm not saying that Bitcoin can't or won't catch on and become an actual currency that can be used for everyday functions... I'm not a guy that believes in ANYONES predictions. That's just guessing or wishful thinking. But you never know!

Personally - I think Bitcoin would catch on and would more likely become a currency if there were more of them and they were worth LESS.... and were used to buy things and pay bills --- rather than just (for the most part) being traded amongst the "faithful few".

Yes, obvious differences. But I like the principle of the bitcoin decentralized peer to peer, free market system. That's where the real value has always been. It's too bad that it seems like the popularity was exploited. It remained very stable for almost 2 years until this bubble. Bitcoin reminds me of the Gold market since 1971 on a nano scale. lol! It's not going anywhere, there's still a use for it. It will level off and slowly climb as options for usage expand.

Full disclosure, For what little that I have I'm staying in as its still trading for more than I paid. I am very happy for my buddy (who unlike me!) bought in at $8. He sold almost all of his on Monday for $188. He made out very well.. so I'm very happy for him recognizing the bubble and jumping ship at a good time!

[GregWeld]

Well === it didn't take long for the bubble to burst did it....



I'm always happy for anyone that scores - regardless of how they did it... My problem is with folks not having a clue about values of "things"... We all know housing can't double and triple every other year... we all know a 1969 Camaro CLONE (now called a tribute car) has no value at $200K.... yet somehow people get sucked in and sucked up.

Tony - I agree there is some value in the Bitcoin system... but the value has to be in trading the "coins" for goods and services... Not just trading the coins themselves. So I agree with you... it's too bad that there was a pile on affect that made this go crazy and if it falls back to "norm" ($30ish) then it will hurt the legitimacy of the entire system.

It's funny - people LOVE stuff when it's going up -- and when it comes back to "normal" they don't want to have anything to do with it (whatever it is).

[John510]

Whats a good thing to invest a large chunk of money into? Looking for at least a 10% return if thats even possible.....


Also would like to have access to the money.

Commercial real estate a good idea?

[sik68]

These recent posts on bitcoin have really guided me to learn more about currencies and so here's a summary based on how I understand it.

A currency falls into 2 categories: an instrument of equity, or an instrument of debt.

A currency that is backed by a tangible asset (like gold) is an instrument of equity. At any time, your notes can be traded in for a ratio quantity of the asset. Of course, it can be argued that the value of gold is arbitrary, but there are a lot of valid reasons why it works. Not rocket science, but I'm stating the obvious to draw the distinction with non-backed currencies.

A currency that is not backed by a tangible asset is only an instrument of debt; an IOU traded among people who agree on its value. It is only backed on faith by those using it.

Again, not rocket science...the concepts are basic but thinking about the difference between an asset based monetary system vs a debt based monetary system and you start to see the world through a different lens.

I know this is not directly Investing 102 material, but I think it applies, because it is important for us as investors to recognize the distinctions between not only speculation vs investing, but also the distinction between real assets and IOUs, aka liabilities.

[GregWeld]

Originally Posted by John510

Whats a good thing to invest a large chunk of money into? Looking for at least a 10% return if thats even possible.....


Also would like to have access to the money.

Commercial real estate a good idea?

John -


That is not an easy one two answer... because you failed to provide adequate info such as: Term? i.e., retirement - one week - 5 years etc

Also - can you stand (suffer) a decrease in capital during the holding period...

Commercial real estate is ILLIQUID.... it provides the cash flow you're looking for - although not 10% - more like 7% -- you would NOT have access to the capital.

So when you say you want to have access to the money -- do you want access to the cash flow the capital produces? Or do you need to have access to the capital as well?


Personally - I use three different stocks to hold cash while providing me with a return.

Go to Google Finance and just "search" these three stock symbols:

JNK

JNK is a a Junk Bond ETF (meaning a basket of high yielding low grade bonds) that pays a monthly dividend of 7.12% (annual) ---- or in other words 21 CENTS per share per month.

HYG


HYG is a high yield bond fund consisting of high yielding CORPORATE bonds. It pays 6.41% - or 49 cents per share per month.


I use these because in the CURRENT fairly stable interest rate market -- these have a fairly stable per share price... and I like the monthly income while waiting for less risky investments. Since they pay monthly -- I don't have to pay as much attention to the timing of the buy or sell - since I'll only miss out on ONE months dividend rather than an entire quarters worth (3 months) if I miss time the event.

NLY


NLY - Annaly Capital Management is a mortgage based or mortgage RATE spread based company that pays a HUGE dividend quarterly... of 11.36% or 45 cents per share per QUARTER.


THESE THREE ARE HIGHLY RISKY BASED ON INTEREST RATES.... but as I said above -- right now -- interest rates seem to be fairly stable. That can change and when it changes (we don't know how long or when) the capital basis will change - perhaps just a little - or perhaps a lot. That depends on how much the FED decides to jump the rate.

[GregWeld]

I love stuff like this! It really tells me "you guys" are starting to see this INVESTING --- can be extremely interesting --- and it can be like a hobby like our cars are.... where you might not buy that part -- or that car - but you're interested enough to talk about it and LEARN something from it. I love it!




BY THE WAY --- BITCOIN is now DOWN to $71

That is DOWN 33% in ONE DAY.

That my friends is a gut wrenching decrease in your "money"

Originally Posted by sik68

These recent posts on bitcoin have really guided me to learn more about currencies and so here's a summary based on how I understand it.

A currency falls into 2 categories: an instrument of equity, or an instrument of debt.

A currency that is backed by a tangible asset (like gold) is an instrument of equity. At any time, your notes can be traded in for a ratio quantity of the asset. Of course, it can be argued that the value of gold is arbitrary, but there are a lot of valid reasons why it works. Not rocket science, but I'm stating the obvious to draw the distinction with non-backed currencies.

A currency that is not backed by a tangible asset is only an instrument of debt; an IOU traded among people who agree on its value. It is only backed on faith by those using it.

Again, not rocket science...the concepts are basic but thinking about the difference between an asset based monetary system vs a debt based monetary system and you start to see the world through a different lens.

I know this is not directly Investing 102 material, but I think it applies, because it is important for us as investors to recognize the distinctions between not only speculation vs investing, but also the distinction between real assets and IOUs, aka liabilities.

[GregWeld]

I looked at CON ED (ED) today -- just because it was one of the couple GREEN (up) shares so I wondered if there was some news... even though a utility company doesn't really produce much "interesting" news.... :>)


I see this STEADY EDDIE was UP over 11% already this year (since January 1st)...


There's that trade off between steadying your investments (more important in a DOWN market) and the lower dividend rate.... but a nice total return non-the-less! Gotta love it!