90% VTSAX & 10% Bitcoin (GBTC)

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retired@50
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Re: 90% VTSAX & 10% Bitcoin (GBTC)

Post by retired@50 »

bg5 wrote: Sat Nov 21, 2020 3:13 am I plan to just let the $30k ride and see what happens. I don’t plan to rebalance so things could get goofy.
I'd keep the crypto to 10% or less. If it actually grows faster than the stock fund, then you can say that the crypto fund has been an additional contributor to your stock index holdings. If it doesn't grow, I wouldn't continue to feed it with new money.

Regards,
This is one person's opinion. Nothing more.
langlands
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Re: 90% VTSAX & 10% Bitcoin (GBTC)

Post by langlands »

oldfort wrote: Sat Nov 21, 2020 12:57 pm
When you read comments like this in the article: it's clear you have to don't to dig too deep to find Bitcoin proponents with fringe theories on monetary policy and opposition to the Federal Reserve.
we are reminded how easily our economy could be flooded with new money printed out of thin air; $3 trillion in new money was created in just three months in the United States, about 14% of U.S. GDP in 2019. The U.S. was not alone.
That's not a fringe theory. A lot of conservative-leaning (and even not so conservative-leaning) mainstream economists share concerns about the new normal of easy monetary policy. The fact of the matter is that a lot of what we're seeing with historically low interest rates and debt monetization is unprecedented in the history of economics. No one really knows the implications. I'd say the current "mainstream" view is that all the printing is not ideal, but also a necessary evil to keep the economy running. But I doubt anyone would say it's a good thing. Hyperinflation is a real, but remote possibility.
Last edited by langlands on Sat Nov 21, 2020 1:14 pm, edited 1 time in total.
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Re: 90% VTSAX & 10% Bitcoin (GBTC)

Post by z3r0c00l »

This fund reminds me of "True Blue Beans, INC" that specializes in authenticating one kind of Beanie Baby called the Peanut The Royal Blue Elephant. No matter what happens to the value of stuffed blue elephant, True Blue gets their fee.
oldfort
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Re: 90% VTSAX & 10% Bitcoin (GBTC)

Post by oldfort »

langlands wrote: Sat Nov 21, 2020 1:11 pm
oldfort wrote: Sat Nov 21, 2020 12:57 pm
When you read comments like this in the article: it's clear you have to don't to dig too deep to find Bitcoin proponents with fringe theories on monetary policy and opposition to the Federal Reserve.
we are reminded how easily our economy could be flooded with new money printed out of thin air; $3 trillion in new money was created in just three months in the United States, about 14% of U.S. GDP in 2019. The U.S. was not alone.
That's not a fringe theory. A lot of conservative-leaning (and even not so conservative-leaning) mainstream economists share concerns about the new normal of easy monetary policy. The fact of the matter is that a lot of what we're seeing with historically low interest rates and debt monetization is unprecedented in the history of economics. No one really knows the implications. I'd say the current "mainstream" view is that all the printing is not ideal, but also a necessary evil to keep the economy running. But I doubt anyone would say it's a good thing. Hyperinflation is a real, but remote possibility.
This isn't the craziest idea in the article. I don't know what censorship resistant money means, but I'm fairly certain the only people who care about it on any scale are criminals engaged in illegal enterprises.
Bitcoin has inherent value only because it has the unique characteristics of “sound money” (scarce, durable, accessible, divisible, verifiable and censorship resistant).
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bluquark
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Re: 90% VTSAX & 10% Bitcoin (GBTC)

Post by bluquark »

oldfort wrote: Sat Nov 21, 2020 4:49 pm I don't know what censorship resistant money means, but I'm fairly certain the only people who care about it on any scale are criminals engaged in illegal enterprises.
A large number of wealthy Chinese people who wish to diversify out of the country also care about it: https://amp.scmp.com/economy/china-econ ... d-currency
The Chinese government allows its citizens to transfer the equivalent of only US$50,000 or less out of the country each year. Historically, wealthy citizens have dodged this rule through foreign investments in real estate and other assets – sometimes even using shell companies to disguise the purchases of foreign currencies as legitimate business transactions. But as Beijing has cracked down on some of these methods to circumvent capital controls, the use of cryptocurrencies may be picking up some of the slack as investors seek to protect their wealth in a global economy that is suffering from the trade war and the coronavirus pandemic, according to a recent report by New York-based blockchain analytic company, Chainalysis.
70/30 portfolio | Equity: global market weight | Bonds: 20% long-term munis - 10% LEMB
nocebo
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Re: 90% VTSAX & 10% Bitcoin (GBTC)

Post by nocebo »

oldfort wrote: Sat Nov 21, 2020 4:49 pm
langlands wrote: Sat Nov 21, 2020 1:11 pm
oldfort wrote: Sat Nov 21, 2020 12:57 pm
When you read comments like this in the article: it's clear you have to don't to dig too deep to find Bitcoin proponents with fringe theories on monetary policy and opposition to the Federal Reserve.
we are reminded how easily our economy could be flooded with new money printed out of thin air; $3 trillion in new money was created in just three months in the United States, about 14% of U.S. GDP in 2019. The U.S. was not alone.
That's not a fringe theory. A lot of conservative-leaning (and even not so conservative-leaning) mainstream economists share concerns about the new normal of easy monetary policy. The fact of the matter is that a lot of what we're seeing with historically low interest rates and debt monetization is unprecedented in the history of economics. No one really knows the implications. I'd say the current "mainstream" view is that all the printing is not ideal, but also a necessary evil to keep the economy running. But I doubt anyone would say it's a good thing. Hyperinflation is a real, but remote possibility.
This isn't the craziest idea in the article. I don't know what censorship resistant money means, but I'm fairly certain the only people who care about it on any scale are criminals engaged in illegal enterprises.
Bitcoin has inherent value only because it has the unique characteristics of “sound money” (scarce, durable, accessible, divisible, verifiable and censorship resistant).
Care to cite your sources?
Hustlinghustling
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Re: 90% VTSAX & 10% Bitcoin (GBTC)

Post by Hustlinghustling »

Anon9001 wrote: Sat Nov 21, 2020 9:02 am Realistically it is still not well known to many people outside the Western World and the market cap is much lower than Gold while being more useful than Gold in that in some failed states it is actually used as a currency.
I disagree and say it probably has reached the levels it has precisely because of its traction in the non-western world.
Hustlinghustling
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Re: 90% VTSAX & 10% Bitcoin (GBTC)

Post by Hustlinghustling »

Re “I don't know what censorship resistant money means, but I'm fairly certain the only people who care about it on any scale are criminals engaged in illegal enterprises”


2 way street. indeed criminal actors use it. but also average honest people stuck under oppressive and corrupt govt regimes hoping to escape their grasp (no shortage of that in the world, if talking about a demand base)

and on a less extreme end of that spectrum, the average libertarian leaning citizen concerned with the implications of increasingly big brother governance.
neverpanic
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Re: 90% VTSAX & 10% Bitcoin (GBTC)

Post by neverpanic »

Ferdinand2014 wrote: Fri Nov 20, 2020 11:04 pm why only 10%.

Op is 10%. That tells me op does not have conviction.
One of the first rules many of us (most??) are taught is not to put all of one's eggs into a single basket.

Many are conditioned from a very early age that the smartest investing approach is to diversify.
I am not a financial professional or guru. I'm a schmuck who got lucky 10 times. Such is the life of the trader.
Ferdinand2014
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Re: 90% VTSAX & 10% Bitcoin (GBTC)

Post by Ferdinand2014 »

neverpanic wrote: Sat Nov 21, 2020 11:40 pm
Ferdinand2014 wrote: Fri Nov 20, 2020 11:04 pm why only 10%.

Op is 10%. That tells me op does not have conviction.
One of the first rules many of us (most??) are taught is not to put all of one's eggs into a single basket.

Many are conditioned from a very early age that the smartest investing approach is to diversify.
Correct. However you totally missed my point.
“You only find out who is swimming naked when the tide goes out.“ — Warren Buffett
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SmileyFace
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Re: 90% VTSAX & 10% Bitcoin (GBTC)

Post by SmileyFace »

bg5 wrote: Fri Nov 20, 2020 7:42 pm confidence that it will out perform the market for the next 20 years
bg5 wrote: Fri Nov 20, 2020 7:42 pm 1. Is using 10% of my portfolio to buy individual stocks, Bitcoin, etc a rediculous amount?
You answered your own question in your build-up. If you have confidence of outperfomance then 10% isn't a ridiculous amount. In fact - maybe it isn't enough - if you have confidence it will outperform maybe go 90% Bitcoin and only 10% VTSAX. I wouldn't be confident though. And maybe that's what's behind your post - maybe you aren't as confident as you think you are.
Hustlinghustling
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Re: 90% VTSAX & 10% Bitcoin (GBTC)

Post by Hustlinghustling »

It's not clear to me what all these "confident enough" posts are suggesting. If a poster here was unshakeably certain of Tesla's dominance going forward and swapped out his/her balanced index portfolio for 100% Tesla stock, would that be the preferred action for the "confident enough" crowd? Or would the typical 5-10% play money allocation be more sensible and advised? I imagine the latter, so what's the difference? I thought BH's were experts in knowing that they don't know and yet here, are expecting people to act in the opposite way. Seems the distaste for Bitcoin is the main issue
snailderby
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Re: 90% VTSAX & 10% Bitcoin (GBTC)

Post by snailderby »

For many other assets, an allocation of 5% won't be significant enough to matter (or bother). Bitcoin is different. For better or worse, you could see a huge difference in returns between a 100% VTI portfolio and a 95% VTI/5% bitcoin portfolio. Like the OP said, though, the premium for GBTC can be atrocious. Or so I've heard.
Anon9001
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Re: 90% VTSAX & 10% Bitcoin (GBTC)

Post by Anon9001 »

Interesting that GBTC has higher volatility than BTC:https://www.portfoliovisualizer.com/bac ... ion2_2=100
whereskyle
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Re: 90% VTSAX & 10% Bitcoin (GBTC)

Post by whereskyle »

bg5 wrote: Fri Nov 20, 2020 7:42 pm This forum continues to be one of my best discoveries of my life. I’ve learned so much but probably the biggest lesson is to invest as much as you can and for that I’m so thankful.

Wife and I currently have 90% of our portfolio in VTSAX which is about $270,000. We also have about $30,000 in a Bitcoin fund. We choose GBTC as it’s our only option for our Roth. The only major concern is fees as you pay a premium when buying and a 2% fee which stinks

I do know that crypto is here to stay and the fact that Wall Street is buying it in huge amounts does give me confidence that it will out perform the market for the next 20 years. I also see it as a major inflation hedge. The large amount of cash that the US continues to print makes me nervous. I do see Bitcoin as the new “gold” and want to diversify a bit. I’m still strongly committed to VTSAX as 90% of our portfolio but want to add a bit more risk to capatilize on better returns. I don’t really see a huge difference in investing 10% in Bitcoin vs 10% in emerging markets.

My questions are as follows

1. Is using 10% of my portfolio to buy individual stocks, Bitcoin, etc a rediculous amount?

2. I see Bitcoin as a commodity with international flavor. Does this make any sense to use it as my international portion of my portfolio or am I way out of line here?
1. No, but it will probably make life more stressful than it's worth.

2. Bitcoin is a form of currency. I'd buy companies that create, own, and sell valuable goods and services from all over the world instead.
"I am better off than he is – for he knows nothing and thinks that he knows. I neither know nor think that I know." - Socrates. "Nobody knows nothing." - Jack Bogle
HMSVictory
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Re: 90% VTSAX & 10% Bitcoin (GBTC)

Post by HMSVictory »

You are going down a dangerous road.... and everything about Bitcoin involves speculation.

There have been dozens of "this time it's different" speculative crazes over the centuries...... Great book on it is Devil Take the Hindmost!

There is no inherent value in it (ie: earnings, buybacks, yield or dividends) and you are strictly relying upon the greater fool theory. Namely that you find a greater fool to pay more for it that you did. I don't think your 10% allocation will bankrupt you or end your chances at building wealth but you are asking for trouble with it. Behavior mistakes are the biggest wealth killers out there. Your desire to tinker and out think the market.... I don't recommend it but YMMV.
Stay the course!
z3r0c00l
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Re: 90% VTSAX & 10% Bitcoin (GBTC)

Post by z3r0c00l »

Down 15% in 24 hours. Stocks have only done that a few times in the last century.
whereskyle
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Re: 90% VTSAX & 10% Bitcoin (GBTC)

Post by whereskyle »

"I am better off than he is – for he knows nothing and thinks that he knows. I neither know nor think that I know." - Socrates. "Nobody knows nothing." - Jack Bogle
Anon9001
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Re: 90% VTSAX & 10% Bitcoin (GBTC)

Post by Anon9001 »

Would just avoid GBTC OP considering the higher risk it has compared to Bitcoin. Very confusing how it has 87% higher risk than BTC when it is supposed to track it. The lag in returns is not surprising however considering the 2% fee.
Anon9001
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Re: 90% VTSAX & 10% Bitcoin (GBTC)

Post by Anon9001 »

Interesting also that it trades at a premium to BTC?:https://ycharts.com/companies/GBTC/disc ... ium_to_nav

A 14% premium to be exact. Much better than 32% median but be aware of it as I am not sure the earlier posters discussed this.
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