Jack Bogle Says ‘Avoid Bitcoin Like the Plague’

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

Post by B4Xt3r » Wed Nov 29, 2017 7:24 am

neurosphere wrote:
Tue Nov 28, 2017 9:58 pm
I remember a buddy buying Dow Corning at $110, because fiber optics were the "future of the internet" and growth was "unlimited".

I personally bought at about $80 on the way up, and $70 on the way down. "GLW" was my personal lesson on "I don't know squat about any individual company/sector". It could have been much worse. :)

Bitcoin feels the same to me. But I could be wrong, because I don't know squat. :)

NS
Thank you for sharing stories like this - it makes me at 28 (who has never purchased individual stocks) hesitate to purchase individual stocks. I now that it can be difficult to share a mistake, but you make other people better investors because of it.

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

Post by Valuethinker » Wed Nov 29, 2017 7:34 am

sambb wrote:
Wed Nov 29, 2017 6:02 am
did mr bogle avoid enron, or was it in his index funds? why would he be ok with enron, but not bitcoin?
Enron was the most admired company in a number of surveys for several years.

Its accounts were signed off by a firm of professional auditors, the 5th largest in the world at that time.

It had a number of well respected Directors, including a close personal friend of the US president, well connected in Washington, as Chairman (Ken Lay).

The company had enormous physical assets and contracts, which were sold off for a lot of money post bankruptcy.

Bitcoin has none of the above-- we don't even know the identity of its creator. All we have is this belief that it should be worth something.

Yes it was a house of cards. There was accounting fraud. Wall Street should have been more suspicious, but conflicts of interest led to a bending of analyst views. The company systematically skewed the views of financial analysts, investors, consultants, business schools.

Read The Smartest Guys in the Room.

BTW that is terrible logic that you have used -- reasoning by false analogy. Bitcoin is not a NYSE listed company.

A better analogy would be Madoff Investments, which was a hedge fund that was actually a Ponzi Scheme. Again there, too, there was outright accounting fraud. Various efforts to get the SEC to investigate it in more detail were pushed back (read No One Would LIsten by Harry Markopoulos). Madoff himself played affinity fraud brilliantly -- if you can get people at the same country clubs to invest, you can perpetuate a pretty big scandal (see Gouda Walker and the Lloyd's (insurance) Market Names scandal in the UK).

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

Post by Valuethinker » Wed Nov 29, 2017 7:42 am

kehyler wrote:
Wed Nov 29, 2017 7:24 am
neurosphere wrote:
Tue Nov 28, 2017 9:58 pm
I remember a buddy buying Dow Corning at $110, because fiber optics were the "future of the internet" and growth was "unlimited".

I personally bought at about $80 on the way up, and $70 on the way down. "GLW" was my personal lesson on "I don't know squat about any individual company/sector". It could have been much worse. :)

Bitcoin feels the same to me. But I could be wrong, because I don't know squat. :)

NS
Thank you for sharing stories like this - it makes me at 28 (who has never purchased individual stocks) hesitate to purchase individual stocks. I now that it can be difficult to share a mistake, but you make other people better investors because of it.
Do not purchase individual stocks.

You get killed by the ones that go wrong, and you can never make up the losses, particularly in tax protected accounts.

In addition, you miss the big winners. You pick a portfolio of tech stocks in 1999: HP, Dell, Microsoft, IBM, Cisco. Things look pretty good, then the crash happens. You missed Facebook, Google, Apple, Amazon, Netflix, which is what has driven the sector since about 2005.

In the long run, missing the big winners is what really hurts. You buy a portfolio of retailers, but you ignore one that is really only in the south, and sells to blue collar customers*. That company, btw, is called WalMart, and becomes the world's largest retailer (but even WalMart has not done that well since 2003). If you look at "Good to Great" Jim Collins book on great companies (probably the best selling business book of all time) the companies in it have had a mixed performance since.

* this is not a made up example. Peter Lynch, the greatest mutual fund investor of his generation, admits that he totally missed WalMart. There were none in the New England area, and he never got around to visiting one. It was, after all, run out of Bensonville Arkansas-- how many great companies came out of Arkansas?

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

Post by nisiprius » Wed Nov 29, 2017 7:48 am

HomerJ wrote:
Tue Nov 28, 2017 10:29 pm
alwayshedge wrote:
Tue Nov 28, 2017 8:25 pm
People said the same thing about the internet. Many many intelligent people thought it was blasphemy to think the internet would surround our lives like it has. Now we're sitting here, on the internet, discussing about how one should avoid the next tech.

Not saying Mr. Bogle is wrong. But don't let the whole conservative "I only buy index funds because everything else is stupid" put the blinders on you. The world goes through changes. Things that seem stupid and speculative sometimes do actually become what they said could never happen.
Bitcoin is not the Internet. Blockchain MAY be the Internet (although I highly doubt it), but Bitcoin could be MySpace or Alta-Vista or Ask-Jeeves.

Blockchain may become very successful and important. But that does not mean Bitcoin has to.
Hear, hear! Best succinct summary so far.

Even when you are pretty sure some general technology area is going to be high-growth, you still have to decide how to invest--who is going to make the money in that field. Who will profit from FM radio? Will it be Edwin Armstrong, inventor the technology, and his Yankee Network of FM stations, or would you have been prescient enough to predict that it would be David Sarnoff and RCA?

1) It's not even clear that the investor's dilemma is "who will profit off the Internet?" The general technology is "wide-area computer networking." The examples of how you could have lost might not be MySpace, AltaVista, or Ask Jeeves; the appropriate examples might have been CompuServe and Prodigy. On the one hand, real, serious, consumer-oriented private companies, with a lot of capital, equipment, and hundreds of thousands of paying customers. They might well have looked like the safe bet (just as Osborne Computers, the first personal computer company that was seriously focussed on business rather than hobbyist use, might have looked like the safe bet in personal computers).

2) People forget that commercial use of the Internet was actually prohibited until 1995. The transition is so complicated I hadn't understood it and, after skimming two Wikipedia articles about it--https://en.wikipedia.org/wiki/National_ ... on_Network and https://en.wikipedia.org/wiki/Commercia ... e_Internet -- my eyes glaze over and, let's just say, it was complicated; but there was a clear dividing point in time. Old-timers may remember the days when in theory (not policed or enforced in practice)--it was only legal for a .com to exchange email with a .edu, not directly with another .com. Betting commercial development of the Internet before 1994 would have been risky indeed. This leads to the possible analogy: bitcoin might be like trying to invest in "The World," world.std.com, the first ISP which exists to this day (but has AFAIK never gone public), or "The Well" (similar West Coast pioneer). The World had to fight some legal battles in the beginning, as its leal status was unclear.
retprof wrote:
Tue Nov 28, 2017 10:03 pm
nisiprius wrote:
Tue Nov 28, 2017 9:05 pm
alwayshedge wrote:
Tue Nov 28, 2017 8:25 pm
...People said the same thing about the internet...
Who? I really don't remember that.
1995 Newsweek article by astronomer Cliff Stoll:

http://www.newsweek.com/clifford-stoll- ... ana-185306:

“After two decades online, I’m perplexed. It’s not that I haven’t had a gas of a good time on the Internet. I’ve met great people and even caught a hacker or two. But today, I’m uneasy about this most trendy and oversold community. Visionaries see a future of telecommuting workers, interactive libraries and multimedia classrooms. They speak of electronic town meetings and virtual communities. Commerce and business will shift from offices and malls to networks and modems. And the freedom of digital networks will make government more democratic.

Baloney. Do our computer pundits lack all common sense? The truth in no online database will replace your daily newspaper, no CD-ROM can take the place of a competent teacher and no computer network will change the way government works.”
Yes, that's very good, and IMHO very fair. Stoll was very vocal about the idea that education would be vastly improved simply by spending school money to buy computers for classrooms; I wonder if anyone has ever organized a debate between Stoll and the MIT "One Laptop Per Child" organization?
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Re: Jack Bogle Says ‘Avoid Bitcoin Like the Plague’

Post by Call_Me_Op » Wed Nov 29, 2017 7:56 am

JDCarpenter wrote:
Tue Nov 28, 2017 4:37 pm
I, for one, don't disagree one bit!

But is there any reason to think that Mr. Bogle's opinion will impact anyone's decisionmaking on this one way or the other? :D

E.T.A.--I'm guessing that the Venn diagram of Bogle-believers/indexers and bitcoin aficionados probably has little overlap...
Yes, because Bogleheads are investors, not speculators.
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Re: Jack Bogle Says ‘Avoid Bitcoin Like the Plague’

Post by WhyNotUs » Wed Nov 29, 2017 7:58 am

nisiprius wrote:
Wed Nov 29, 2017 7:48 am
or "The Well" (similar West Coast pioneer).
Those were the days. I had pretty high hopes for the net at that point as a way of mass distributing quality information and perspectives. Now it is largely about porn, shopping, and misinformation.

I thought about gambling with BTC as it had all of the makings of a great ponzi run but it is not as much fun when you realize the last ones in are low income earners, retirees, and young people just getting a start. I don't need to take their money, will let the Winklevoss twins have it.
I own the next hot stock- VTSAX

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

Post by sciencenerd » Wed Nov 29, 2017 8:04 am

Bitcoin has a current market value of $0.15 trillion total. Last year, the growth rate was 10/year.

If we extrapolate this growth rate, total bitcoin market would be $1.5 trillion in another year, $15 trillion in two years (close to annual US GDP), or $150 trillion in three years. That's about what the US economy is worth in total.

Clearly, the current trajectory is not sustainable and screams bubble territory.

I'd agree with Bogle, stay away as far as possible.

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

Post by dwickenh » Wed Nov 29, 2017 8:13 am

Good article outlining the positives and negatives of this investment.

https://wealthyaccountant.com/2017/11/2 ... lles-heel/
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Re: Jack Bogle Says ‘Avoid Bitcoin Like the Plague’

Post by bradshaw1965 » Wed Nov 29, 2017 8:52 am

People will often say that blockchain is the big deal here but trying to find any real use of the tech divorced from the coin frenzy is really difficult. I've tried to dip my toe into allied services but the volatility whipsaw makes it almost impossible.

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

Post by Liberty1100 » Wed Nov 29, 2017 9:29 am

All of this talk made me too anxious.

After being interested since 2013 and fully understanding how Bitcoin works and all of the possible downsides, I have set aside a few dollars to "join the ride." I have put in $120 and will only invest that much. I leveraged this bet across the three currencies, (BTC, ETH, & LTE), which will help me minimize the volatility.

I am either going to lose my money, which will reinforce that I should stick to my boglehead-style investing plan
OR
I am am going to double my money, which will literally reinforce my boglehead-style investing plan.

It is definitely a bet.

One thing I am realizing is that the real money makers in all of this are the players like Coinbase. Their transaction fees are surely making them rich. It makes me super happy that I have eliminated all transaction fees with my retirement accounts by going through Vanguard.

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

Post by BogleMelon » Wed Nov 29, 2017 9:54 am

alwayshedge wrote:
Tue Nov 28, 2017 8:25 pm
But don't let the whole conservative "I only buy index funds because everything else is stupid" put the blinders on you.
I was about to agree with this, but then I remembered that by owning only index funds, I literally buy everything on the globe that is for sale!
"One of the funny things about stock market, every time one is buying another is selling, and both think they are astute" - William Feather

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

Post by BogleMelon » Wed Nov 29, 2017 10:03 am

Bitcoin may well go to $20,000 but that won’t prove I’m wrong.
I can't agree more on this statement of Mr. Bogle. If you go to Vegas and play roulette with your house deed, and instead of losing your house you won $5M, that doesn't mean your gambling act was right. Your decision to put your own house in jeopardy is always stupid no matter what the output is :!:
"One of the funny things about stock market, every time one is buying another is selling, and both think they are astute" - William Feather

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

Post by TravelforFun » Wed Nov 29, 2017 10:41 am

jlcnuke wrote:
Tue Nov 28, 2017 5:40 pm
Had I invested the $18k I put in my 401k in 2012 in bitcoin instead I'd have ~$15,000,000 today. Needless to say, my index investing hasn't produced those returns either.
Investors should be barred from using phrases like: could have, would have, or should have. There's no looking back.

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

Post by vitaflo » Wed Nov 29, 2017 10:56 am

jlcnuke wrote:
Wed Nov 29, 2017 6:05 am
vitaflo wrote:
Tue Nov 28, 2017 10:45 pm
jlcnuke wrote:
Tue Nov 28, 2017 6:38 pm
Wakefield1 wrote:
Tue Nov 28, 2017 6:22 pm
Big lottery jackpot? Paid for by those buying in? When more players/buyers/sellers start to cash out/sell instead of buying into the game will the jackpot start to shrink? Can it go all the way to nothing?
My speculation into most lottery jackpots have gone to $0.... every drawing I don't win something from (most of them) is a 100% loss of the money I speculate on that drawing. Which do you think is more likely: my bitcoin value going to $0 tomorrow or the money I spent on tonight's lottery ticket being worth $0 tomorrow? Personally, I'd say the latter is more likely as historically that has been the overwhelmingly most common result while historically bitcoin hasn't ever had a 100% drop in value overnight.
I mean, risk = reward right? Winning the Powerball is a (currently) ~80,000,000% return on investment overnight. Bitcoin has "only" gone up 1,000% this year. Certainly bitcoin has less risk than Powerball, but perhaps that's not saying much.

If smart investing is about managing risk, I would consider neither to be good investments.
I know I never claimed either were an "investment". In fact, I've said they aren't many times over the years. They're gambles/speculation.
My post was agreeing with you. ;)

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

Post by soccerdad12 » Wed Nov 29, 2017 10:57 am

Read in the last few days that one of the most searched phrases on internet browsers is "how to buy bitcoin with a credit card." Now that is scary.

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

Post by alfaspider » Wed Nov 29, 2017 11:06 am

sciencenerd wrote:
Wed Nov 29, 2017 8:04 am
Bitcoin has a current market value of $0.15 trillion total. Last year, the growth rate was 10/year.

If we extrapolate this growth rate, total bitcoin market would be $1.5 trillion in another year, $15 trillion in two years (close to annual US GDP), or $150 trillion in three years. That's about what the US economy is worth in total.

Clearly, the current trajectory is not sustainable and screams bubble territory.

I'd agree with Bogle, stay away as far as possible.
Exactly. The trajectory is not sustainable as the market will eventually run out of capital to sustain the current rise. Big investors will start trying to cash out, which will precipitate a crash. It's certainly possible that bitcoin could become the dominant global currency with a stable value someday, but there are many reasons why that is highly unlikely. It has a number of limitations that will make it very difficult for it to work well in that role.

As someone pointed out, blockchain technology may well indeed become an important foundation of the future of capital and finance in the way the internet has become a key foundation for communication. But that does not mean bitcoin isn't Yahoo or, even worse, pets.com.

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

Post by nisiprius » Wed Nov 29, 2017 11:07 am

To all the people in this and other threads, who practice or advocate the idea of allocating a small amount (5% is often suggested) of the portfolio, an amount they "can afford to lose," to speculative investments...

...I have never seen any of those discussions address the question of what happens if you do lose it. The assumption seems to be that the worst that can happen is that you won't beat an index fund with it, and that it is all OK because anyone can tolerate a 5% loss.

But that's only true if you have really, truly, limited your loss.

So if you gamble, say, $25,000 on, say, bitcoin, and you lose it all, what happens next? Do you say "Well, that was fun. I definitely got $25,000 worth of fun out of that, much more fun than anything else I could have done with $25,000" and never do it again? Or do you wait six months or so for the pain to subside, push the memory away, and say "Wow, this looks interesting, I think I'll put 5% of my money into this other thing because it's just fun money, I can afford to lose it, and I want a chance to recoup my losses?"

Is there anyone there who has lost a "fun money" investment willing to say what they did afterwards? Or have all the "fun money" investors been so wise that none of them has ever lost their investment?
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Re: Jack Bogle Says ‘Avoid Bitcoin Like the Plague’

Post by nisiprius » Wed Nov 29, 2017 11:28 am

Speaking of "avoiding the plague," we saw a sign like this on our road trip out West in 2016... in the National Grasslands area near Badlands National Park. My wife was disappointed that we never did see a black-footed ferret. We saw lots of prairie dogs and we avoided them like the plague. But don't worry, it's not bubonic plague, it's "only sylvatic plague." Of course, if the organism that causes it infects humans, the disease that it causes in humans is... bubonic plague.

Prairiedogecoin, anybody?

Image
Last edited by nisiprius on Wed Nov 29, 2017 11:33 am, edited 1 time in total.
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Re: Jack Bogle Says ‘Avoid Bitcoin Like the Plague’

Post by Iridium » Wed Nov 29, 2017 11:32 am

Liberty1100 wrote:
Wed Nov 29, 2017 9:29 am
<snip>
One thing I am realizing is that the real money makers in all of this are the players like Coinbase. Their transaction fees are surely making them rich. It makes me super happy that I have eliminated all transaction fees with my retirement accounts by going through Vanguard.
I am not sure if you mean the transaction fees to send coins, or currency conversion fees when one buys/sells BTC from fiat currency. Coinbase does not get the transaction fees that collected when coins are sent from one address to another. The Bitcoin miners collect that and miners have enormous costs in purchasing vast farms of purpose built computer chips and powering them. That is one of the inefficiencies specific to BTC (as opposed to other crytocurrencies) right now: transaction costs are absurd, but nobody is really making a killing on them.

Coinbase makes their money on currency conversion fees. That is probably making them a tidy sum, though the fees are very much in line with, if not lower than, retail costs to convert between two fiat currencies.

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

Post by HomerJ » Wed Nov 29, 2017 11:39 am

sambb wrote:
Wed Nov 29, 2017 6:02 am
did mr bogle avoid enron, or was it in his index funds? why would he be ok with enron, but not bitcoin?
What are you talking about? Of course he avoided owning the single stock Enron. Enron is the example we use when talking about the dangers of having too much of your money in a single stock. Just like the dangers of having too much of your money in a single investment like Bitcoin.

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

Post by Texanbybirth » Wed Nov 29, 2017 11:44 am

soccerdad12 wrote:
Wed Nov 29, 2017 10:57 am
Read in the last few days that one of the most searched phrases on internet browsers is "how to buy bitcoin with a credit card." Now that is scary.
Well I just contributed to that search. I even downloaded the Coinbase app, but then my guardian angel whispered in my ear and I didn't open an account. Back to the long, slow grind of work! :beer

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

Post by ruralavalon » Wed Nov 29, 2017 11:52 am

I would rather buy rare tulip bulbs. I can plant them in our garden and see a beautiful flower next spring.
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Re: Jack Bogle Says ‘Avoid Bitcoin Like the Plague’

Post by TheRightKost87 » Wed Nov 29, 2017 2:20 pm

jlcnuke wrote:
Tue Nov 28, 2017 10:38 pm
Then again, for all I know, 15 of the top 10 companies in the S&P 500 will file bankruptcy next year... I can't predict the future.
15 of the top 10? That'd be quite the feat for sure.
"The problem with diversification is that it works, whether or not we want it to"

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

Post by jlcnuke » Wed Nov 29, 2017 2:24 pm

TheRightKost87 wrote:
Wed Nov 29, 2017 2:20 pm
jlcnuke wrote:
Tue Nov 28, 2017 10:38 pm
Then again, for all I know, 15 of the top 10 companies in the S&P 500 will file bankruptcy next year... I can't predict the future.
15 of the top 10? That'd be quite the feat for sure.
bah.. you mean what I know..... ;)

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

Post by DGE » Wed Nov 29, 2017 2:27 pm

Texanbybirth wrote:
Wed Nov 29, 2017 11:44 am
soccerdad12 wrote:
Wed Nov 29, 2017 10:57 am
Read in the last few days that one of the most searched phrases on internet browsers is "how to buy bitcoin with a credit card." Now that is scary.
Well I just contributed to that search. I even downloaded the Coinbase app, but then my guardian angel whispered in my ear and I didn't open an account. Back to the long, slow grind of work! :beer
I did the same thing...have the Coinbase app and created an account with the intention to make a purchase this morning. I bank with a smaller bank and it required me to do a manual linkage, which also meant Coinbase will be making 2 small deposits into my bank account in the next 2-3 business days, and I'll have to confirm those amounts before I can make a purchase. I considered this a sign from the investment gods to slow down and not invest with my emotions.

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

Post by Jags4186 » Wed Nov 29, 2017 2:50 pm

I will admit I really don’t fully understand Bitcoin. But the reality is it is much different than the internet. No one could go out and buy stock in “the internet”. There was no company called “the internet.” There weren’t competing internets. There was a technology that was government supported that companies used as their backbone. The technology is the blockchain. When there are companies built around the blockchain that do something then we can talk. And I’m sure some of you will inform me that there are already. :D

I also think a big difference between the internet and the blockchain is that the internet was built off of everyday technology and was easy to explain. If someone asked me to explain the internet in 1990 I would have said the following: People speak to each other on phones. The internet allows computers to speak to each other using the phones. I don’t think anyone can concisely explain Bitcoin to me like I just explained the internet.

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

Post by Always passive » Wed Nov 29, 2017 3:14 pm

I am 69 and would never consider investing in bitcoins. But my daughter thinks that I do not understand and my granddaughter thinks that neither my daughter nor I can understand. The world keeps changing so fast that neither I nor Bogle are qualify to comment on the subject.

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

Post by Valuethinker » Wed Nov 29, 2017 3:57 pm

Always passive wrote:
Wed Nov 29, 2017 3:14 pm
I am 69 and would never consider investing in bitcoins. But my daughter thinks that I do not understand and my granddaughter thinks that neither my daughter nor I can understand. The world keeps changing so fast that neither I nor Bogle are qualify to comment on the subject.
It changes, but it also stays the same.

We overweight recent history.

Those who remember 1938 are probably in a better position than those of us who do not. Or even those who remember 1968. They can see the recurring patterns in the world.

Similarly it was said that the problem in 1980 was that the young investors were all out of the market, crushed by 12 years of go nowhere, inflation, etc. Whereas those who had been through previous bear markets, like the 1930s one, realized that eventually things would get overcooked and markets would follow a long bloody bear market with superb performance.

I had a boss who had lost money in the Australian mining boom of the early 80s. A lot of money-- when it crashed.

Thus, in the dot com boom, he sold out and cashed in. Whereas I did not .... He has a very nice house these days ;-).

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

Post by Valuethinker » Wed Nov 29, 2017 3:59 pm

Jags4186 wrote:
Wed Nov 29, 2017 2:50 pm
I will admit I really don’t fully understand Bitcoin. But the reality is it is much different than the internet. No one could go out and buy stock in “the internet”. There was no company called “the internet.” There weren’t competing internets. There was a technology that was government supported that companies used as their backbone. The technology is the blockchain. When there are companies built around the blockchain that do something then we can talk. And I’m sure some of you will inform me that there are already. :D

I also think a big difference between the internet and the blockchain is that the internet was built off of everyday technology and was easy to explain. If someone asked me to explain the internet in 1990 I would have said the following: People speak to each other on phones. The internet allows computers to speak to each other using the phones. I don’t think anyone can concisely explain Bitcoin to me like I just explained the internet.
I never found the Internet remotely easy to explain or understand! I knew what it did, but I couldn't easily explain to myself or anyone else how it did it.

Phones are 1-to-1. The internet is 1 to many and many to many. Maybe the phone analogy helped, but the whole idea that you could be as if you were remotely logged onto a computer, except you weren't, there was this other thing.

And then there was the WWW thing -- that *really* blew my mind.

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

Post by vitaflo » Wed Nov 29, 2017 4:18 pm

Jags4186 wrote:
Wed Nov 29, 2017 2:50 pm
When there are companies built around the blockchain that do something then we can talk. And I’m sure some of you will inform me that there are already. :D
Many companies are building products on blockchain tech. Some of them are crypto-currency of course, but many are other things. My company is working on one implementation right now (distributed secure user credentialing).

Blockchain is just a tool, and crypto-currencies are just one application of it. There are many others.

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

Post by SEAworld9 » Thu Nov 30, 2017 11:46 am

originally opened my acct in 2013. bought very little then, and have been buying since late august of this year.

do your own research, make your own decisions. if you want to compare this to tulips go for it, however this is nothing like tulips.

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

Post by DaftInvestor » Thu Nov 30, 2017 12:03 pm

This speculation-bubble will burst soon just like all the rest after which point the tulip, whoops, I mean bitcoin, speculators will look back and say "How could I have been so foolish".

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

Post by ruralavalon » Thu Nov 30, 2017 12:04 pm

SEAworld9 wrote:
Thu Nov 30, 2017 11:46 am
originally opened my acct in 2013. bought very little then, and have been buying since late august of this year.

do your own research, make your own decisions. if you want to compare this to tulips go for it, however this is nothing like tulips.
And the research could include the Dutch "tulipmania" when a bubble of extraordinarily high prices for fashionable tulip bulbs collapsed in 1637. To me this looks very much like tulips.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

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

Post by SEAworld9 » Thu Nov 30, 2017 12:32 pm

ruralavalon wrote:
Thu Nov 30, 2017 12:04 pm
SEAworld9 wrote:
Thu Nov 30, 2017 11:46 am
originally opened my acct in 2013. bought very little then, and have been buying since late august of this year.

do your own research, make your own decisions. if you want to compare this to tulips go for it, however this is nothing like tulips.
And the research could include the Dutch "tulipmania" when a bubble of extraordinarily high prices for fashionable tulip bulbs collapsed in 1637. To me this looks very much like tulips.
awesome! we have another blockchain expert on the board. would love to know your thoughts about how blockchain and bitcoin are the same as tulips.

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

Post by Hawkeye_Saver » Thu Nov 30, 2017 12:42 pm

This Bitcoin bubble seems a lot like a MLM scheme. Anyone who's in it is trying to recruit others to buy in because that's the only way to make money on it. More fools, more money.

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

Post by Nate79 » Thu Nov 30, 2017 12:49 pm

SEAworld9 wrote:
Thu Nov 30, 2017 12:32 pm
ruralavalon wrote:
Thu Nov 30, 2017 12:04 pm
SEAworld9 wrote:
Thu Nov 30, 2017 11:46 am
originally opened my acct in 2013. bought very little then, and have been buying since late august of this year.

do your own research, make your own decisions. if you want to compare this to tulips go for it, however this is nothing like tulips.
And the research could include the Dutch "tulipmania" when a bubble of extraordinarily high prices for fashionable tulip bulbs collapsed in 1637. To me this looks very much like tulips.
awesome! we have another blockchain expert on the board. would love to know your thoughts about how blockchain and bitcoin are the same as tulips.
awesome! we have another tulip expert on the board. :wink:

I would suggest you read the wikipedia page on the tulip mania. It is quite interesting:
https://en.wikipedia.org/wiki/Tulip_mania

The parallels to the euphoric mania surrounding bitcoin is uncanny. Rampant speculation without ever expecting to use the actual good is what jumps out at me. When grandma is buying bitcoin because it is going up up up without ever expecting to actually use bitcoin for it's purpose sounds familiar.

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

Post by SEAworld9 » Thu Nov 30, 2017 2:28 pm

Nate79 wrote:
Thu Nov 30, 2017 12:49 pm
SEAworld9 wrote:
Thu Nov 30, 2017 12:32 pm
ruralavalon wrote:
Thu Nov 30, 2017 12:04 pm
SEAworld9 wrote:
Thu Nov 30, 2017 11:46 am
originally opened my acct in 2013. bought very little then, and have been buying since late august of this year.

do your own research, make your own decisions. if you want to compare this to tulips go for it, however this is nothing like tulips.
And the research could include the Dutch "tulipmania" when a bubble of extraordinarily high prices for fashionable tulip bulbs collapsed in 1637. To me this looks very much like tulips.
awesome! we have another blockchain expert on the board. would love to know your thoughts about how blockchain and bitcoin are the same as tulips.
awesome! we have another tulip expert on the board. :wink:

I would suggest you read the wikipedia page on the tulip mania. It is quite interesting:
https://en.wikipedia.org/wiki/Tulip_mania

The parallels to the euphoric mania surrounding bitcoin is uncanny. Rampant speculation without ever expecting to use the actual good is what jumps out at me. When grandma is buying bitcoin because it is going up up up without ever expecting to actually use bitcoin for it's purpose sounds familiar.
you're right, i love tulips! i normally cringe when someone uses wikipedia as the reference and basis for a position, but so be it. :D

that said, yes i have read it, and it has a big section that everyone tends to gloss over when using the tulip comparison: the conversion of futures contracts into options with capped downside risk (in this case 3.5%), which was driven by government officials to bail themselves out of investment losses. this was the cause of the mania and drove up the derivative prices to sky-high levels. eventually, these contracts were cancelled and the derivatives market fell back in-line with spot prices.

tulipmania was never about the tulips; spot prices for the actual flower remained flat/within normal trading ranges during this time. the "mania" was in the derivatives, and in this case the market acted efficiently. imagine what would happen to all of the derivative markets if it was announced that as of today, all futures contracts become option contracts with a capped 3.5% downside risk?

this is not what is going on with bitcoin. is the price rising quickly? yes. is there speculation? yes. but it is not the same as what was going on with tulips.

and again, this is putting all of the technology aside.

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

Post by Voland » Thu Nov 30, 2017 2:55 pm

As several people have said, you should not mix blockchain and bitcoin. Blockchain is a technology/idea that is nothing like what we had before, it is all but certain that blockchain in all of its various applications will live on. Bitcoin on the other hand is nothing more than the first implementation of blockchain technology and its future is far more murky. Bitcoin (without modifications to the code) will never be used in commerce due to extremely low transaction limit. But, being the first and being secure, it may become digital equivalent of gold. Or it may turn out like tulips. Nobody knows. Not even Jack Bogle.

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

Post by bawr » Thu Nov 30, 2017 3:12 pm

Voland wrote:
Thu Nov 30, 2017 2:55 pm
Bitcoin (without modifications to the code) will never be used in commerce due to extremely low transaction limit.
Not so. Scaling solutions designed to run on top of Bitcoin are being developed:

https://lightning.network

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

Post by Jonathan » Thu Nov 30, 2017 3:51 pm

The modern view is that tulip mania is an overexaggerated myth. From SmithsonianMag.com: There Never Was a Real Tulip Fever.

From the Wikipedia article:

Image

FYI the Goldgar quoted in Wikipedia is Anne Goldgar, who wrote Tulipmania: Money, Honor, and Knowledge in the Dutch Golden Age, which debunks the myth of Tulipmania. Goldgar is a Princeton and Harvard-educated professor of history at King's College London. More on Goldgar's book, from Amazon.com:

Image

The notion that asset volatility is a valid reason for sticking to index funds is legitimate. However, repeatedly bandying these myths about damages peoples' credibility.

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

Post by ruralavalon » Thu Nov 30, 2017 4:07 pm

Smithsonian magazine wrote:That’s not to say that everything about the story is wrong; merchants really did engage in a frantic tulip trade, and they paid incredibly high prices for some bulbs. And when a number of buyers announced they couldn’t pay the high price previously agreed upon, the market did fall apart and cause a small crisis—but only because it undermined social expectations.
Read more: http://www.smithsonianmag.com/history/t ... vqYE3q2.99
Give the gift of Smithsonian magazine for only $12! http://bit.ly/1cGUiGv
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The tulip craze did not involve all levels of Dutch society and produced only a small crisis, but still involved frantic trading at incredibly high prices which then collapsed.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

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

Post by Jonathan » Thu Nov 30, 2017 4:13 pm

Sure, it's not completely fabricated like the story of The Tooth Fairy.

It was "a small crisis" that was grossly distorted and exaggerated, and most of what we've heard about it is not true.

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

Post by ruralavalon » Thu Nov 30, 2017 4:19 pm

Jonathan wrote:
Thu Nov 30, 2017 4:13 pm
Sure, it's not completely fabricated like the story of The Tooth Fairy.

It was "a small crisis" that was grossly distorted and exaggerated, and most of what we've heard about it is not true.
Still frantic trading at incredibly high prices is not good investing.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

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

Post by Jonathan » Thu Nov 30, 2017 4:36 pm

ruralavalon wrote:
Thu Nov 30, 2017 4:19 pm
Still frantic trading at incredibly high prices is not good investing.
That's perfectly reasonable. But if we want to be intellectually honest, it's probably best to just stop brandishing the tulip story to draw a point about financial volatility or bubbles, or to promote the concept of indexing. There are plenty of benefits of a Bogleheads-style investment strategy that can be accurately communicated without advancing known myths.

I'm not doling out any blame here; I've advanced the tulip myth myself. I was wrong.

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

Post by Voland » Thu Nov 30, 2017 4:38 pm

bawr wrote:
Thu Nov 30, 2017 3:12 pm
Voland wrote:
Thu Nov 30, 2017 2:55 pm
Bitcoin (without modifications to the code) will never be used in commerce due to extremely low transaction limit.
Not so. Scaling solutions designed to run on top of Bitcoin are being developed:

https://lightning.network
True, but I'd say that it is still indirect modification to the code. And it remains to be seen how well it would work/scale in reality once it's actually implemented. Coding is hard. And so is infrastructure. I'd say Ethereum has a higher chance of becoming mainstream e-commerce payment method simply because it supports smart contracts from the get-go.

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

Post by VictoriaF » Thu Nov 30, 2017 10:03 pm

Jags4186 wrote:
Wed Nov 29, 2017 2:50 pm
I also think a big difference between the internet and the blockchain is that the internet was built off of everyday technology and was easy to explain. If someone asked me to explain the internet in 1990 I would have said the following: People speak to each other on phones. The internet allows computers to speak to each other using the phones. I don’t think anyone can concisely explain Bitcoin to me like I just explained the internet.
To demonstrate your understanding of how the Internet works, please describe BGP path attributes.

Victoria
WINNER of the 2015 Boglehead Contest. | Every joke has a bit of a joke. ... The rest is the truth. (Marat F)

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

Post by Jags4186 » Thu Nov 30, 2017 10:13 pm

VictoriaF wrote:
Thu Nov 30, 2017 10:03 pm
Jags4186 wrote:
Wed Nov 29, 2017 2:50 pm
I also think a big difference between the internet and the blockchain is that the internet was built off of everyday technology and was easy to explain. If someone asked me to explain the internet in 1990 I would have said the following: People speak to each other on phones. The internet allows computers to speak to each other using the phones. I don’t think anyone can concisely explain Bitcoin to me like I just explained the internet.
To demonstrate your understanding of how the Internet works, please describe BGP path attributes.

Victoria
As soon as you can explain what Bitcoin is so that anyone can understand it.

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

Post by VictoriaF » Thu Nov 30, 2017 10:15 pm

Jags4186 wrote:
Thu Nov 30, 2017 10:13 pm
VictoriaF wrote:
Thu Nov 30, 2017 10:03 pm
Jags4186 wrote:
Wed Nov 29, 2017 2:50 pm
I also think a big difference between the internet and the blockchain is that the internet was built off of everyday technology and was easy to explain. If someone asked me to explain the internet in 1990 I would have said the following: People speak to each other on phones. The internet allows computers to speak to each other using the phones. I don’t think anyone can concisely explain Bitcoin to me like I just explained the internet.
To demonstrate your understanding of how the Internet works, please describe BGP path attributes.

Victoria
As soon as you can explain what Bitcoin is so that anyone can understand it.
Bitcoin is a ledger that contains a record of all transactions since its inception.

Victoria
WINNER of the 2015 Boglehead Contest. | Every joke has a bit of a joke. ... The rest is the truth. (Marat F)

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

Post by Jags4186 » Thu Nov 30, 2017 10:23 pm

VictoriaF wrote:
Thu Nov 30, 2017 10:15 pm
Jags4186 wrote:
Thu Nov 30, 2017 10:13 pm
VictoriaF wrote:
Thu Nov 30, 2017 10:03 pm
Jags4186 wrote:
Wed Nov 29, 2017 2:50 pm
I also think a big difference between the internet and the blockchain is that the internet was built off of everyday technology and was easy to explain. If someone asked me to explain the internet in 1990 I would have said the following: People speak to each other on phones. The internet allows computers to speak to each other using the phones. I don’t think anyone can concisely explain Bitcoin to me like I just explained the internet.
To demonstrate your understanding of how the Internet works, please describe BGP path attributes.

Victoria
As soon as you can explain what Bitcoin is so that anyone can understand it.
Bitcoin is a ledger that contains a record of all transactions since its inception.

Victoria
Thanks that’s very helpful.

You can learn all about BGP paths here

https://en.m.wikipedia.org/wiki/Border_Gateway_Protocol

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

Post by Liberty1100 » Thu Nov 30, 2017 10:26 pm

Jags4186 wrote:
Thu Nov 30, 2017 10:13 pm
As soon as you can explain what Bitcoin is so that anyone can understand it.
Bitcoin is a digital and global money system (currency). It allows people to send or receive money across the internet, even to someone they don't know or don't trust. Money can be exchanged without being linked to a real identity. The mathematical field of cryptography is the basis for Bitcoin's security.
-Simple.Wikipedia.org/wiki/Bitcoin
In the same article, there is more content about Bitcoin Mining, blockchain, Wallets and exchanges. It should be easy enough to wrap your head around it. Also, there are probably thousands of videos out there on youtube explaining what it is and how it works.

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