Jack Bogle Says ‘Avoid Bitcoin Like the Plague’

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

Post by baw703916 » Thu Nov 30, 2017 10:27 pm

VictoriaF wrote:
Thu Nov 30, 2017 10:15 pm
Bitcoin is a ledger that contains a record of all transactions since its inception.

Victoria
Which makes it a little puzzling why hackers would demand payment for ransomeware in bitcoins. It's kind of like bank robbers stealing a bunch of marked bills.
Most of my posts assume no behavioral errors.

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

Post by VictoriaF » Thu Nov 30, 2017 10:40 pm

baw703916 wrote:
Thu Nov 30, 2017 10:27 pm
VictoriaF wrote:
Thu Nov 30, 2017 10:15 pm
Bitcoin is a ledger that contains a record of all transactions since its inception.

Victoria
Which makes it a little puzzling why hackers would demand payment for ransomeware in bitcoins. It's kind of like bank robbers stealing a bunch of marked bills.
A hacker can create several IDs and sell bitcoins from one ID to another. Bitcoin laundering is easier than money laundering.

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

Post by LadyGeek » Thu Nov 30, 2017 10:52 pm

This thread is now in the Investing - Theory, News & General forum (news).

Bloomberg is old news. You heard it here first in the Bogleheads forum. What? Where? When? At the Bogleheads conference, October 20, 2017.

See the wiki: Bogleheads® 16 - Philadelphia

Direct link: Bogleheads 2017 Jack Bogle Q&A, 28:30 time mark. Jack's answer: "I think it's honestly ridiculous..."

The wiki has some background info: Bitcoin
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Re: Jack Bogle Says ‘Avoid Bitcoin Like the Plague’

Post by Swelfie » Fri Dec 01, 2017 2:26 am

VictoriaF wrote:
Thu Nov 30, 2017 10:40 pm
baw703916 wrote:
Thu Nov 30, 2017 10:27 pm
VictoriaF wrote:
Thu Nov 30, 2017 10:15 pm
Bitcoin is a ledger that contains a record of all transactions since its inception.

Victoria
Which makes it a little puzzling why hackers would demand payment for ransomeware in bitcoins. It's kind of like bank robbers stealing a bunch of marked bills.
A hacker can create several IDs and sell bitcoins from one ID to another. Bitcoin laundering is easier than money laundering.

Victoria
I'm not so sure of that. But many are getting smarter and demanding Monero instead. Monero is an encrypted ledger that contains a record of all transactions since its inception viewable only to those who took part in the transactions.

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

Post by Rolyatroba » Tue Dec 05, 2017 12:33 pm

Without a doubt investing in Bitcoin would be every bit as speculative as investing in Webvan. Great idea, initially successful, but who knows how it will turn out. Digital currency is certainly the future, but to invest in Bitcoin is to bet that Bitcoin will win that battle in the long run...unlikely enough for me to stay away.

OTOH, if you believe in the underlying technology, as I very much do, you will be able to invest in that using an index (low cost TBD): http://www.realitysharesadvisors.com/in ... ain-index/

Certainly not pure Boglehead theory but close enough for me.

Being an indexer for more than 25 years, I sometimes kick myself for not buying NFLX in '08 when I saw how well their streaming worked on 3Mb/s DSL. That is the one example of broad index fund-only remorse I have. I'll definitely bend the rules a little with this ETF when it is available, and take part in something I really believe in.

As one Ted talker said, "either Wall St. will do this (blockchain), or it will be done to Wall St."

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

Post by Valuethinker » Tue Dec 05, 2017 1:07 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
The internet was easy to describe IF you omitted a lot of the critical stuff that makes the internet work-- protocols, etc. Computers talking to computers is not really enough, is it?

I suspect bitcoin is somewhat similar. That very few people really understand how it works (I have the New Scientist guide ;-)).

But I do know how financial bubbles work. Which is what is at issue here.

And I shall be emphatic. Bitcoin's price is in a bubble BUT it is not possible to tell whether it should be $100, $1000, $10,000 or $100k a Bitcoin. Or even between $10k and $30k, say. But the behaviour of Bitcoin price and the accompanying language and behaviour of participants is classic of a bubble.

We are in the land of Mandelbrot's blind archer firing arrows against a wall-- the distribution of outcomes has no (knowable) mean or dispersion (is technically that a Cauchy Distribution?).

Makes stock investing look like low risk

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

Post by wrongfunds » Tue Dec 05, 2017 1:38 pm

IEEE magazine recently did a whole issue of Spectrum on blockchain technology. I believe it is freely available over Web. A must reading if you are new to this technology.

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

Post by zonto » Tue Dec 05, 2017 1:59 pm

Would Jack Bogle approve of crypto investing if one does so through a market capitalization weighted index fund?
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Re: Jack Bogle Says ‘Avoid Bitcoin Like the Plague’

Post by ruralavalon » Tue Dec 05, 2017 3:17 pm

Thank you forthe links. This is hilarious :D ,
Mashable wrote:CryptoKitties is a digital goods trading game that lives on the Ethereum blockchain. It lets you purchase, trade, and breed digital kittens. The game has no straightforward "goal" — you can simply buy a digital kitten, and it will eternally be yours due to the nature of blockchain technology.

However, kittens come with different visual features, called traits, and some of these traits are rarer than others. Naturally, most users are trying to breed rare cats, not only because they look cool, but also because they can be very expensive; one particularly rare cat was recently sold for more than a hundred thousand dollars
Bloomberg wrote:Since its 2015 debut, digital evangelists have preached how the ethereum network will be perfect for applications such as managing supply chains and securities sales. What it’s actually used for is buying kittens.
"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 MP123 » Tue Dec 05, 2017 3:31 pm

ruralavalon wrote:
Tue Dec 05, 2017 3:17 pm
Thank you forthe links. This is hilarious :D ,
Mashable wrote:CryptoKitties is a digital goods trading game that lives on the Ethereum blockchain. It lets you purchase, trade, and breed digital kittens. The game has no straightforward "goal" — you can simply buy a digital kitten, and it will eternally be yours due to the nature of blockchain technology.

However, kittens come with different visual features, called traits, and some of these traits are rarer than others. Naturally, most users are trying to breed rare cats, not only because they look cool, but also because they can be very expensive; one particularly rare cat was recently sold for more than a hundred thousand dollars
Bloomberg wrote:Since its 2015 debut, digital evangelists have preached how the ethereum network will be perfect for applications such as managing supply chains and securities sales. What it’s actually used for is buying kittens.
I wonder what asset allocation is appropriate for my portfolio of... digital kittens? :D

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

Post by Slothmeister » Tue Dec 05, 2017 3:38 pm

Why would you want to invest in something where there is no accountability? Decentralization is great until the SHTF and there's no rope to grab.

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

Post by calmaniac » Tue Dec 05, 2017 3:43 pm

“Never trust anything that can think for itself if you can’t see where it keeps its brain.”

— Arthur Weasley, Harry Potter and the Chamber of Secrets

Applies to Bitcoin as well.

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

Post by Nate79 » Tue Dec 05, 2017 3:45 pm

My family is more into dogs than cats. So if there is a Dogcoin I would probably be in on it. Kittencoin? Yeah, not going to happen. We just aren't cat people.

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

Post by rmelvey » Tue Dec 05, 2017 3:52 pm

Nate79 wrote:
Tue Dec 05, 2017 3:45 pm
My family is more into dogs than cats. So if there is a Dogcoin I would probably be in on it. Kittencoin? Yeah, not going to happen. We just aren't cat people.
Dogecoin has been out for years. Market cap of around $285M
http://dogecoin.com/

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

Post by Cruz » Tue Dec 05, 2017 4:09 pm

Interesting component of crypto currency...

The bitcoin computer network currently uses as much electricity as Denmark. In 18 months, it will use as much as the entire United States.

https://grist.org/article/bitcoin-could ... gy-future/

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

Post by Valuethinker » Wed Dec 06, 2017 4:57 am

nsisson wrote:
Tue Dec 05, 2017 4:09 pm
Interesting component of crypto currency...

The bitcoin computer network currently uses as much electricity as Denmark. In 18 months, it will use as much as the entire United States.

https://grist.org/article/bitcoin-could ... gy-future/
What was it Ben Stein, economic adviser to President Nixon, saie?

"When something cannot go on forever, it stops"

There is a cap on the value of this thing, and you may have found it.

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

Post by F150HD » Wed Dec 06, 2017 6:46 am

Cycle wrote:
Tue Nov 28, 2017 11:01 pm
I'd be curious if people are actually using btc like money or if people are mostly just hoarding it like tulips.
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Re: Jack Bogle Says ‘Avoid Bitcoin Like the Plague’

Post by Valuethinker » Wed Dec 06, 2017 6:57 am

Valuethinker wrote:
Wed Dec 06, 2017 4:57 am
nsisson wrote:
Tue Dec 05, 2017 4:09 pm
Interesting component of crypto currency...

The bitcoin computer network currently uses as much electricity as Denmark. In 18 months, it will use as much as the entire United States.

https://grist.org/article/bitcoin-could ... gy-future/
What was it Ben Stein, economic adviser to President Nixon, saie?

"When something cannot go on forever, it stops"

There is a cap on the value of this thing, and you may have found it.
Note: just a quick check around the web suggests that that "fact" has been seriously questioned. Actual energy consumption could be much lower.

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

Post by ensign_lee » Wed Dec 06, 2017 10:22 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...
Yay I'm special! I'm the overlap. I have a proper asset allocation, max out my 401k and IRA and HSA, and I also invest in bitcoin! :D

For anyone who is curious about what bitcoin is, I found this video by Andreas pretty easy to understand: https://www.youtube.com/watch?v=l1si5ZW ... 2tzigB9Nnj
Last edited by ensign_lee on Wed Dec 06, 2017 10:34 am, edited 1 time in total.

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

Post by BogleMelon » Wed Dec 06, 2017 10:31 am

ensign_lee wrote:
Wed Dec 06, 2017 10:22 am

For anyone who is curious about what bitcoin is, I found this video by Andreas pretty easy to understand: https://www.youtube.com/watch?v=l1si5ZW ... 2tzigB9Nnj
The problem with all the people who try to explain Bitcoins, is that they use analogy too much: "Think of blockchain as a ....." or imagine this and imagine that...etc
As an accountant I know what a ledger is in real accounting life. And what transactions are. I need someone to tell me what in real life the blockchain does for real companies with real company names and not imaginary scenarios so I can understand what Bitcoins really 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 ensign_lee » Wed Dec 06, 2017 10:36 am

BogleMelon wrote:
Wed Dec 06, 2017 10:31 am
ensign_lee wrote:
Wed Dec 06, 2017 10:22 am

For anyone who is curious about what bitcoin is, I found this video by Andreas pretty easy to understand: https://www.youtube.com/watch?v=l1si5ZW ... 2tzigB9Nnj
The problem with all the people who try to explain Bitcoins, is that they use analogy too much: "Think of blockchain as a ....." or imagine this and imagine that...etc
As an accountant I know what a ledger is in real accounting life. And what transactions are. I need someone to tell me what in real life the blockchain does for real companies with real company names and not imaginary scenarios so I can understand what Bitcoins really is.
Ah, well for companies themselves, it provides them a way to transact and reach new customers they wouldn't have otherwise. It also provides them a way that should hopefully be cheaper fee wise and that isn't charge-back-able.

For instance, let's say you're widget shop. You sell widgets via CC. You're paying 3% to accept credit cards, and still open to chargebacks. If you sold widgets via bitcoin, you're now hopefully paying less than 3% (this currently alas is no longer true for smaller purchases, ironically, with the large increase in price), and now your customers cannot initiate chargebacks against you.

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

Post by BogleMelon » Wed Dec 06, 2017 10:41 am

ensign_lee wrote:
Wed Dec 06, 2017 10:36 am
For instance, let's say you're ...
Here we go! Another analogy :D :D
Just kidding :beer
"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 Dec 06, 2017 10:42 am

BogleMelon wrote:
Wed Dec 06, 2017 10:31 am

The problem with all the people who try to explain Bitcoins, is that they use analogy too much
ensign_lee wrote:
Wed Dec 06, 2017 10:36 am
For instance, let's say you're ...
Here we go! Another analogy :D :D
Just kidding :beer
"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 SEAworld9 » Wed Dec 06, 2017 11:24 am

most here thing bitcoin is a bubble and will soon crash and it's understandable how that's the common view.

but objectively thinking.... what if it's not?

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

Post by grog » Wed Dec 06, 2017 11:30 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".

Image

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
The graph made me laugh out loud.

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

Post by SEAworld9 » Wed Dec 06, 2017 11:46 am

grog wrote:
Wed Dec 06, 2017 11:30 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".

Image

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
The graph made me laugh out loud.
of course we can selectively choose any graph we want. want to see something just as impressive? post the chart for corning with a start date of 10/4/2002 until today.

i'm not advocating for this particular stock, but more so of how we tend to skew our views based on timing. if i told you that a a stock with 15 years of sustained growth and the stock had gone from $1.33 to $32.04 like dow corning did, would you call that a terrible investment?

now, is this the right time for bitcoin? is it too early? is too late? no one knows.

and in taking a complete look at bitcoin as a smart boglehead "investor" would, i ask again.... what if it's not a bubble?

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

Post by ruralavalon » Wed Dec 06, 2017 11:52 am

SEAworld9 wrote:
Wed Dec 06, 2017 11:24 am
most here thing bitcoin is a bubble and will soon crash and it's understandable how that's the common view.

but objectively thinking.... what if it's not?
In my opinion the better and more important question would be "is this a bubble?"
"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 neurosphere » Wed Dec 06, 2017 12:01 pm

SEAworld9 wrote:
Wed Dec 06, 2017 11:24 am
most here thing bitcoin is a bubble and will soon crash and it's understandable how that's the common view.

but objectively thinking.... what if it's not?
The same logic applies to any investment, ever. An investor's job is to explain why bitcoin, TODAY, is a better investment from a risk return standpoint than any other investment available. Is bitcoin a better deal than a powerball ticket? The upside on the powerball is enormous. Is bitcoin better than the 3-fund portfolio? Why bitcoin and not any one of the other currencies?

"What if it's not" is not an appropriate question, any more than "but what if it IS".

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

Post by Rolyatroba » Wed Dec 06, 2017 12:01 pm

ruralavalon wrote:
Wed Dec 06, 2017 11:52 am
SEAworld9 wrote:
Wed Dec 06, 2017 11:24 am
most here thing bitcoin is a bubble and will soon crash and it's understandable how that's the common view.

but objectively thinking.... what if it's not?
In my opinion the better and more important question would be "is this a bubble?"
There is no point to either question, as neither can be answered. It is pure probability. There is a reasonable probability that a much improved blockchain for currency will come out which would render bitcoin less useful and eventually worthless. There is also a reasonable probability that Bitcoin's blockchain technology will improve, which might lead to continued growth in its use, and perhaps ultimately become one of the world's primary currencies. And lots of existential factors affecting these probabilities--regulation, big bank response, etc.

There are probabilities for total loss and probabilities for immense growth. Nobody can answer the above questions. And that's why you stay away from it like the plague.

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

Post by SEAworld9 » Wed Dec 06, 2017 12:14 pm

Rolyatroba wrote:
Wed Dec 06, 2017 12:01 pm
ruralavalon wrote:
Wed Dec 06, 2017 11:52 am
SEAworld9 wrote:
Wed Dec 06, 2017 11:24 am
most here thing bitcoin is a bubble and will soon crash and it's understandable how that's the common view.

but objectively thinking.... what if it's not?
In my opinion the better and more important question would be "is this a bubble?"
There is no point to either question, as neither can be answered.
......... There are probabilities for total loss and probabilities for immense growth. Nobody can answer the above questions. And that's why you stay away from it like the plague.
if there's no point in even asking the questions we'd be staying away from every type of investment and there would be no investment industry. do you know the future of every one of your investments? do you know the SWOT and your personal perspective for every company that's in all of your index funds? what about legislation - what if the FCC abolishes net neutrality and its affects on all of the technology stocks in your index funds? are you staying away from these because of the probability?

literally as bogleheads our "investment" strategy is to give our money to people we've never met to invest in companies 99% of which we can't even name, and that's all fine as long as they charge a low expense ratio.

i'm not advocating for or against bitcoin at the moment, but rather we take an objective look to why it might work and why it might not. some people have done a good job at it and most are using rationale that has nothing to do with it.

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

Post by SEAworld9 » Wed Dec 06, 2017 12:19 pm

neurosphere wrote:
Wed Dec 06, 2017 12:01 pm
SEAworld9 wrote:
Wed Dec 06, 2017 11:24 am
most here thing bitcoin is a bubble and will soon crash and it's understandable how that's the common view.

but objectively thinking.... what if it's not?
The same logic applies to any investment, ever. An investor's job is to explain why bitcoin, TODAY, is a better investment from a risk return standpoint than any other investment available. Is bitcoin a better deal than a powerball ticket? The upside on the powerball is enormous. Is bitcoin better than the 3-fund portfolio? Why bitcoin and not any one of the other currencies?

"What if it's not" is not an appropriate question, any more than "but what if it IS".
they're both appropriate questions because analysis - which is "an investors job" - can start with these questions. what it does is neutralize the preconceived notions and assumptions that one has about it.

is bitcoin better than a powerball ticket? well, we know that the odds of winning a major powerball jackpot are 1 in 292,000,000. does/can bitcoin provide a better alpha? maybe. can it be better than a 3FP? i'm not sure off the top of my head, but let's start doing the analysis instead of talking about things like tulips. that is what i am saying.

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

Post by Valuethinker » Wed Dec 06, 2017 12:33 pm

SEAworld9 wrote:
Wed Dec 06, 2017 11:24 am
most here thing bitcoin is a bubble and will soon crash and it's understandable how that's the common view.

but objectively thinking.... what if it's not?
Not soon. Will crash. Anyone would be a fool to give timing. Or from what level it will crash. It might crash from say $100k to $10k.

If it is not, then we have missed one. However over time some quoted equities will come to benefit from the thing, and so we participate that way.

Tulip happens to be quite accessible as a memory. John Law's Mississippi Company comes closer to my mind, in truth.

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

Post by WanderingDoc » Wed Dec 06, 2017 12:48 pm

jalbert wrote:
Tue Nov 28, 2017 8:11 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.
The index funds may well have obliterated the bitcoin return in risk-adjusted terms. An investment is a claim on future cash flows. The only future cash flows of a bitcoin are the willingness of someone to buy it from you or accept it in a barter trade (the word "currency" used in its description notwithstanding).
I'm not interested in risk-asjusted returns. I am interested in returns. The money I have in Bitcoin is meaningless to me. If it goes to zero I would be happy, because then I could actually start worrying about being a great doctor instead of staying up late trying to wrap my head around cryptocurrency :twisted:
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Re: Jack Bogle Says ‘Avoid Bitcoin Like the Plague’

Post by Rolyatroba » Wed Dec 06, 2017 12:49 pm

SEAworld9 wrote:
Wed Dec 06, 2017 12:14 pm
if there's no point in even asking the questions we'd be staying away from every type of investment and there would be no investment industry. do you know the future of every one of your investments? do you know the SWOT and your personal perspective for every company that's in all of your index funds? what about legislation - what if the FCC abolishes net neutrality and its affects on all of the technology stocks in your index funds? are you staying away from these because of the probability?

literally as bogleheads our "investment" strategy is to give our money to people we've never met to invest in companies 99% of which we can't even name, and that's all fine as long as they charge a low expense ratio.

i'm not advocating for or against bitcoin at the moment, but rather we take an objective look to why it might work and why it might not. some people have done a good job at it and most are using rationale that has nothing to do with it.
Of course we don't know the future of any investment, including index funds. But you have to invest or lose your money to inflation. So the question is where to invest, and we've learned low cost index-funds are the way to go. That is all there is to it.

I guess with my last post, you could say it applies to any individual investment. Bitcoin, however, seems likely to be a standard deviation or two outside of the expected return for an individual investment, and thus worth repeating the pointlessness of trying to answer questions about it's future value.

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

Post by ensign_lee » Wed Dec 06, 2017 2:51 pm

BogleMelon wrote:
Wed Dec 06, 2017 10:42 am
BogleMelon wrote:
Wed Dec 06, 2017 10:31 am

The problem with all the people who try to explain Bitcoins, is that they use analogy too much
ensign_lee wrote:
Wed Dec 06, 2017 10:36 am
For instance, let's say you're ...
Here we go! Another analogy :D :D
Just kidding :beer
lol cheers. :D

I was about to be like "THAT WASN'T AN ANALOGY!" :P

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

Post by VictoriaF » Wed Dec 06, 2017 3:47 pm

MP123 wrote:
Tue Dec 05, 2017 3:31 pm
I wonder what asset allocation is appropriate for my portfolio of... digital kittens? :D
50% - Asian Tiger kittens
50% - Dogs of the Dow (On the Internet, nobody knows you're a dog)

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

Post by happyisland » Wed Dec 06, 2017 4:01 pm

SEAworld9 wrote:
Wed Dec 06, 2017 12:19 pm
they're both appropriate questions because analysis - which is "an investors job" - can start with these questions. what it does is neutralize the preconceived notions and assumptions that one has about it.

is bitcoin better than a powerball ticket? well, we know that the odds of winning a major powerball jackpot are 1 in 292,000,000. does/can bitcoin provide a better alpha? maybe. can it be better than a 3FP? i'm not sure off the top of my head, but let's start doing the analysis instead of talking about things like tulips. that is what i am saying.
Let's do it! What is your analysis of the value of a bitcoin? At what price would you consider it overvalued? Undervalued?

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

Post by curiouskitty » Wed Dec 06, 2017 5:05 pm

With all respect to Mr. Bogle, he missed the boat on Bitcoin and saying "we'll talk when it hits $100" is a nice talking point but rather meaningless.

Whether Bitcoin (and other coins) continue to go up or not, the amount of Bitcoin mined will decrease over time leading to scarcity. Even assuming the value of Bitcoin stayed the same, every year some will be lost (due to death, hard drive erasure, etc.) so once the mining rewards are low enough it will be hard to get. Obviously if everyone abandons it then it won't matter, but if people still use it then the value should go up simply due to reduced supply.

I'm less bullish on Bitcoin overall but smart contracts have amazing potential. Its worth considering it speculative but no reason to call it the plague.

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

Post by saltycaper » Wed Dec 06, 2017 5:15 pm

Looks like it's up about 30% since his comments 8 days ago, far outpacing the return of US stocks and bonds. So far Bogle's been wrong.
Quod vitae sectabor iter?

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

Post by Swelfie » Wed Dec 06, 2017 5:16 pm

BogleMelon wrote:
Wed Dec 06, 2017 10:31 am
ensign_lee wrote:
Wed Dec 06, 2017 10:22 am

For anyone who is curious about what bitcoin is, I found this video by Andreas pretty easy to understand: https://www.youtube.com/watch?v=l1si5ZW ... 2tzigB9Nnj
The problem with all the people who try to explain Bitcoins, is that they use analogy too much: "Think of blockchain as a ....." or imagine this and imagine that...etc
As an accountant I know what a ledger is in real accounting life. And what transactions are. I need someone to tell me what in real life the blockchain does for real companies with real company names and not imaginary scenarios so I can understand what Bitcoins really is.
A government issued currency has the trust of the government that issues it to govern that currency effectively. The government in turn is managed by people. Arguably by the people that are best armed and united who select rulers/administrators for themselves. The ruler/administration layer is often opaque from the class that selects/elects them through corruption, deception, incompetence, propaganda, etc. These governments also tend to be geographically centralized and contiguous for defense purposes. The monetary supply and regulation may be manipulated for political gain, individual gain, advantage to specific governments and military advantage any of which may not be in the best interest of those who actually hold the currency, who may not be citizens of the government that backs is, and who may need to transact across government boundaries, even in times of war.

A cryptocurrency is similar in that a government-like body issues and backs the currency. However, this body does not serve any of the other functions of government which means they can be spread across the globe and embedded into all populations. A secure protocol is created that gives governance of the currency to the holders of that currency with a single voter making decisions about that governance and being rewarded for doing so by being awarded additional currency. The voter is chosen by lottery with the offs of winning being in direct proportion to the amount of that currency they are willing to put at risk relative to other voters. If a majority of subsequent voters disagree with the vote, the lottery is rolled back to before the dissenting vote and the voter loses their award and the amount they had put at risk for the opportunity to vote. This protocol maximizes the probability that governance of the currency will be done with all potential voters and by extension holders of the currency's best interest because attempts to push forward unpopular regulation will almost always result in the loss of the currency you put at risk for the opportunity to push forward that regulation. Additionally, since the network is distributed and embedded within all populations it is nearly impossible for any nation or group of nations to eradicate since they have no central target and any group of holders may become a governance body at any time and are in fact strongly incentivized to do so.

Since the latter firm of currency's characteristics seem to favor the best interests of the holders of that currency it is possible that it is inherently more valuable in the marketplace than government backed currency, but it is too soon to tell since it has existed in concept for less than a decade and has yet to gain widespread adoption.

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

Post by SEAworld9 » Wed Dec 06, 2017 5:28 pm

saltycaper wrote:
Wed Dec 06, 2017 5:15 pm
Looks like it's up about 30% since his comments 8 days ago, far outpacing the return of US stocks and bonds. So far Bogle's been wrong.
24 hours ago it was at $11,744. it's about to break $14,000 now. regardless of whether you're pro or con, this is crazy to watch/be involved in.

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

Post by neurosphere » Wed Dec 06, 2017 5:32 pm

SEAworld9 wrote:
Wed Dec 06, 2017 12:14 pm
if there's no point in even asking the questions we'd be staying away from every type of investment and there would be no investment industry. do you know the future of every one of your investments? do you know the SWOT and your personal perspective for every company that's in all of your index funds?
Your questions suggest you do not understand how index fund work. The entire premise of index funds is based on the fact that almost NO ONE can know how any one publically traded stock might do relative to others, in the long term. This has been validated in so many studies, they are too numerous to count.

Index funds summary: I cannot know which stock will outperform, so therefore I will buy them all.
Individual stock or active fund summary: I have information or skills which others do not have which allows me to predict which investments will outperform.
Real world data: Over long periods of time, less than 10-20% of people who attempt to pick the outperformers actually do so.

I don't need to know any details of the stocks in my index funds. Indeed, by NOT knowing the details (and just being happy with the entire group of stocks), I know that, statistically, I'll do better than those who DO attempt choose "winners", whether it's bitcoin or some other investment. :D

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

Post by SEAworld9 » Wed Dec 06, 2017 5:43 pm

neurosphere wrote:
Wed Dec 06, 2017 5:32 pm
SEAworld9 wrote:
Wed Dec 06, 2017 12:14 pm
if there's no point in even asking the questions we'd be staying away from every type of investment and there would be no investment industry. do you know the future of every one of your investments? do you know the SWOT and your personal perspective for every company that's in all of your index funds?
Your questions suggest you do not understand how index fund work. The entire premise of index funds is based on the fact that almost NO ONE can know how any one publically traded stock might do relative to others, in the long term. This has been validated in so many studies, they are too numerous to count.

Index funds summary: I cannot know which stock will outperform, so therefore I will buy them all.
Individual stock or active fund summary: I have information or skills which others do not have which allows me to predict which investments will outperform.
Real world data: Over long periods of time, less than 10-20% of people who attempt to pick the outperformers actually do so.

I don't need to know any details of the stocks in my index funds. Indeed, by NOT knowing the details (and just being happy with the entire group of stocks), I know that, statistically, I'll do better than those who DO attempt choose "winners", whether it's bitcoin or some other investment. :D
right. so essentially, spray n' pray. put my money into stuff that i know nothing about - and as you mention, that i dont need to know anything about - and because i'm buying everything, with a little luck over the time period i'm "invested" ... hopefully i'll end up with more money in the end. but i have historical data on my side to back it up.... as long as i ignore the "past performance does not indicate future returns" part.

that sounds kind of like... speculation?

ps. bitcoin just broke $14,000

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

Post by neurosphere » Wed Dec 06, 2017 6:12 pm

SEAworld9 wrote:
Wed Dec 06, 2017 5:43 pm

right. so essentially, spray n' pray. put my money into stuff that i know nothing about - and as you mention, that i dont need to know anything about - and because i'm buying everything, with a little luck over the time period i'm "invested" ... hopefully i'll end up with more money in the end. but i have historical data on my side to back it up.... as long as i ignore the "past performance does not indicate future returns" part.

that sounds kind of like... speculation?

ps. bitcoin just broke $14,000
bitcoin: are you really advocating that bitcoin is great at $14,000 because you have a hunch it will continue to go up?
index funds: an enormous wealth of data which demonstrates that the benefits persist in almost all asset classes and economic conditions.

Again, your phrases such as putting money into stuff that "I don't need to know anything about" betrays you don't understand macroeconomics and index funds. I don't want to derail this thread into a personal back and forth so...Maybe all I can say is that personally I don't have to mental capacity to understand why bitcoin is different that pets.com, webvan, or 3-Com/Palm (who after all, essentially invented the smart phone/PDA). So I'll end with the fact that my lack of sophistication/knowledge/understanding of individual companies forces me to invest primarily in index funds, where most likely I'll outperform 90% of all investors. I can live with that.

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

Post by SEAworld9 » Wed Dec 06, 2017 6:31 pm

neurosphere wrote:
Wed Dec 06, 2017 6:12 pm
SEAworld9 wrote:
Wed Dec 06, 2017 5:43 pm

right. so essentially, spray n' pray. put my money into stuff that i know nothing about - and as you mention, that i dont need to know anything about - and because i'm buying everything, with a little luck over the time period i'm "invested" ... hopefully i'll end up with more money in the end. but i have historical data on my side to back it up.... as long as i ignore the "past performance does not indicate future returns" part.

that sounds kind of like... speculation?

ps. bitcoin just broke $14,000
bitcoin: are you really advocating that bitcoin is great at $14,000 because you have a hunch it will continue to go up?
index funds: an enormous wealth of data which demonstrates that the benefits persist in almost all asset classes and economic conditions.

Again, your phrases such as putting money into stuff that "I don't need to know anything about" betrays you don't understand macroeconomics and index funds. I don't want to derail this thread into a personal back and forth so...Maybe all I can say is that personally I don't have to mental capacity to understand why bitcoin is different that pets.com, webvan, or 3-Com/Palm (who after all, essentially invented the smart phone/PDA). So I'll end with the fact that my lack of sophistication/knowledge/understanding of individual companies forces me to invest primarily in index funds, where most likely I'll outperform 90% of all investors. I can live with that.
no, i as not advocating one way or the other for bitcoin. i was updating the current price that it was at, pertinent to my last post. all is said that the price increase was crazy to see.

what i am advocating for is that things aren't automatically dismissed just because it's not an index fund and that index funds are not treated as a blind religion, and call ourselves smarter because we just buy everything and hop it goes up. this is from a person who's mostly invested in index funds!

"i dont need to know any details of the stocks in my index funds" were your words, not mine.

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

Post by Swelfie » Wed Dec 06, 2017 6:39 pm

SEAworld9 wrote:
Wed Dec 06, 2017 6:31 pm
call ourselves smarter because we just buy everything and hop it goes up.
Actually, I would see this statement as the crux of the Boglehead investment philosophy:

1) The market trends upwards.
2) Many smart people spend a lot of money in fees trying to out smart each other in the zero sum game of trading.
3) Those traders will on average perform average, but some will be big losers and that's an additional risk.
4) Once you factor in fees, the traders will on average vastly underperform average.
5) We are smarter because we can guarantee average returns with no fees and minimal effort just by buying everything and doing something productive instead, thereby beating the majority of very smart traders.

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

Post by zeugmite » Wed Dec 06, 2017 11:23 pm

Ah, bitcoin. If people were honest with themselves, they'd agree that they are doing it mostly because, so far, it hasn't crashed seriously yet, post Mt. Gox. It could have stayed down after Mt. Gox (and it did, for several years), but (new) people have short memories. A Mt. Gox like event is hardly impossible. If you just look at the loan spreads on Bitfinex, it's pricing in something like a 30% credit risk on the exchange itself. It doesn't foster much confidence.

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

Post by Bharat » Thu Dec 07, 2017 5:47 am

ensign_lee wrote:
Wed Dec 06, 2017 10:36 am
Ah, well for companies themselves, it provides them a way to transact and reach new customers they wouldn't have otherwise. It also provides them a way that should hopefully be cheaper fee wise and that isn't charge-back-able.

For instance, let's say you're widget shop. You sell widgets via CC. You're paying 3% to accept credit cards, and still open to chargebacks. If you sold widgets via bitcoin, you're now hopefully paying less than 3% (this currently alas is no longer true for smaller purchases, ironically, with the large increase in price), and now your customers cannot initiate chargebacks against you.
Not sure why are you comparing bitcoin (asset/money) to credit cards (not asset/not money). Wouldn't comparing bitcoin to bank account/paypal account be the right comparison in your example? In this case if you pay for the widget from your paypal, there shouldn't be any transaction fee.

Furthermore, vendors may not like backcharge features but customers do.
Everything that you own, owns piece of you.

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

Post by GoldenFinch » Thu Dec 07, 2017 6:10 am

Bitcoin went to over 14,000 overnight. Does this mean more people are throwing money into bitcoin or it is more valuable for some other reason. I know this is a stupid question, but I want to understand. Bitcoin feels like dot.com stocks to me, with people jumping on the momentum. But I don’t know what to think except that I can’t imagine myself ever using it.

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