Absolutely brutal - 5/5

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glennds
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Re: Absolutely brutal - 5/5

Post by glennds » Wed May 11, 2022 11:03 am

Kbg wrote:
Mon May 09, 2022 4:26 pm
Jack Jones wrote:
Mon May 09, 2022 4:10 pm
Imagine if the Bitcoin price was taking off during all this.
Yes imagine…but it’s not.

There are beginning to be a few academic studies on bitcoin as an asset class. Most of them start with a qualifier; “well there isn’t much data” bitcoin tends to be highly correlated to technology stocks. I think both parts are important when discussing this topic, but we do have some preliminary data. Personally, I just don’t see this being an asset class. I have yet to see anything that indicates it will serve a useful function in someone’s portfolio for sound economic reasons. I am convinced that the technology is useful, just not as a unique or distinct financial asset class.
I think I pretty much agree with your take that it's not an asset class. But Bitcoin and the various other cryptocurrencies are are definitely speculative assets. I tend to call Bitcoin a fad asset. Which is to say its price in dollars seems to go up and down based solely on demand, and that demand seems to cycle based more on fad cult popularity than traditional economic factors. On the plus side, in the case of Bitcoin, Ethereum and maybe a few others, they've built up to a decently broad market. So for me, I hold some BTC and ETH, but in my mind, they are speculative fad assets that will cycle up and down on their own popularity in boom/bust cycles.

One thesis that is now obviously disproven is the thesis that the US government has printed too much money, the result will be inflation, and in response, Bitcoin will skyrocket to astronomical levels. The first two conditions have happened and in response BTC has plummeted.
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Re: Absolutely brutal - 5/5

Post by perfect_simulation » Thu May 12, 2022 11:05 am

I think HB was deeply mistrusting of the government. Enough so that he would have been an advocate for owning some Bitcoin. Perhaps in the VP, if not the PP.
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Re: Absolutely brutal - 5/5

Post by glennds » Thu May 12, 2022 11:17 am

perfect_simulation wrote:
Thu May 12, 2022 11:05 am
I think HB was deeply mistrusting of the government. Enough so that he would have been an advocate for owning some Bitcoin. Perhaps in the VP, if not the PP.
I'd say he was mistrustful of the government to a point, but not an extreme one. Otherwise he wouldn't have designed a portfolio that allocated 25% to the USD and another 25% to long T bonds. I really wonder what he would have thought of Bitcoin. I couldn't see him advocating it in a PP for the reasons Kbg has pointed out. But yes, possibly in the VP.
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Re: Absolutely brutal - 5/5

Post by Jack Jones » Thu May 12, 2022 3:55 pm

Kbg wrote:
Mon May 09, 2022 4:26 pm
Jack Jones wrote:
Mon May 09, 2022 4:10 pm
Imagine if the Bitcoin price was taking off during all this.
Yes imagine…but it’s not.
Or gold for that matter. Seems like gold doesn’t read the news or something.
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Re: Absolutely brutal - 5/5

Post by Kbg » Thu May 12, 2022 5:55 pm

perfect_simulation wrote:
Thu May 12, 2022 11:05 am
I think HB was deeply mistrusting of the government. Enough so that he would have been an advocate for owning some Bitcoin. Perhaps in the VP, if not the PP.
Hey we are all just shooting the breeze on a website, but just for discussion/fun...I'll be a bit provocative on what I'm going to say.

Concur that HB didn't trust government and I'm sure he would have been absolutely cool with having crypto in a VP but I'm going to venture he absolutely would not have had it in a PP.

Here's why...fundamentally the PP is about safe growth. He thought large cap stocks, gold, silver, US treasuries and Swiss Francs were the materials that should be in a PP. There is nothing about BTC even from it's early days that behaviorally puts it in the same league as the above assets.

Accordingly, think he would have put BTC in the speculative venture VP bucket and waived us all off putting it our PPs.
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Re: Absolutely brutal - 5/5

Post by glennds » Thu May 12, 2022 6:17 pm

Kbg wrote:
Thu May 12, 2022 5:55 pm


Hey we are all just shooting the breeze on a website, but just for discussion/fun...I'll be a bit provocative on what I'm going to say.

Concur that HB didn't trust government and I'm sure he would have been absolutely cool with having crypto in a VP but I'm going to venture he absolutely would not have had it in a PP.

Here's why...fundamentally the PP is about safe growth. He thought large cap stocks, gold, silver, US treasuries and Swiss Francs were the materials that should be in a PP. There is nothing about BTC even from it's early days that behaviorally puts it in the same league as the above assets.

Accordingly, think he would have put BTC in the speculative venture VP bucket and waived us all off putting it our PPs.
Not that provocative if you ask me. The PP is completely built on the idea of positive and negative correlations, and applying them to known economic conditions. Each asset class is supposed to move predictably in one direction or the other in each of the four economic conditions; Prosperity, Recession, Inflation, Deflation.

Does BTC have a historical pattern of moving in a predictable direction under any of those four economic conditions?
BTC believers were betting that it would rally (to the moon) under Inflation, but that certainly hasn't happened. So it's a wild card.
Wild cards not welcome in the PP saloon by order of Sheriff Harry Browne.

It's my belief that BTC's failure to respond to the inflationary environment has seriously shaken its market.
Not that gold has performed like we would have expected either. Not sure why the PP YTD is down as much as it is TBH.
I wonder what Budd thinks.
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Re: Absolutely brutal - 5/5

Post by perfect_simulation » Thu May 12, 2022 9:19 pm

At the end of the day HB was a libertarian and I think he recommended USD only because it was the reserve currency. But in his book he also did say to keep some cash outside of the US...swiss francs for example. I wonder if, metaphorically, BTC fits that bill....no pun intended
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Re: Absolutely brutal - 5/5

Post by dualstow » Thu May 12, 2022 9:32 pm

Bitcoin is just too young and Harry was wise. Even though he would probably have been fascinated by it, I can’t imagine that he would have recommended crypto to investors depending on his sage advice, let alone telling people to put in in a portfolio of “money you can’t afford to lose.”
let 2022 be the year of GOLD
Supreme Court overturns Roe v Wade. You heard it here third, or fourth
$100 million worth of crypto has been stolen in another major hack - cnbc
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Re: Absolutely brutal - 5/5

Post by Dieter » Thu May 12, 2022 10:39 pm

glennds wrote:
Thu May 12, 2022 6:17 pm


<snip a lot>

Not that gold has performed like we would have expected either. Not sure why the PP YTD is down as much as it is TBH.
I wonder what Budd thinks.
Not Budd, but, That first sentence informs the second, no?

🙂

I hear Gold may take time to react. But, who knows.

Compared to bogglehead portfolio —

Cash + LTT is about TBM returns — for VG funds 0.04 + -19.19 =~ -9.6% ; VG TBM is -9.44% YTD

LCB same-ish

But, less stock, more “bonds”, plus Gold means PP less bad.

But still not good

Will be interesting how things go in the next few months

Now if I’d just had the non retirement funds to put more into I-Bonds the last few years.

(The PPish part of portfolio is more a cashless GB, so, quite ugly)
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Re: Absolutely brutal - 5/5

Post by Jack Jones » Fri May 13, 2022 5:32 am

Regarding Gold and BTC's failure to respond to the inflationary environment...if you zoom out to a 5 year view of both, it seems like they responded ahead of schedule. First gold, then Bitcoin. Perhaps this is how it goes? Asset inflation before sticker price inflation?
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Re: Absolutely brutal - 5/5

Post by mathjak107 » Fri May 13, 2022 7:42 am

Bitcoin was likely the bigger fool theory at work more than an inflation Hedge ..it is like these asset correlation tables that are done after the fact to try to , make a correlation between assets .

When I was in school the eco teacher showed us a chart of inflation and a chart of all the various activities people did in the high inflation 1970’s .

The graph for going to the movies was way way higher then anything else .

I said to the teacher , there is proof going to the movies causes inflation.

Bitcoin rose because it was sold from one fool to the next not because anyone thought inflation was involved.

It is after the fact some are trying to make a link
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Re: Absolutely brutal - 5/5

Post by dualstow » Fri May 13, 2022 8:12 am

mathjak107 wrote:
Fri May 13, 2022 7:42 am

I said to the teacher , there is proof going to the movies causes inflation.

O0
let 2022 be the year of GOLD
Supreme Court overturns Roe v Wade. You heard it here third, or fourth
$100 million worth of crypto has been stolen in another major hack - cnbc
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Re: Absolutely brutal - 5/5

Post by glennds » Fri May 13, 2022 10:40 am

Jack Jones wrote:
Fri May 13, 2022 5:32 am
Regarding Gold and BTC's failure to respond to the inflationary environment...if you zoom out to a 5 year view of both, it seems like they responded ahead of schedule. First gold, then Bitcoin. Perhaps this is how it goes? Asset inflation before sticker price inflation?
That's an interesting take. As though the movement in the asset in this case might have been predictive of what was to come?
If that were the case, does the whole portfolio being down suggest a tight money recession coming?

Someone will probably remind me that the idea is to keep it in balance and be as best prepared for all conditions because we can't predict the future.
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Re: Absolutely brutal - 5/5

Post by glennds » Fri May 13, 2022 10:46 am

mathjak107 wrote:
Fri May 13, 2022 7:42 am


Bitcoin rose because it was sold from one fool to the next not because anyone thought inflation was involved.

It is after the fact some are trying to make a link
Inflation hedge has always been touted by the BTC fans as a major feature. Specifically in the context of declining USD purchasing power. Along with all the other extolled virtues like privacy, portability, fungibility, finite supply, on and on.
I'm just saying the current conditions have been the first time in it's short history that BTC has been truly put to the inflation hedge test.
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Re: Absolutely brutal - 5/5

Post by mathjak107 » Fri May 13, 2022 1:40 pm

Commodities up nicely ytd ,, that is an inflation hedge

Oil up nicely ytd , that is an inflation hedge

Bitcoin plunging ytd as inflation hits the highest in 40 years. , that is no inflation hedge
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Re: Absolutely brutal - 5/5

Post by Matthew19 » Fri May 13, 2022 9:57 pm

HB was a fan of free market, Austrian economics. I believe it was Hayek who somewhat predicted Bitcoin -

“I don't believe we shall ever have a good money again before we take the thing out of the hands of government, that is, we can't take them violently out of the hands of government, all we can do is by some sly roundabout way introduce something that they can't stop”

As for the inflation hedge suggestions, March 2020 to now btc seems to have been a good hedge. Actually almost any 2 year period would look good.
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Re: Absolutely brutal - 5/5

Post by mathjak107 » Sun May 15, 2022 6:23 am

Looking at the weeks results

I show pp down 10.50 ytd

Wellesly down 7.96%

Insight income model down 8.76%

Let’s see what next week does
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Re: Absolutely brutal - 5/5

Post by jalanlong » Mon May 16, 2022 2:57 pm

dualstow wrote:
Thu May 12, 2022 9:32 pm
Bitcoin is just too young and Harry was wise. Even though he would probably have been fascinated by it, I can’t imagine that he would have recommended crypto to investors depending on his sage advice, let alone telling people to put in in a portfolio of “money you can’t afford to lose.”
Bitcoin supporters (esp those in places like Canada) would say that Bitcoin can be for "money you can't afford to lose" when the government decides to start freezing or seizing financial assets without any due process because you have the wrong views on certain topics.
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Re: Absolutely brutal - 5/5

Post by dualstow » Mon May 16, 2022 3:20 pm

And that’s very creative. There are also scary stories about safe deposit boxes being emptied. However, there is a much greater chance that valuables would be taken from my home. You have to pick your battles.
let 2022 be the year of GOLD
Supreme Court overturns Roe v Wade. You heard it here third, or fourth
$100 million worth of crypto has been stolen in another major hack - cnbc
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Re: Absolutely brutal - 5/5

Post by Kbg » Mon May 16, 2022 4:18 pm

jalanlong wrote:
Mon May 16, 2022 2:57 pm
dualstow wrote:
Thu May 12, 2022 9:32 pm
Bitcoin is just too young and Harry was wise. Even though he would probably have been fascinated by it, I can’t imagine that he would have recommended crypto to investors depending on his sage advice, let alone telling people to put in in a portfolio of “money you can’t afford to lose.”
Bitcoin supporters (esp those in places like Canada) would say that Bitcoin can be for "money you can't afford to lose" when the government decides to start freezing or seizing financial assets without any due process because you have the wrong views on certain topics.
As opposed to the safety provided by private vendors who lose just a couple hundred mil here and there to the occasional hack. :o
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Re: Absolutely brutal - 5/5

Post by bitcoininthevp » Tue May 17, 2022 4:45 am

dualstow wrote:
Thu May 12, 2022 9:32 pm
Bitcoin is just too young and Harry was wise. Even though he would probably have been fascinated by it, I can’t imagine that he would have recommended crypto to investors depending on his sage advice, let alone telling people to put in in a portfolio of “money you can’t afford to lose.”
I like to think he'd have it in his VP.
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Re: Absolutely brutal - 5/5

Post by bitcoininthevp » Tue May 17, 2022 4:48 am

mathjak107 wrote:
Fri May 13, 2022 1:40 pm
Commodities up nicely ytd ,, that is an inflation hedge

Oil up nicely ytd , that is an inflation hedge

Bitcoin plunging ytd as inflation hits the highest in 40 years. , that is no inflation hedge
Another way to look at it is that during the large "money printing" period of the last few years, it went up ~10x.

When the printing stopped and reversing signaled, Bitcoin led that down as well.
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Re: Absolutely brutal - 5/5

Post by bitcoininthevp » Tue May 17, 2022 4:57 am

glennds wrote:
Fri May 13, 2022 10:46 am
mathjak107 wrote:
Fri May 13, 2022 7:42 am


Bitcoin rose because it was sold from one fool to the next not because anyone thought inflation was involved.

It is after the fact some are trying to make a link
Inflation hedge has always been touted by the BTC fans as a major feature. Specifically in the context of declining USD purchasing power. Along with all the other extolled virtues like privacy, portability, fungibility, finite supply, on and on.
I'm just saying the current conditions have been the first time in it's short history that BTC has been truly put to the inflation hedge test.
We are in a period of tightening liquidity, high dollar demand, and rising rates and as long as it continues Bitcoin will probably suffer. After all, BTCUSD is measured in USD.

Bitcoin rose the most during the printing and seems to drop the most during the tightening. I suspect after the fed crushes markets enough the same will repeat.

Bitcoin is still in its speculative stage (the speculation is betting it will be money) as well so that probably contributed to its recent (2y) rise as well.

So my thought is bitcoin performed as an inflation (in the money supply) hedge the last years, but isnt a good supply-restrained commodities price inflation hedge.
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Re: Absolutely brutal - 5/5

Post by bitcoininthevp » Tue May 17, 2022 5:11 am

joypog wrote:
Mon May 09, 2022 3:51 pm
Kbg wrote:
Mon May 09, 2022 2:57 pm
Completely not surprised about BTC...gold hasn't blown it out of the water but it has held. BTC, not so much. Down worse than the market by a fair amount.
Don't know jack about crypto, but I've heard BTC is more corrolated to high flying tech stocks than gold. Does that make any sense?

In any case, I'm staying out of it for now. Maybe one day I'll throw in 10k as a flier after I've got my PP online.
Bitcoin's correlation over time to stocks

Image.

"Does that make any sense?" - IMHO bitcoin's properties are gold-like but the market trades it tech-stock-like.
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Re: Absolutely brutal - 5/5

Post by mathjak107 » Tue May 17, 2022 5:34 am

my opinion is bitcoin rose over that time frame soley from the bigger fool theory .

it is after the fact one tries to make some correlation to the economy /

my opinion is once the real inflation hit us bitcoin was a poor inflation hedge .

it acted more like tech stocks .

commodities are an inflation hedge , oil has been an inflation hedge .

they are up beating inflation .

bitcoin plunged
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