[Offwidth]

The difficulty I have with this, is that some sort investment with your money is probably going on whether you want it to or not, if you have any savings or a pension. What changes is how much of the reward/risk you walk away with vs someone else. If you have a pension invested on your behalf, someone is creaming off a large chunk of your money for the effort of investing, probably in a mundane way that's easy to replicate for yourself, without paying fees. If you hold cash with fixed income, someone is using that money, making a profit and paying you the least they can get away with. Cash loses money vs inflation. There are other options - paying down a mortgage is well worthwhile and I'd certainly recommend that as a priority for most people with spare cash.

Sure savings, pensions and home owning are just lower risk gambling. Loses can occasionally be large... think failed banks, pension scandals, and the current cladding related disaster in many thousands of UK leasehold flats.

[Bradders]

Sure savings, pensions and home owning are just lower risk gambling. Loses can occasionally be large... think failed banks, pension scandals, and the current cladding related disaster in many thousands of UK leasehold flats.

So...what?

[Offwidth]

So...what?

Because if the risks are not clear from whoever is selling the financial product it's an issue of misselling. Looking back I was missold my first endowment mortgage (by someone who was incentivised by a sales bonus) but I was lucky and made a profit, too many others found their endowment didn't cover the basic house purchase.

[Johnny Brown]

I may well be wrong and crypto is new assests rising up to their natural value where nearly everyone is a winner but I personally think the crypo gains will come from others losing and it is in effect a giant pyramid scheme

I think this is a fundamental misunderstanding. To understand cryptos you first need to understand fiat money; and understand that fiat is a fairly recent experiment, and that of the two cryptos have a more secure footing in reality; it is a 'harder' form of money. One of the original motivations for cryptos was to protect your money from the inflation caused by governments printing fiat currency. The more governments print money the more people will seek alternatives that provide a more secure store of value. So money flowing to cryptos may increase inflation in fiat, but that is driven by governments printing money. It is no way a pyramid scheme.

As cryptos become more mainstream I won't be surprised if that feedback loop accelerates to the extent that some fiat currencies become unviable.

[kac]

It may well have been set up with the best intentions and may theoretically be a great idea. But do you really think people are buying crypto now to protect against inflation from the printing of money. I think its a classic bubble and people are buying simply because they think its going to go up loads in value. Anyway as I said I may well be wrong and so best of luck to crypo owners. I suspect it will come down to whether it gets too big to fail before people realise the downsides. I can see why people take the gamble!

[Ru]

So...what?

Because if the risks are not clear from whoever is selling the financial product it's an issue of misselling. Looking back I was missold my first endowment mortgage (by someone who was incentivised by a sales bonus) but I was lucky and made a profit, too many others found their endowment didn't cover the basic house purchase.

But the risks are never clear, even when not miss sold. The only risks you get to be informed about is that there is a risk of you losing money if the market turns against you. If you’re lucky you might get a choice between products that are ‘more risky’ and ‘less risky,’ but that’s essentially meaningless. The only difference is that someone else chooses the risk on your behalf and takes a cut of your money for doing so.

[tomtom]

Then simply don’t get involved in this thread Offwidth, it’s for investors. The people posting here don’t need you to save them.

Or stop reading Offwidths posts Pete :p

I don't really think much of this thread (as in not bothered) - but I do dislike the way you are attempting to police it as seemingly your fiefdom.

[Johnny Brown]

But do you really think people are buying crypto now to protect against inflation from the printing of money. I think its a classic bubble and people are buying simply because they think its going to go up loads in value. Anyway as I said I may well be wrong and so best of luck to crypo owners. I suspect it will come down to whether it gets too big to fail before people realise the downsides. I can see why people take the gamble!

Right now we're late in a bull market and yes some are likely to lose value in the short to medium term. But bubbles are a function of the market and human nature, they don't necessarily mean the thing is a bad investment long term - look at the dotcom bubble.

And yes, plenty of people are in crypto as a hedge against money printing.

We're getting into the second stage of cryptos now where lots of projects have real utility, whereas the bubble/ bull-run a few of years back was mainly based on just excitement about potential. Make no mistake cryptos, like the Internet, will be a part of our future whether you choose engage with them or not.

[kac]

I do get the hedge argument put forward by bitcoin fans. I just dont think thats why 99% of people are buying bitcoin. Its also far from proven that it does act as an effective hedge.  Its also not the same as the dotcom bubble and thats just a comparison of apples and pears. As I am sure you also know not all historical bubbles have ended as well as the dotcom one. Anyway your probably right that its not going anywhere for a long time and may well prove a good gamble.

[Offwidth]

But the risks are never clear, even when not miss sold. The only risks you get to be informed about is that there is a risk of you losing money if the market turns against you. If you’re lucky you might get a choice between products that are ‘more risky’ and ‘less risky,’ but that’s essentially meaningless. The only difference is that someone else chooses the risk on your behalf and takes a cut of your money for doing so.

I just think most of the bigger known risks should be clearer (knowing some will always be unknown). That person pushing my endowment mortgage wasn't independent and wasn't entirely honest and his bonus took a lot out of the pot to grow. I was lucky mine matured with profit, many did not. I feel similarly for the lease owners stuck in the cladding trap... someone  was very dishonest to them, but it's the lease owners who are stuck with the bill and in some cases heading for bankruptcy. There are so many cases more deserving of help than the foolish who purchased useless PPI.

The aftermath of the 2008 crash shocked me as it left the entire system teetering on the edge of collapse. That such a thing can happen in such a way is just insane. I knew regulation was lax but had no idea just how bad it really was. Despite the criminal horror show of triple A rated junk and investment banks hedging against their own recommended known junk products almost no-one was jailed. The end of The Big Short was telling in that the bad habits had already started to return.

Maybe there is a project for someone on Wikipedia (or similar) as it's pretty slim and disconnected pickings there at present when trying to research the many interesting ways people got ripped off in investments and the scale of damage from the less common Black Swan effects.

Anyhow I've done what I wanted for now, so let the enthusiastic punter investment craic continue.

[Johnny Brown]

I do get the hedge argument put forward by bitcoin fans. I just dont think thats why 99% of people are buying bitcoin. Its also far from proven that it does act as an effective hedge.  Its also not the same as the dotcom bubble and thats just a comparison of apples and pears. As I am sure you also know not all historical bubbles have ended as well as the dotcom one. Anyway your probably right that its not going anywhere for a long time and may well prove a good gamble.

It would be interesting to know what percentage of bitcoin your supposed 99% of people own. I would not be surprised if it conforms to something like the 80:20 rule and 80% is owned by 20%; quite likely much less. I don't think large numbers of people owning small amounts is that important compared to what and why the whales are up to.

[T_B]

At the risk of going off on another tangent, poker is a very efficient game in the medium to long term for transferring money from lower skilled players to higher skilled players.

Perhaps it was a better example than he realised.

As an aside, did anyone ever meet the climber and professional poker player John Rosholt on trips to the US?

https://rockandice.com/people/john-rosholt-climber-and-gambler-disappears-in-las-vegas/

Me: “pleased to meet you John, what have you been up to in Vancouver?”
John: “playing poker, it’s my profession”.

We did some cool routes together in Squamish, including The Northern Lights and a new 3-pitch variation on Freeway, which we named ‘Big Slick’.

He was a really nice guy and very solid on cracks. RIP.

[kac]

Ive not really given it that much thought JB. My point was that pretty much every buyers primary motivation was it going up in value - lots! My 99% of people could be big or small investors.  I suspect your about right with the 80 20 thing.

[Johnny Brown]

Ive not really given it that much thought JB.

Yeah that's apparent... ;-) Suggest taking some time to read this, you can't understand cryptos without first understanding money.

My point was that pretty much every buyers primary motivation was it going up in value

Umm. Is there another reason for investing in anything? Again, you're presumably talking about the people you know who own some but don't seem to understand it. I don't think people like them own a significant percentage of the total. Whereas Visa supporting it is something to take heed of - if it was 'just a bubble' that wouldn't have happened and the bubble would have popped after the first bull run. I wouldn't buy bitcoin right now as a drop is likely medium term but equally I'm pretty confident if you did you'd be back in profit within a couple of years.

[kac]

Thanks for the link JB. My job is basically valuing things and I had to study economics as part of my masters so think I have a pretty good understanding of what money is. Anyway when you put money on a horse or you buy some shares you do so thinking you have made a decision that will get you more money back than you put in. But they are not both investing. I am sure you agree that buying some obscure crypto would not be investing. You think bitcoin is here to stay so it is investing. As I said you may well be right but I think its still far from certain. I'll leave it at that so the thread can go back to Pete recommmending some more obscure mining companies!

[andy popp]

My point was that pretty much every buyers primary motivation was it going up in value

Umm. Is there another reason for investing in anything?

Sure, probably no-one invests in the hope of losing money, but people invest for a wide variety of reasons: most obviously, you might really believe in a company, it's products/services, or what they are trying to do and want to be part of helping them raise the finance they need;  historically a lot of investing was rooted in local solidarities; investments can create interlocks between firms or between families or friends; investments can be used for non-economic reasons, such as cementing political or social alliances; investments can even be sentimental.

[seankenny]

Yeah that's apparent... ;-) Suggest taking some time to read this, you can't understand cryptos without first understanding money.

This is not the first time you’ve posted this, so whatever I say is directed at other readers on this thread, but this is basically bronomics. It’s all just a lot of half-remembered and somewhat garbled basic econ with kooky diagrams replacing the typical set of graphs you’d usually use to explain some relationships... at least that was half the first page, it may get better but life is short. My main gripe is that he sees everything through a monetary lens (give a man a hammer...) which leads to a lot of nonsense.

However it is clearly very good at selling the idea of Bitcoin to people so top marks to him as he runs some kind of Bitcoin consultancy. He is also a bit hunky and lives in Santa Monica, I’m sure that doesn’t hinder him.

[Johnny Brown]

Andy, yes of course but he did write primary motivation. As you said probably no one hopes to lose money.

I am sure you agree that buying some obscure crypto would not be investing

Bizarre comment, I couldn't agree less. Why would buying an obscure crypto not be investing? Are you assuming the buyer won't research it or believe it has potential to have a future as a useful product? Everything you've said applies equally to an uninformed person buying stocks, except you seem to have assumed cryptos have no prospect of utility.

It is already apparent, if you take the time to look, that blockchains will be an important technology for the next twenty years at least. Which of them will succed is of course far less certain; we know the market has a track record of not always picking the best tech. This is why Elon is always joking about Doge.

Sean, I don't claim to have any of your expertise so always take your opinions seriously. I'm sure the first half page was beneath you, and I don't who care he is or what he looks like, but I'd be interested in why, specifically, the question of hardness of gold/ money/ bitcoin which seems pretty compelling, particularly given what has happened since it was written?

Anyway this and other stuff could be better split into another thread where it can die quietly.

Back on topic, if anyone is interested I have a friend who is a developer at (iirc) rchain. He often sends me recommendation of other 'obscure cryptos' which impress him. Being a real geek this is often based in the elegance of the maths and dev team as much as the potential utility, but I'd be happy to repost some of his thoughts.

[kac]

Adam ive absolutely no problem with you disagreeing with me. Although the critique of my comments and the assumption that im wrong because I dont understand is really tiresome. Anyway hopefully the thread can be split so this can go and die somewhere. Please Simon!

[andy popp]

Andy, yes of course but he did write primary motivation. As you said probably no one hopes to lose money.

I genuinely missed the "primary," though profit's probably quite often not even the primary motivation. 

[seankenny]

My apologies if I came across as dismissive, shouldn’t post before lunch. But what I find frustrating about such posts as the Breedlove one is that they are unnecessary. Economics (and I assume finance) is a pretty standardised field, and thanks to its ubiquity in the US education system there are tons of great, free resources out there that cover the subject at every level from
GCSE to graduate school. And none of them are fluffing the product they are trying to sell.

Much of what that blog post discusses doesn’t actually require a theory of money. One can think about growth, time preferences, etc purely in real terms, ie looking at the relationship of prices without considering the effects of inflation at all. Obviously if you take a theory to the data then you would have your method of making those prices comparable humming away in the background, but even then you’re looking at the real economy (consumer products, for example) rather than the financial one.

That’s not to say that monetary issues don’t affect growth, business cycles, etc. Of course they do, and it’s very important. But one can explore fundamental ideas about those things without recourse to money. (And Pete might have a point, this thread should have more discussion of Australian tin mines than the Phillips curve.)

Anyhow, here are two divergent views of Bitcoin, one from Bloomberg writer Noah Smith, the other from economist Nouriel Roubini. I lean more to the later than the former, but I found Smith’s argument worth reading. Your position will probably be the exact opposite!

https://noahpinion.substack.com/p/triumph-of-the-hodlers


https://www.ft.com/content/9be5ad05-b17a-4449-807b-5dbcb5ef8170

[petejh]

Adam ive absolutely no problem with you disagreeing with me. Although the critique of my comments and the assumption that im wrong because I dont understand is really tiresome. Anyway hopefully the thread can be split so this can go and die somewhere. Please Simon!

No no, please continue with spunking the intellectual masturbation all over the thread, it's *fascinating* to hear about economic theories, and hear people's opinions of bitcoin. 

Thanks also to Offwidth for his sermon on risk, and how people are too reckless to be trusted with making decisions about making their own money work for them, and too stupid and uninformed to understand the markets with their nasty-wasty big boy players. We're blessed.

Please carry on with the theorising too, I'm on the edge of my seat looking forward to Sean's next post about economic theories. Because economists are well-known for their *great* track record of prediction and for being the go-to people for the micro-level research into the minutiae of companies and hot sectors, that individual investors need to do to pick apart the bones and spot good opportunities slightly ahead of the herd, which will hopefully grow our portfolios over time.

Do carry on.

(btw just in case anyone's interested in actual ideas for long-term investments based on fundamental research, this week Filo Mining released their latest round of drilling result for the 100% owned Filo de Sol copper/gold project on the  Argentina/Chile border. It looks likely to grow into being a Tier 1 copper/gold asset within the next 5 years - which is a very big deal. Look up 'Lassonde' 'Nirvanna' 'Copper'. If you want a high probability 2-5 year play on the copper/gold market you won't find many better ones. The project value based on likely tonnage/grade to be in the region of a minimum 5 and up to 10 times Filo's current market cap. Do a discounted cash flow model for future revenue and you still have a very tasty growth potential. Local infrastructure being built by neighbouring mine = low upfront capex. Watch Filo ride up the 'exploration' part of the Lassonde curve. I just dropped a large chunk in at $2.98 on Wednesday in anticipation, the day before results hit.)

[ali k]

Maybe the title needs changing to “UKB users’ list of stock picks”. No debate. No conversation.

I was just joking when I suggested this, but it genuinely seems like this is what you’re after Pete.

And given that you’ve posted roughly 95% of those tips and want to police any other contributions, maybe a blog would be a better medium so you can vet comments before they’re made public? Just sayin’ 

[Offwidth]

Don't forget the sanctimonious ethics Pete

https://www.dw.com/en/mining-projects-foment-unrest-across-latin-america/a-50443084

On risk I just don't get why your latest sure thing isn't already priced in on that share price unless you have insider information. How do you research something many others can't. I know clever people who gave up ordinary work and trade successfully for a living ....they would never promote stuff the way you do and they sweat the risk a bit as with leverage and very bad luck it could be their home on the line.

History has shown the big players can and do play dirty but their main advantage is much more mundane they can have nano second options running constantly to maximise gain and subsequent super fast escape routes on any sudden downturn.

[remus]

Maybe the title needs changing to “UKB users’ list of stock picks”. No debate. No conversation.

I was just joking when I suggested this, but it genuinely seems like this is what you’re after Pete.

And given that you’ve posted roughly 95% of those tips and want to police any other contributions, maybe a blog would be a better medium so you can vet comments before they’re made public? Just sayin’ 

Personally I much prefer Pete's stock tips to the other stuff that's followed. There's plenty of hand-wringing about the pros and cons of investing elsewhere.