Investing 102

[Woody]

Originally Posted by Tony_SS

A few pages back I was crowing about Bitcoin at $70 each. Many friends of mine screamed "bubble!!!" at that price and ran away... not me. Right now the price is $190.00 / bitcoin.

The question remains, is it an exploding market searching for its true value? Or is it a gigantic bubble?

Personally, I still think this is a good price. Markets are emerging, companies are creating ATMs for Bitcoin and we will see its use streamlined and mainstreamed. I think the opening door to get in is closing fast though. But I could be wrong, millions of users could decide to sell at once or have security breach at an exchange to drop the value. If that happens, I'm buying!

Tony, speaking security breaches, did you see this.

http://rt.com/news/bitcoin-currency-cyber-attack-394/

[GregWeld]

All people really need to understand about stuff like this is that it's the difference between INVESTING -- and GAMBLING.... Some people gamble and hit HUGE winnings... others just drip their money away every week buying "stuff" hoping they're going to be winners.

I'd prefer to actually invest.... and I'm the kind of guy that could actually afford to gamble. I just can't be bothered. I don't even buy lottery tickets or Mega power whatever they ares... Bitcoins fit this category... it's just gambling. You're just gambling that someone is going to pay more than you paid... because you're not buying anything more than that. You're just buying something and hoping like hell that someone else will pay more than you did... thus making you have a "gain". As long as someone else is around - great... things go fine. But what you're really buying is nothing more than a fart in a windstorm.

My wife and and argue all the time about spending money... we don't actually argue about spending money -- we just see value in different kinds of spending money. She would spend - and does in fact spend - huge sums traveling... and on clothing... To which my way of thinking is that you might as well walk outside and toss the money in the street... I prefer to buy STUFF... real stuff... that if I want to I can sell at some point and get "some" of my money back. We discuss it this way.... Even if I ONLY get 50% of my cost back -- I have something -- where as there is ZERO return EVER on a trip... other than the memory. I get the memory part out of owning my stuff AND I get something back...

We just agree to see things differently... she goes places... I buy stuff....

I feel this way about INVESTING in stocks... sometimes I sell for lower than I paid.... I accept this fact. I can not pick 10 stocks and have all 10 go up and stay there. But I try my best to understand enough about what I'm buying to try to minimize my losses. I can not understand ANYTHING about Bitcoin except that it appears to be a frenzy and that there's enough people out there that are willing to play. It reminds me of the Dot Bomb era... or the house flipping era... Some people made millions... most of the people lost their shirts. I like walking around with my shirt on.

[Tony_SS]

Originally Posted by Woody

Tony, speaking security breaches, did you see this.

http://rt.com/news/bitcoin-currency-cyber-attack-394/

Yes I did, but those don't concern me. Targeting one exchange has pushed the price down for a minute then it pops right back up. They are trying to shake user confidence since they can't "steal" anything or disable any system.

And instawallet isn't very secure, so I wouldnt use it in the first place, but your wallet is backed up on your computer or usb flash drive (or so it should be) so if where you park your wallet gets breached, then it is still safe, as far as I know.

I use blockchain.info. That's said to be one of the best, encryption there is said to be excellent, you can control the amount of security on your wallet too. It has some nice features.

[Woody]

Originally Posted by GregWeld

All people really need to understand about stuff like this is that it's the difference between INVESTING -- and GAMBLING.... Some people gamble and hit HUGE winnings... others just drip their money away every week buying "stuff" hoping they're going to be winners.

I'd prefer to actually invest.... and I'm the kind of guy that could actually afford to gamble. I just can't be bothered. I don't even buy lottery tickets or Mega power whatever they ares... Bitcoins fit this category... it's just gambling. You're just gambling that someone is going to pay more than you paid... because you're not buying anything more than that. You're just buying something and hoping like hell that someone else will pay more than you did... thus making you have a "gain". As long as someone else is around - great... things go fine. But what you're really buying is nothing more than a fart in a windstorm.

My wife and and argue all the time about spending money... we don't actually argue about spending money -- we just see value in different kinds of spending money. She would spend - and does in fact spend - huge sums traveling... and on clothing... To which my way of thinking is that you might as well walk outside and toss the money in the street... I prefer to buy STUFF... real stuff... that if I want to I can sell at some point and get "some" of my money back. We discuss it this way.... Even if I ONLY get 50% of my cost back -- I have something -- where as there is ZERO return EVER on a trip... other than the memory. I get the memory part out of owning my stuff AND I get something back...

We just agree to see things differently... she goes places... I buy stuff....

I feel this way about INVESTING in stocks... sometimes I sell for lower than I paid.... I accept this fact. I can not pick 10 stocks and have all 10 go up and stay there. But I try my best to understand enough about what I'm buying to try to minimize my losses. I can not understand ANYTHING about Bitcoin except that it appears to be a frenzy and that there's enough people out there that are willing to play. It reminds me of the Dot Bomb era... or the house flipping era... Some people made millions... most of the people lost their shirts. I like walking around with my shirt on.

Greg I could not agree more. I am with you on every point you made.

By the way thanks for keeping us up to date on the interest rate issues. I watch the 10-year note rate every day. As we moved above 2.0% I was beginning to think we were at the point where rates were going higher. They sure retreated quickly though in the last week.

[Tony_SS]

Originally Posted by GregWeld

All people really need to understand...[snip]

It's investing in an alternate currency, one that is user controlled and freely exchanged without "interest, fee's, taxes" etc that banks and govts make money off of. So people are investing or buying into using that currency. Yes some are speculating making money, but that's all part of it. Judging by the price we have more people buying into this than cashing out.

I'm not naive though, bitcoin is in direct competition with the dollar. I know how central banking works, and I can bet you that they are buying in as well. They can do that since they print up the electronic dollars willy nilly. They will sell all at once, the price will crash and they will try to set off a panic. That's all they can do against bitcoin.

I agree with you on spending. But do you think your "dollars" in the bank are really there? Ask the people of Cyprus what happened to their Euros. And stocks are just paper that can become 'farts in the wind' as well. Some things have more risk than others. Bitcoin has a ton of it, there's no denying that. But understand that there are a LOT of people who despise having their dollars slowly devalued through inflation, robed of the purchasing power and savings, having their Euro's stolen and so on. So Bitcoin is a direct free market response to that.

I think you should always invest in what you are knowledgeable about and what you believe in. Succeed or fail, I think a free market should be in control of their currency and completely own it free of any other intervention. That's why I'm supporting it. Heck yeah it's high risk, and there's a good chance it's a bubble and will pop for now... but I'll risk what I can loose. Whatever happens remains to be seen, but it sure is fun watching so far.

Should I have diverse investments based on advice given here? Absolutely. I not knocking any other investments, just bringing this one up for discussion.

[GregWeld]

Originally Posted by Tony_SS

Heck yeah it's high risk, and there's a good chance it's a bubble and will pop for now... but I'll risk what I can loose. Whatever happens remains to be seen, but it sure is fun watching so far.

Ya know -- the people around me that thought flipping houses was fun too.... right up until they lost their ass and moved into an apartment. Then their refrain is --- "I should have seen it coming".


Personally - I don't care what anyone invests in -- or does with their money... but this is INVESTING 102 and people need to understand there is investing and there is gambling. I think Bitcoin is gambling. Since your currency really can't be used to buy very much... you can't take them or transfer them to a real bank account and go buy a car... or food... (you'll no doubt argue that you can, in fact, buy these things -- but I'll argue that even if you could - it would be difficult at best)... so the real intrigue with this "currency" is trading it and watching (hopefully) it go up. Whether it's a bubble or not won't be known - so I wouldn't speculate on whether it is or not. What I'm saying is that things that have no intrinsic value other than someone pays more for it - tend to have very bad outcomes.

It may be that Bitcoin becomes so wildly owned that everyone will take them as payment for anything --- in other words -- just like a US dollar.... It really doesn't matter to me whether the dollar is in fact nothing more than a printed piece of paper... what matters is that if I have enough of them I can buy goods and services and that ANYONE will take my money. That's all that really needs to happen. End of story. Perhaps Bitcoin makes it to that point.

My Grandfather - who lived in Carson City, Nevada for 50 years - used to point out that "most people" are, at some point, perhaps 10% ahead at some point in their gambling while in a casino... and that most people would be happy with a 10% return on their money ANNUALLY... yet these people are up 10% in an hour or two, or day or two.... yet most gamble until they've spent whatever it was they brought to gamble with. He also pointed out that they didn't build those big casinos with the money they earned from the winners.... but I'm sure the losers had a great time. They're still losers.

[GregWeld]

See -- Tony -- I don't know that you actually get what I'm trying to say about Bitcoin.

Here it is in a nutshell...


Bitcoin (whomever or whatever that is) didn't come out a month ago and make an announcement that their currency is now accepted at Bank of America... or at Wal Mart... Nor did they come out and say they've just backed the currency by purchasing half a gazilion dollars of Titanium (or gold or silver)... YET! The price has quadrupled. For no apparent reason than what? Because there are more and more people such as yourself buying into it? Or was there some government that said Hey! We're dropping out of the Eurozone and we're now using Bitcoin as our domestic currency.

None of that happened.

The only "news" is that the meteoric price of a new digital currency had gone bananas.... drawing in more people to play... thus pushing the price up. That's it. Nothing more.

A guy buys 1,000 dollars worth --- next thing you know it's "worth" 3,000 dollars so he buy another 2,000 worth... and that doubles -- so now he's got 10,000 dollars worth.... and he's telling everyone he knows about all the money he's made.

You know when I quit day trading Intel - Microsoft and Dell? When I'd go to the grocery store and the clerks were telling me how much they made day trading "dot whatever". You know why I didn't flip houses with a couple buddies of mine? Because my SON was convinced that he could do it and make zillions in just a matter of weeks.

You know why I just spent a tidy sum rebuilding my Sister and brother in laws Camaro? Because they bet the farm - including money they didn't have by signing as guarantors on notes for my nephew to buy and flip houses. The first couple times went pretty good.... and now they rent a house.

[sik68]

Anyone remember Itex? My parents exchanged on it for a while, then the bottom fell out on that. They were saving their Itex dollars to buy a swimming pool for us kids. 6 months go by and they call the pool company to place the order, and the pool company quoted them 3x the price in Itex as before. I don't remember the exact devaluation; I just remember being sad I didn't get a swimming pool. Another summer on crabgrass running through the sprinklers, thinking "I'm getting too old for sprinklers."



For the kids Tony, be safe and limit your potential downside!

[GregWeld]

Originally Posted by sik68

Anyone remember Itex? My parents exchanged on it for a while, then the bottom fell out on that. They were saving their Itex dollars to buy a swimming pool for us kids. 6 months go by and they call the pool company to place the order, and the pool company quoted them 3x the price in Itex as before. I don't remember the exact devaluation; I just remember being sad I didn't get a swimming pool. Another summer on crabgrass running through the sprinklers, thinking "I'm getting too old for sprinklers."



For the kids Tony, be safe and limit your potential downside!

Here Steven --- You can come up and paddle around in mine....

[Tony_SS]

Hate ya for that pool!!!

Originally Posted by GregWeld

The price has quadrupled. For no apparent reason than what? Because there are more and more people such as yourself buying into it?

Greg I hear what you're saying but let me explain why the price has gone up. After the Cyprus banks were on lock down just long enough for the govt and banks to physically steal the savings right out of the accounts, this set of a panic. Bitcoin started to climb. Spain, Italy, Slovenia, many countries in the EU are in bad shape and folks started to buy into the currency. They way it is set up, is that the price only goes up is when people buy more coins, making them more scarce. The program only produces 21 million 'coins'. Nothing else is manipulating the price. That to me is what is amazing about it. Also, you can exchange back into dollars at any time and buy that car, house, etc, just like any other currency.

Now, having said that, I'm not here to entirely toot its horn. I read this great article and I agree with it. Asian markets are buying into it now, not with the intentions of supporting a new currency, but with to flip based on speculation. I would say 90% chance we are seeing central banks/asian markets run this price up. For that reason I'm cautious. So far is has proven to be legitimate tool for peer to peer trade, its just super volatile right now. Time will reveal its value. Right now it's $207. Mathematically one Bitcoin could be worth $1 million. Will governments shut it down somehow? (although that's virtually impossible, they have to turn off the internet) What makes it interesting is that this is all based on human psychology as nothing else whatsoever is manipulating the price. So, how long is a rope?

http://www.naturalnews.com/039830_bi...ble_crash.html