Post
Topic
Board Economics
Re: Investing in Bitcoin vs. Index Funds (and the FIRE concept)
by
DiamondCardz
on 08/06/2015, 18:17:14 UTC
I think the difference is that with stocks and related funds you can put some numbers behind the movements.  If earnings go up then generally the stock price will as well.  BUT interest rates are sure to go up soon which should have a negative impact on the price of stocks.  Also corporate earnings have been lowering.  I think that in the short run buying any stocks has a lot of risk because the market is generally overvalued. 

Bitcoins on the other hand are really hard to predict.  I think it can basically be boiled down to how much money is coming in or going out.  This can be really hard to predict with any accuracy.  Past performance of a CEO for a stock can be a good indicator that he will perform similarly in the future.  A company producing good can be researched.  You can find out how much demand there is for the product.  For me bitcoin is more mysterious. You never know what will happen.  As an investment I think it is a high risk-high reward kind of game.  If you hold them long term and they are still around in 10 years then bitcoins will almost certainly be worth a great deal.  But on the other hand you just never know what will happen in the future.  It is risky and as others have said the best thing to do is diversify.

Indeed. Personally I don't see anything in the short-term that should be raising the price of Bitcoin, but obviously that's a different game for the long-term. I'm not a professional in actuarial science - but personally I think the risk of holding Bitcoin is too high for me and the potential reward.

I do not share your optimism for the times that lie ahead of us. You base your optimism on a (historically) quite short period of time (100-150 years). There have been macro cycles in the past spanning more than 100 years with economic and population decline.

Given the enormous debt burden of most countries in the world and the increase in military tensions worldwide I would certainly not rely on anything "government". The system is more fragile than most people think.

When it comes to investing nothing is guaranteed. Better stay flexible.

ya.ya.yo!

A "historically" short period of time, but there isn't much more data than that and we are in a relatively modern society. So to boil it down, you believe that a large amount of countries will collapse economically and in the possibility of a WW3? Because it's worth remembering that we've had WW1, WW2 etc. in the time periods that my optimism is based on, and yet there is still a 4% real-terms annualized return over the time period. In reality, despite the debt burden of many countries, it's unlikely they will simply just collapse (and it is possible that within the next 5-10 years some of these countries may move back into budget surpluses).