Non US Investing: Should we put 5% of port in Bitcoin?

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galeno
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Non US Investing: Should we put 5% of port in Bitcoin?

Post by galeno »

https://youtu.be/Zz6RK361Gxo

The above video is an excellent argument in favor of old seasoned retired investors like us buying and holding perhaps 5% of port in bitcoin.

I'd like to know what other veteran non-USA investors think about it.

If you asked me about my opinion regarding Bitcoin before I saw this video I would dismiss Bitcoin as a modern version of the Tulip Bulb mania.

Anyway. What do you think?
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Re: Non US Investing: Should we put 5% of port in Bitcoin?

Post by Tellurius »

Stay the course.
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Re: Non US Investing: Should we put 5% of port in Bitcoin?

Post by David Jay »

You are going to give up your IPS because you watched a YouTube video???
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Re: Non US Investing: Should we put 5% of port in Bitcoin?

Post by galeno »

I suggest watching the video before reflexively replying to this post. Please. We are NOT newbies.

Even JP Morgan is advising investors to put 1% of port into Bitcoin.

https://www.investmentwatchblog.com/jpm ... o-bitcoin/

Jack Bogle suggests putting 5% of port into "funny money" to satisfy the "gambling gene" in most of us.

Up until January our 5% was in VDEM (EM equities). Now we have 0% "funny money".

If Bitcoin has no "left tail" as the video suggests. And if institutional investors see Bitcoin as a risk management tool. It seems like a "twofer" to me.
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Re: Non US Investing: Should we put 5% of port in Bitcoin?

Post by hithere »

It's a gamble, but if you're okay with the risk, then why not. Besides, it's just 5% of your portfolio that will be at risk, and presumably that's money you can afford to lose.

I'm not a retiree, but I am myself planning to invest between 5 and 10% of my portfolio in cryptocurrencies once they crash. If the crypto cycles are really correlated to the Bitcoin halving dates as many claim, then after the crash the next boom in the crypto space will be in 2024.
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Re: Non US Investing: Should we put 5% of port in Bitcoin?

Post by Peaceful »

Maybe if you were going to do this but spread the 5% in a variety of cryptocurrencies for some "crypto diversity," it might worth a flyer. But all concentrated in a single high flying crypto currency? Roughly like investing 5% of your portfolio in Tesla.

My main issue with all cryptocurrencies is that they aren't legal tender in any jurisdiction as far as I know. Regardless of what Michael Saylor, Mark Cuban, Elon Musk, and a variety of other crypto proponents might lead you to believe, there is absolutely nothing at all, at least at present, backing up any of these crypto currencies.

There are other issues--security etc.--but all of these crypto currencies are pure speculation. And you might be getting on the roller coaster closer to the end of the wild ride than the beginning.

A better question to ask is what else, aside from the hype, do you see in bitcoin? What's the value proposition, given that it hasn't been adopted as legal tender nor does it have the full faith and credit of any sovereign government backing it up? Serious question.

Crypto right now is no different from any other barter exchange currency, which is the way it all began. Other than the speculative frenzy, it hasn't evolved beyond being a private barter currency at all. Why is investing in bitcoin now any different than had you invested in gamestop when it was at $438/share recently?
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Re: Non US Investing: Should we put 5% of port in Bitcoin?

Post by nisiprius »

Opinion in the forum is divided. There is no consensus.

This forum is centered on "Investing Advice Inspired by Jack Bogle."

In late 2017, Bogle said, in this video
Well, bitcoin is a currency. Bitcoin has no underlying rate of return. Bonds have an interest coupon, stocks have earnings and dividends. Gold has nothing, and bitcoin has nothing. There is nothing that supports the bitcoin except the hope that you will sell it to someone for more than you paid for it. I think that's a factually correct statement. How much of bitcoin is criminal, people that want to hide their transactions? Some people say it's large, some people say it's small, I don't really know the answer to that question.

But I would say: avoid bitcoin like the plague.

[Audience laughter].

Did I make myself clear?
Some obvious observations are:
  • When he made the remark, one BTC was listed at $10,542.
  • A few weeks later, it hit $18,640.
  • But a year later, it was down to $3,194.
  • And now it is up to almost $50,000.
John C. Bogle also had an opinion on "funny money," but it is often misrepresented. Bogle never recommended that anybody put 5% of their portfolio into risky bets. His advice was only for investors who can’t be satisfied with shutting their eyes, doing nothing and letting indexing work in their favor, and it was
Divide your money into your long-term investment account and your funny money account for short-term speculation. Guess on funds, guess on markets, guess on stocks if you want to, because that gives you an opportunity to act on your speculative impulses.

But they will hurt you a lot so I recommend you have a funny money account of no more than 5% of your portfolio. I also recommend that after five years, check it out. Has it done better than the long-term investment or worse? I’d be astonished if at least 95% of those funny money accounts don’t do worse.
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Re: Non US Investing: Should we put 5% of port in Bitcoin?

Post by Peaceful »

galeno wrote: Sun Feb 28, 2021 3:25 pm I suggest watching the video before reflexively replying to this post. Please. We are NOT newbies.

Even JP Morgan is advising investors to put 1% of port into Bitcoin.

https://www.investmentwatchblog.com/jpm ... o-bitcoin/

Jack Bogle suggests putting 5% of port into "funny money" to satisfy the "gambling gene" in most of us.

Up until January our 5% was in VDEM (EM equities). Now we have 0% "funny money".

If Bitcoin has no "left tail" as the video suggests. And if institutional investors see Bitcoin as a risk management tool. It seems like a "twofer" to me.
Of course bitcoin has a left tail. The two guys in the video are Michael Saylor and some other guy who isn't even identified but both of them sound heavily invested in bitcoin so all they are doing is "talking their book."

I used Tesla as an analogy before, but maybe a better one would be jewelry quality diamonds. They are considered "valuable" not because they are scarce, because they aren't. The scarcity is artificial and due to the DeBeers monopoly and cartel over supply and distribution. Plus a huge decades long marketing campaign designed to convince every woman and her prospective husband that a diamond was an essential way for a man to show a woman that he really loved her. All complete nonsense of course, although a nice diamond is very pretty and has some esthetic value.

Bitcoin isn't actually scarce either. The value such as it is, is all based on artificial scarcity in the way Satoshi constructed the blockchain algorythm. So any "value" is directly a function of artifical scarcity, combined with hype and marketing. The video you linked to is just that: marketing. That's fine but don't assume that video you linked to is anything more than marketing.

At least with diamonds, you can wear them, lots of women (and men) do like them, too. So they have an esthetic value to some extent. Tesla actually does make cars that people drive and it's developing other technologies such as AI and batteries that may provide additional actual value.

What value does bitcoin actually confer on its owner, other than pure speculation (i.e. the hope of selling it for more than it's purchase price to the next sucker down the line?) You don't actually need it to buy anything--anything you could buy with bitcoin can be purchased with actual legal tender--U.S. dollars, swiss francs, pounds sterling, etc. The only practical function it ever served was for money launderers and drug dealers who were doing illegal transactions with each other (i.e. Silk Road etc.) I'm sure you have no interest in bitcoin for that!

If anything, bitcoin is a net negative value--bitcoin mining apparently consumes huge amounts of electricity.

When Michael Saylor or the other guy in the video gives you a written guarantee that there won't be a left tail and that they will make good on any losses you suffer if they're wrong, then and only then should you even consider making important financial decisions (and 5% of your entire portfolio after a LIFETIME of investing is an "important financial decision") in this way.

The U.S. dollar has an army, navy, air force, marines, and coastguard backing it up, as well as trillions upon trillions of dollars of real estate and other sorts of assets backing it up. So I'll bet on the dollar over bitcoin should Armageddon come down upon us all.

I'll take the combined might of the U.S. military, it's trillions upon trillions of assets, and full faith and credit of the U.S. government and the dollar's legal tender status over the 8 minute video of Michael Saylor and some other guy, thanks.
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Re: Non US Investing: Should we put 5% of port in Bitcoin?

Post by galeno »

Bitcoin the asset + Bitcoin the network sounds very compelling. A circle of virtue?

Especially Bitcoin the network. An internet of value. Without intermediaries.

Blockchain technology enables "The Trust Protocol".
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Re: Non US Investing: Should we put 5% of port in Bitcoin?

Post by SlowMovingInvestor »

galeno wrote: Sun Feb 28, 2021 6:21 pm Bitcoin the asset + Bitcoin the network sounds very compelling. A circle of virtue?

Especially Bitcoin the network. An internet of value. Without intermediaries.

Blockchain technology enables "The Trust Protocol".
Firstly, Bitcoin the network has several limitations that make it nearly impractical for anything other than cryptocurrency.

Secondly, if you've already decided you like bitcoin enough to repeat buzzwords and think that it has no left tail, I'm not sure why you're soliciting opinions on whether you should put 5% into it.
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Re: Non US Investing: Should we put 5% of port in Bitcoin?

Post by Gadget »

You don't really specify your age.

I'm pretty pro bitcoin/crypto, but you make it sound like you're already retired or close to it when you talk about seasoned investors.

I think your investing horizon needs to be on the longer side to invest in crypto. It's super volatile. If you're already retired comfortably, why take the extra risk? Unless you just really don't need the money and want more for heirs.

Or if you just like it and want to invest some in retirement, maybe pick 1%? I guess it depends on how critical it would be if you lose 5%.

My gambling appetite is solely focused on retiring early. If I fail on my speculative bets like crypto, it just means I'll have to work as long as a normal person most likely. If you're in the same boat, I think crypto is a decent bet on the future. If your 5% bet going to zero would change your life in retirement for the worse, then I'd probably stay away.
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Re: Non US Investing: Should we put 5% of port in Bitcoin?

Post by galeno »

I knew there would be negative feedback. I was hoping for some positive feedback. Regaeding the neywork potential regarding Bitcoin.

I too would not advise Bitcoin to anyone. But for us? Seasoned conservative Boglehead retirees?

Then again if not Bitcoin what? For 5% of port "mad money"?

Silver? Cobalt? EM equities? EM bonds? None of these speculative assets has or will have a network like Bitcoin has / will have.
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Re: Non US Investing: Should we put 5% of port in Bitcoin?

Post by Dave55 »

galeno wrote: Sun Feb 28, 2021 6:44 pm I knew there would be negative feedback. I was hoping for some positive feedback. Regaeding the neywork potential regarding Bitcoin.

I too would not advise Bitcoin to anyone. But for us? Seasoned conservative Boglehead retirees?

Then again if not Bitcoin what? For 5% of port "mad money"?

Silver? Cobalt? EM equities? EM bonds? None of these speculative assets has or will have a network like Bitcoin has / will have.
If you consider yourself "a seasoned conservative Boglehead retiree", why would even consider Bitcoin?

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Re: Non US Investing: Should we put 5% of port in Bitcoin?

Post by galeno »

Wife and I will be 64 this year. Our investment horizon is 31 years. This is our 9th year of retirement. We will take our state pensions (in CRC) at age 70 to maximize them.

Our current simple 2 UCITS ETF port is 50% VWRD (world stocks) + 45% AGUG (USD hedged world bonds) + 5% USD cash.

0% in "funny money".

We'd sell VWRD and hold 45% VWRD + 5% BC. The rest unchanged.

That's still a conservative to moderate retirement port for our age by any metric.
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Re: Non US Investing: Should we put 5% of port in Bitcoin?

Post by galeno »

"If you consider yourself "a seasoned conservative Boglehead retiree", why would even consider Bitcoin?"

It's the only thing that POSSIBLY makes sense for that 5% of port.

The STORY behind this whole Bitcoin / Blockchain phenomenon is FACINATING to me.

Plus everytime I talk to a millenial about this I tell him "tulip bulbs". I then get called "an idiot".

I want to find out more.
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Re: Non US Investing: Should we put 5% of port in Bitcoin?

Post by SlowMovingInvestor »

galeno wrote: Sun Feb 28, 2021 7:09 pm "If you consider yourself "a seasoned conservative Boglehead retiree", why would even consider Bitcoin?"

It's the only thing that POSSIBLY makes sense for that 5% of port.
So honestly, why are you asking whether you should put 5% into Bitcoin ? It seems like you've already decided.
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Re: Non US Investing: Should we put 5% of port in Bitcoin?

Post by Peaceful »

galeno wrote: Sun Feb 28, 2021 7:09 pm "If you consider yourself "a seasoned conservative Boglehead retiree", why would even consider Bitcoin?"

It's the only thing that POSSIBLY makes sense for that 5% of port.

The STORY behind this whole Bitcoin / Blockchain phenomenon is FACINATING to me.

Plus everytime I talk to a millenial about this I tell him "tulip bulbs". I then get called "an idiot".

I want to find out more.
What you should really be trying to do, at this point, is find the "next" bitcoin. The "next" Amazon. The "next" Tesla. BEFORE whatever that trend or fad or new development is, becomes whatever it is going to be. You want to get into the next big thing BEFORE Michael Saylor, Mark Cuban, Elon Musk, and various hedge funds start the pump and dump.

Whatever you think you know about bitcoin, is now already common knowledge among the market or potential market for bitcoin investors. You have no edge.

If you are going to gamble your 5% by hopping onto speculative investing trends, it makes a lot more sense to try to get in on it much earlier.

Remember, Musk isn't gambling $1.5 billion of his own money on bitcoin. Tesla recently issued additional shares worth $5 billion and it's part of that money--other investors' money--that he's wagering the $1.5 billion on.

But heck what do I know. It's only money right. You'll probably get lucky.
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Re: Non US Investing: Should we put 5% of port in Bitcoin?

Post by jpmorganfunds »

Yup we're in a bubble.
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Re: Non US Investing: Should we put 5% of port in Bitcoin?

Post by Ramjet »

I find the suggestion of converting 1%-3% of your portfolio to cryoto and letting it ride without rebalancing reasonable

I don't own any crypto
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Re: Non US Investing: Should we put 5% of port in Bitcoin?

Post by galeno »

Better. Chasing a bubble down a rabbit hole. I don't think we'll be investing in BC any time soon.
jpmorganfunds wrote: Sun Feb 28, 2021 7:49 pm Yup we're in a bubble.
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Re: Non US Investing: Should we put 5% of port in Bitcoin?

Post by ohboy! »

Ramjet wrote: Sun Feb 28, 2021 8:01 pm I find the suggestion of converting 1%-3% of your portfolio to cryoto and letting it ride without rebalancing reasonable

I don't own any crypto
I own a lot more than 1-3%. But would agree I’m over-risked, and 1-3% is reasonable. I would not leave out other cryptos though, especially Ethereum. I don’t personally care so much for ADA or BNB but I have some.

The crypto industry/space/community has established itself enough where I don’t see it going away. Hard to say which will have the best price performance going forward. I have spent a good deal of time educating myself on crypto and still believe Ethereum has the best future potential. I admit though that I know nothing about the future. So I hold 50 different coins, mostly weighted by marketcap. After 5 years, so far so good.
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Re: Non US Investing: Should we put 5% of port in Bitcoin?

Post by WolfgangPauli »

Let's take the word "Bitcoin" out of the discussion. Here is my view - I will never invest in something that:

1) Has no intrinsic value (i.e.produce something). You could even argue Gold has at least some intrinsic value as it is used as a metal in mfg.
2) Is incredibly volatile (which is why I do not consider $BTC a currency - could you imagine if the Dollar fluctuated 5% in value almost daily?
3) Requires the CAPGAIN to be created just by having someone else magically want it. You cannot calculate the value of $BTC the way you can a company by looking at income statements and balance sheets.

Finally, $BTC gets its value by being scarce and the supply grows slower than the demand due to these mathematical formulas (more on that below). However, if the Government gets serious about taxing it and auditing you will see this drop dramatically in value. 2021 is the first year where, right on page one of the 1040, you have to declare (under penalty of perjury) if you have acquired, sold, traded or "acquired any interest" in a virtual currency.

That is warning number 1 and if you do not check that box honestly you could be in big trouble. The next one will be audits. You have to pay taxes on your trades and part of the reason $BTC is so popular is people are under this impression it is not taxable. It is.

This will end badly.
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Re: Non US Investing: Should we put 5% of port in Bitcoin?

Post by qwerty123 »

Gadget wrote: Sun Feb 28, 2021 6:38 pm I think your investing horizon needs to be on the longer side to invest in crypto. It's super volatile. If you're already retired comfortably, why take the extra risk? Unless you just really don't need the money and want more for heirs.
This is a really great point. In my opinion, if you are going to put some percentage of your net worth into Bitcoin or other cryptocurrencies, you really need to have a long term plan for it. As you noted, crypto is extremely volatile - Bitcoin dropped 20% in the past week for example (it also went up even more than that over the previous 30 days). If you are going to panic and sell when this occurs, you're going to lose your money. I personally would put X amount in, and just ignore it for 5-10 years. Possibly set a price target / max allocation, at which point you start selling some of it, but be mindful of not watching it too closely.

That said, my rule has been that I don't "invest" in any crypto that I don't understand well. I understand Bitcoin, I understand Ethereum, but the small cap coins I feel like I understand are few and far between, hence I don't own many. I think the key is to set a plan (much like an "investment policy statement"), and stick to the plan. It's easy to get caught up in the hype during massive bull runs, and throw money away.
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Re: Non US Investing: Should we put 5% of port in Bitcoin?

Post by jpmorganfunds »

Dogecoin is technically superior to Bitcoin. Why not Dogecoin?
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Re: Non US Investing: Should we put 5% of port in Bitcoin?

Post by qwerty123 »

jpmorganfunds wrote: Sun Feb 28, 2021 8:32 pm Dogecoin is technically superior to Bitcoin. Why not Dogecoin?
In what ways is it "technically superior"?
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Re: Non US Investing: Should we put 5% of port in Bitcoin?

Post by qwertyjazz »

galeno wrote: Sun Feb 28, 2021 7:09 pm "If you consider yourself "a seasoned conservative Boglehead retiree", why would even consider Bitcoin?"

It's the only thing that POSSIBLY makes sense for that 5% of port.

The STORY behind this whole Bitcoin / Blockchain phenomenon is FACINATING to me.

Plus everytime I talk to a millenial about this I tell him "tulip bulbs". I then get called "an idiot".

I want to find out more.
Read Bernstein’s new book - highly recommended - the phrasing you just used is a direct quote

Makes me wonder if you are a marketing shill (sarcasm)

But seriously - this is amazing - please tell me you did not read the book - I want to believe that Bernstein is just that good
He uses the wording of story and being told idiot and the phrasing you use
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Re: Non US Investing: Should we put 5% of port in Bitcoin?

Post by AlohaJoe »

I'm a non-US investor: I live in Vietnam. Vietnam is #2 in the world in (per-capita) Bitcoin usage with over 20% of people claiming to have used it in the past year. Banks are not trusted (sometimes for valid reasons!) and remittances play a massive part in the economy (#9 in the world with over 580,000 Vietnamese working abroad). I've had random Vietnamese who are making $1,000 a month ask me about Bitcoin.

I know two people who are heavily into Bitcoin (i.e. became millionaires thanks to investing in it 8-10+ years ago) and a handful of others that put relatively large absolute amounts of money into it (though still probably small relative to their net worth). Just for context for where I'm coming from.

Also I'll point out that it appears that guy in the interview is from Stoneridge? If I've got that right then: Stoneridge is a alt asset firm that Bogleheads love to hate on due to their (IMHO) pretty terrible track record of promising "equity-like returns" and instead delivering "bond-like returns". (See the many threads over the years related to Larry Swedroe's recommendations and general community pushback.) So that doesn't exactly give me a great feeling of confidence in this guy's prognosticating....

Anyway, on to more substantive comments:
galeno wrote: Sun Feb 28, 2021 3:25 pm Even JP Morgan is advising investors to put 1% of port into Bitcoin.
1% of anything makes no sense to me other than to avoid FOMO. And even then you'd still have FOMO from not putting enough in. If stocks crash 80%, 1% in Bitcoin doesn't help -- even if Bitcoin quintuples and now makes up 5% of your portfolio. If we get stagflation and 8%+ inflation rates, 1% in Bitcoin also isn't going to help you.

I mean, just do some monte carlo or backtesting and see what 1% of any asset does to a portfolio compared to 0% of that asset.
galeno wrote: Sun Feb 28, 2021 3:25 pm Jack Bogle suggests putting 5% of port into "funny money" to satisfy the "gambling gene" in most of us.
Okay, sure, if that's the rationale, why not. Put it in GME calls or AMC debt or Dogecoin or Bitcoin or whatever SPAC launched this week or Cathy Wood's next fund. This isn't really a position anyone can really logically engage with. It is like debating whether someone should bet on red or black at roulette or arguing over what lotto numbers to play.
If Bitcoin has no "left tail" as the video suggests. And if institutional investors see Bitcoin as a risk management tool. It seems like a "twofer" to me.
He doesn't say Bitcoin has "no left tail". He says he doesn't see it "going to zero". That's very different and pretty meaningless for Bogleheads. I don't worry about any of my investments going to zero. Do you? "Does this asset have a chance to go to zero? No? Then I guess I'll buy some!" That's not how my investment process works.

The "left tail" case of Bitcoin is heavily discussed: Tether implodes and takes Bitcoin down with it. Not "forever" but, say, an 90% loss that takes 5-10 years to claw back. Or Tesla sells their position to take a profit (they make a bigger profit from Bitcoin than from car sales right now). When Elon Musk tweets about Bitcoin it moves more than when he tweets about his own company. Bitcoin's "Musk-beta" is bigger than Tesla's!

Most of the interview is the guy talking about how Bitcoin will enable free & instant transfer of money anywhere in the world, which will disrupt import/export, global remittances, credit cards, etc. And that ("Bitcoin the network") will create a feedback loop to the value of Bitcoin ("Bitcoin the asset") which will (I guess? Somehow?) make an investment in Bitcoin per se "good".

Color me skeptical. A lot of global payments are based around escrow and fraud prevention. I have a friend who works in import/export and it is hard to overstate how nerve racking it is for, say, a Polish pork farmer to get a call from some heretofore unknown Vietnamese guy who says "I want to buy $500,000 of pigs" and then work out exactly how paying for it works.

The small delays and tiny costs of wire transfer are not a big deal and people like having reversibility, KYC, fraud detection, etc. To the point that most people are unhappy that wire transfers don't have enough. Those are all largely unsolved problems with Bitcoin transfers and basically doubles down on all the bad parts of wire transfers.

I used to own a company that would send invoices to Germany and we'd be paid by wire transfer. It usually arrived in our Singapore account same day and the costs were basically zero. As a business we were charged a flat fee of $SIN20 to receive a wire transfer and the exchange rate was essentially market rates.

Consider if every single credit card fraud story you've ever seen posted online ended with "and I never got my money back because I was using Bitcoin Lightning payments".
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Re: Non US Investing: Should we put 5% of port in Bitcoin?

Post by assyadh »

As a millennial and a software engineer familiar with crypto currencies and their variations I will try to expose my views.

I hold some crypto (on a hardware wallet).

You have to be ready to educate yourself on the safety of the assets and the regulatory environment.

I love BTC but I would (probably) never put a dime on it. While it is considered as the gold standard of crypto, it is just too hard for me to justify the performance and the volatility associated with it. BTC fails as a payment currency and also a wealth storing currency (people who say that BTC is the crypto gold clearly have never heard of volatility).

It behaves like a gamble, it will come down to ashes.

The technology is amazing, defi is amazing and smart contracts are a deal breaker, but don't follow the herd.
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Re: Non US Investing: Should we put 5% of port in Bitcoin?

Post by XtremePWN »

Should you put 5% into bitcoin? Short answer: "No". Long answer: "Absolutely not!"
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Re: Non US Investing: Should we put 5% of port in Bitcoin?

Post by Anon9001 »

Digital Gold is what the proponents claim Bitcoin is but Gold has intrinsic value due to it's 70.81% usage in Jewellery, Central Banks and Technology. What does Bitcoin have? Also Gold has had been valuable far more in time than Bitcoin which came into existence only 11 years ago. The image below is older 2012 but it also conveys the same message that Gold's value primarily is not speculative but intrinsic value.
Image
Last edited by Anon9001 on Mon Mar 01, 2021 1:49 am, edited 2 times in total.
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Re: Non US Investing: Should we put 5% of port in Bitcoin?

Post by Valuethinker »

galeno wrote: Sun Feb 28, 2021 2:55 pm https://youtu.be/Zz6RK361Gxo

The above video is an excellent argument in favor of old seasoned retired investors like us buying and holding perhaps 5% of port in bitcoin.

I'd like to know what other veteran non-USA investors think about it.

If you asked me about my opinion regarding Bitcoin before I saw this video I would dismiss Bitcoin as a modern version of the Tulip Bulb mania.

Anyway. What do you think?
I would like to jump up and down, and scream, AND USE CAPITAL LETTERS, and utter blasphemy ..

The short form.

No. No. Just no.

That someone can even pose the question is a measure of just how insane things have become.
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Re: Non US Investing: Should we put 5% of port in Bitcoin?

Post by Valuethinker »

assyadh wrote: Sun Feb 28, 2021 11:33 pm As a millennial and a software engineer familiar with crypto currencies and their variations I will try to expose my views.

I hold some crypto (on a hardware wallet).

You have to be ready to educate yourself on the safety of the assets and the regulatory environment.

I love BTC but I would (probably) never put a dime on it. While it is considered as the gold standard of crypto, it is just too hard for me to justify the performance and the volatility associated with it. BTC fails as a payment currency and also a wealth storing currency (people who say that BTC is the crypto gold clearly have never heard of volatility).

It behaves like a gamble, it will come down to ashes.

The technology is amazing, defi is amazing and smart contracts are a deal breaker, but don't follow the herd.
+1

Thank you. The herd, in this case, is headed off a cliff.

I know some people who even think the technology is not that amazing (as opposed to being clever).
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Re: Non US Investing: Should we put 5% of port in Bitcoin?

Post by Valuethinker »

galeno wrote: Sun Feb 28, 2021 3:25 pm I suggest watching the video before reflexively replying to this post. Please. We are NOT newbies.

Even JP Morgan is advising investors to put 1% of port into Bitcoin.

https://www.investmentwatchblog.com/jpm ... o-bitcoin/

Jack Bogle suggests putting 5% of port into "funny money" to satisfy the "gambling gene" in most of us.

Up until January our 5% was in VDEM (EM equities). Now we have 0% "funny money".

If Bitcoin has no "left tail" as the video suggests. And if institutional investors see Bitcoin as a risk management tool. It seems like a "twofer" to me.
I don't really believe that Jack Bogle thought, in a low returns environment, that one should waste 5% of one's portfolio on assets likely to have a negative return.

The assets are the definition of pure speculation. ALL of their return is based on finding someone else to sell it to for more money. There are no intrinsic cash flows arising out of the investment. I don't think Jack Bogle would have called such an asset "an investment".

If you want to gamble on 5% put it into Japanese smaller companies. Or Asian stocks generally (beware the large cap index tilts towards large Chinese internet stocks with possibly dubious governance and/or accounting; also Australian banks).
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Re: Non US Investing: Should we put 5% of port in Bitcoin?

Post by Anon9001 »

Valuethinker wrote: Mon Mar 01, 2021 1:54 am I don't really believe that Jack Bogle thought, in a low returns environment, that one should waste 5% of one's portfolio on assets likely to have a negative return.

The assets are the definition of pure speculation. ALL of their return is based on finding someone else to sell it to for more money. There are no intrinsic cash flows arising out of the investment. I don't think Jack Bogle would have called such an asset "an investment".

If you want to gamble on 5% put it into Japanese smaller companies. Or Asian stocks generally (beware the large cap index tilts towards large Chinese internet stocks with possibly dubious governance and/or accounting; also Australian banks).
To play a devil's advocate isn't that what Developed Market Bonds are having real return wise? You have to really stretch out the maturity to get a real yield equal to 0% for US TIPS. If Jack Bogle was still alive I doubt he would call Developed Market Bonds an investment.
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Re: Non US Investing: Should we put 5% of port in Bitcoin?

Post by minimalistmarc »

galeno wrote: Sun Feb 28, 2021 2:55 pm https://youtu.be/Zz6RK361Gxo

The above video is an excellent argument in favor of old seasoned retired investors like us buying and holding perhaps 5% of port in bitcoin.

I'd like to know what other veteran non-USA investors think about it.

If you asked me about my opinion regarding Bitcoin before I saw this video I would dismiss Bitcoin as a modern version of the Tulip Bulb mania.

Anyway. What do you think?
I think you have been a successful investor and that you should stop watching YouTube videos about bitcoin.

I’ve noticed that some ageing investors (including relatives) start to become less able to stay the course after they have won the game (even if they have stopped playing).
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Re: Non US Investing: Should we put 5% of port in Bitcoin?

Post by finrod_2002 »

Personally, I certainly wouldn't buy cryptocurrencies for investing/speculating at this moment. If anybody wants to gamble I would wait till they tank (until BTC goes back to a few thousand dollars), after that there is a chance that it goes back up when the next Bitcoin halving happens (around 2024 I guess?). So in that case I wouldn't see anything wrong in putting maybe 1000$ in it? I guess the chances of earning some money are a little higher than buying a lottery ticket. :wink:

That said other crypto projects do provide some value to software engineers /ICT companies. Ethereum for example offers a way to deploy software without having to own servers or having to maintain them. Actually more than that. It offers a complete integrated development pipeline with a building, testing and deploying environment. The Ethereum currency is actually only a sort of side effect of the whole system. And actually the fact that Ethereum is so highly priced right now is more of a burden to people that want to build something on that network because of the higher transaction costs and fees to use the network itself. Like Ethereum there are other such projects like for example Cardano.

So there are companies that build stuff on such networks. Some of them offer their own coins, which can be seen as offering shares. Till now there wasn't any disruptive company like Amazon, Ebay, Google, but who knows what the future holds. Yes, it is impossible to know which company will be successful, much like stock picking. And like before 2000 when nobody knew which internet company would survive. But it is possible that some of those companies offer value to clients in some form, which is not offering the coin, but doing the stuff they want to do and the coin is just a way to finance themself. Of course lot of them are scam, but isn't that true also for penny stocks for example?
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Re: Non US Investing: Should we put 5% of port in Bitcoin?

Post by Valuethinker »

Anon9001 wrote: Mon Mar 01, 2021 2:00 am
Valuethinker wrote: Mon Mar 01, 2021 1:54 am I don't really believe that Jack Bogle thought, in a low returns environment, that one should waste 5% of one's portfolio on assets likely to have a negative return.

The assets are the definition of pure speculation. ALL of their return is based on finding someone else to sell it to for more money. There are no intrinsic cash flows arising out of the investment. I don't think Jack Bogle would have called such an asset "an investment".

If you want to gamble on 5% put it into Japanese smaller companies. Or Asian stocks generally (beware the large cap index tilts towards large Chinese internet stocks with possibly dubious governance and/or accounting; also Australian banks).
To play a devil's advocate isn't that what Developed Market Bonds are having real return wise? You have to really stretch out the maturity to get a real yield equal to 0% for US TIPS. If Jack Bogle was still alive I doubt he would call Developed Market Bonds an investment.
You are wrong.

Developed Market Bonds, particularly investment grade governments (with a caution about Italy), pay essentially risk free coupons and a final redemption value (either $100 par in nominal terms, or the equivalent in real terms for a Real Return Bond).

That's a known and predictable investment.

You might not like the returns it offers, you might think there are better ways of doing it, but it is an investment. Its value to you is not purely a matter of speculation.
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Re: Non US Investing: Should we put 5% of port in Bitcoin?

Post by Jags4186 »

I’d recommend you take a look at this video:

https://www.cnbc.com/video/2021/02/23/m ... ctory.html

And tell me if you want to invest in something that a supposedly legitimate company CEO goes on TV to pump so spectacularly. Maybe I’m an boomer (at the ripe old age of 34) but this scream snake oil, to me at least.
Last edited by Jags4186 on Mon Mar 01, 2021 6:39 am, edited 1 time in total.
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Re: Non US Investing: Should we put 5% of port in Bitcoin?

Post by Valuethinker »

galeno wrote: Sun Feb 28, 2021 7:09 pm "If you consider yourself "a seasoned conservative Boglehead retiree", why would even consider Bitcoin?"

It's the only thing that POSSIBLY makes sense for that 5% of port.

The STORY behind this whole Bitcoin / Blockchain phenomenon is FACINATING to me.

Plus everytime I talk to a millenial about this I tell him "tulip bulbs". I then get called "an idiot".

I want to find out more.
You mean Boomers don't you?

If Boomers are driving this, then it really is an idea enmired in brown waste. Really.

I wouldn't count on a Boomer understanding anything about the Web 2.0 internet. And this might even be called Web 3.0?

Boomers get their news from Facebook. At work, they use email rather than Slack. Boomers drove Starbucks into the stratosphere-- the world's most bland coffee experience.

Boomers drove the 2000 dot com bubble. And the 2001-2006 housing bubble. The Big Short. Margin Call. Wall Street. Platoon.

(signed Valuethinker - a paid up member of the Baby Boom)
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Re: Non US Investing: Should we put 5% of port in Bitcoin?

Post by brianH »

Jags4186 wrote: Mon Mar 01, 2021 6:37 am I’d recommend you take a look at this video:

https://www.cnbc.com/video/2021/02/23/m ... ctory.html

And tell me if you want to invest in something that a supposedly legitimate company CEO goes on TV to pump so spectacularly. Maybe I’m an boomer (at the ripe old age of 34) but this scream snake oil, to me at least.
There's a certain irony that just as Saylor (a scammer if there ever was one) starts talking about bitcoin being a cyber 'bank' for storing wealth, that the BTU/USD market price graph comes on screen with a -10% single-day drop. If I put money in a bank in the morning and later that afternoon they said I now have 10% less than I put it, I'd be a little upset. Telling me it will probably go back up if I hold long enough and believe strong enough isn't likely to make me feel much better.
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Re: Non US Investing: Should we put 5% of port in Bitcoin?

Post by Valuethinker »

Jags4186 wrote: Mon Mar 01, 2021 6:37 am I’d recommend you take a look at this video:

https://www.cnbc.com/video/2021/02/23/m ... ctory.html

And tell me if you want to invest in something that a supposedly legitimate company CEO goes on TV to pump so spectacularly. Maybe I’m an boomer (at the ripe old age of 34) but this scream snake oil, to me at least.
The Baby Boomers were born 1945-1964. You can see the drop in the birth rate, when the contraceptive pill first went on sale (it was about 9 months later in Canada than USA, so you can see its impact).

So at 34 you are a bleeding edge Millennial (aged 18 or younger at the turn of the Century?) or even, arguably "Generation X" - the silent generation born 1965-1985.

The world has heard too much of the Boomers - it's time for us to shuffle off to our old age homes.

(I am not really so sarcastic and cynical about my own generation or any other. But I could do without lazy stereotypes like "The Greatest Generation" (you were just as ingloriously dead in Vietnam in '68, as you were in the Ardennes Forest in '44) "Millennials" etc.

I read some Army Lieut Colonel once (or maybe it was only a Captain) saying something like "no one who has seen my troops get up at 130 AM for a 330 patrol into bandit country, brief the mission, strap on their armor and gear, load up and go outside our perimeter, would ever say that Millennials are feckless, lazy, sloppy slackers. These are as fine soldiers as any American officer has ever had the sacred responsibility of leading." If they were heroes at Bastogne, then they were heroes at Choisin Reservoir, Hamburger Hill and Nasrallah and Kandahar -- you are, as Robert Heinlein pointed out, just as dead in a police action.

Every generation plays the cards it has. Young people right now are getting (polite term "done over"). There will need to be a rebalancing.
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Re: Non US Investing: Should we put 5% of port in Bitcoin?

Post by Jags4186 »

Valuethinker wrote: Mon Mar 01, 2021 8:00 am
Jags4186 wrote: Mon Mar 01, 2021 6:37 am I’d recommend you take a look at this video:

https://www.cnbc.com/video/2021/02/23/m ... ctory.html

And tell me if you want to invest in something that a supposedly legitimate company CEO goes on TV to pump so spectacularly. Maybe I’m an boomer (at the ripe old age of 34) but this scream snake oil, to me at least.
The Baby Boomers were born 1945-1964. You can see the drop in the birth rate, when the contraceptive pill first went on sale (it was about 9 months later in Canada than USA, so you can see its impact).

So at 34 you are a bleeding edge Millennial (aged 18 or younger at the turn of the Century?) or even, arguably "Generation X" - the silent generation born 1965-1985.

The world has heard too much of the Boomers - it's time for us to shuffle off to our old age homes.

(I am not really so sarcastic and cynical about my own generation or any other. But I could do without lazy stereotypes like "The Greatest Generation" (you were just as ingloriously dead in Vietnam in '68, as you were in the Ardennes Forest in '44) "Millennials" etc.

I read some Army Lieut Colonel once (or maybe it was only a Captain) saying something like "no one who has seen my troops get up at 130 AM for a 330 patrol into bandit country, brief the mission, strap on their armor and gear, load up and go outside our perimeter, would ever say that Millennials are feckless, lazy, sloppy slackers. These are as fine soldiers as any American officer has ever had the sacred responsibility of leading." If they were heroes at Bastogne, then they were heroes at Choisin Reservoir, Hamburger Hill and Nasrallah and Kandahar -- you are, as Robert Heinlein pointed out, just as dead in a police action.

Every generation plays the cards it has. Young people right now are getting (polite term "done over"). There will need to be a rebalancing.
Of course I know I’m not an actual baby boomer, I’m just saying that my skepticism about Bitcoin would get me labeled a boomer by the WSB crowd.
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Re: Non US Investing: Should we put 5% of port in Bitcoin?

Post by Anon9001 »

Valuethinker wrote: Mon Mar 01, 2021 6:32 am You are wrong.

Developed Market Bonds, particularly investment grade governments (with a caution about Italy), pay essentially risk free coupons and a final redemption value (either $100 par in nominal terms, or the equivalent in real terms for a Real Return Bond).

That's a known and predictable investment.

You might not like the returns it offers, you might think there are better ways of doing it, but it is an investment. Its value to you is not purely a matter of speculation.
I was playing the devil's advocate. I myself don't have much affinity for cryptos after realizing that Bitcoin's claim as digital gold or store of value can be easily proven false by looking at the data (In March it crashed more than Global Stocks whereas Gold had positive return and it's volatility is significantly higher than Gold which is actually a store of value for long time periods). I think the reason why cryptos crashed recently is the real yields on Developed Market Bonds have bene going up this month and no-one wants to own a zero yielding asset like Bitcoin if real interest rates weren't negative. Same with ARKK funds.
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Re: Non US Investing: Should we put 5% of port in Bitcoin?

Post by janeking12 »

Good idea. There was a time i invested there thanks to my manager. I worked in the company with employee monitoring software(worktime) installed. So he could see what his employees spent time for. Some people bought it and he decided to do it as well.
Crypto is the future, but the future is unknown.
I would suggest that you learn from more than one video on how to invest and when to get in.
And of course bitcoin is the main crypto. The main means that other coins are based on btc movements and it has the biggest value of all market, it is decentralized
Last edited by janeking12 on Tue Mar 02, 2021 3:30 am, edited 1 time in total.
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Re: Non US Investing: Should we put 5% of port in Bitcoin?

Post by galeno »

"If you consider yourself "a seasoned conservative Boglehead retiree", why would even consider Bitcoin?"

I think spending a year in self-imposed house arrest because of the CV pandemic has given me a disease I'll call Boomer FOMO.

No BC for us. Thanks to all.
KISS & STC.
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Re: Non US Investing: Should we put 5% of port in Bitcoin?

Post by abuss368 »

Dave55 wrote: Sun Feb 28, 2021 6:51 pm
galeno wrote: Sun Feb 28, 2021 6:44 pm I knew there would be negative feedback. I was hoping for some positive feedback. Regaeding the neywork potential regarding Bitcoin.

I too would not advise Bitcoin to anyone. But for us? Seasoned conservative Boglehead retirees?

Then again if not Bitcoin what? For 5% of port "mad money"?

Silver? Cobalt? EM equities? EM bonds? None of these speculative assets has or will have a network like Bitcoin has / will have.
If you consider yourself "a seasoned conservative Boglehead retiree", why would even consider Bitcoin?

Dave
Well said. Investors be cautious.

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Re: Non US Investing: Should we put 5% of port in Bitcoin?

Post by Dave55 »

If I were you with the itch to take 5% and "play", I would do it with either: 1. Emerging Markets fund, 2. ARKK or one of the ARK funds. 3. Matthews China Fund (MCHFX)

Dave
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Re: Non US Investing: Should we put 5% of port in Bitcoin?

Post by assyadh »

galeno wrote: Mon Mar 01, 2021 5:20 pm "If you consider yourself "a seasoned conservative Boglehead retiree", why would even consider Bitcoin?"

I think spending a year in self-imposed house arrest because of the CV pandemic has given me a disease I'll call Boomer FOMO.

No BC for us. Thanks to all.
As a millenial who bought and sold BTC, ETH, LTC, XRP, DOGE etc.. I can tell you FOMO is real. I have a friend who bet his entire TFSA on TSLA and bought a model 3 out of it. Really happy for him but will not follow his tracks. Stay the course
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Re: Non US Investing: Should we put 5% of port in Bitcoin?

Post by Jantoven »

ohboy! wrote: Sun Feb 28, 2021 8:09 pm
Ramjet wrote: Sun Feb 28, 2021 8:01 pm I find the suggestion of converting 1%-3% of your portfolio to cryoto and letting it ride without rebalancing reasonable

I don't own any crypto
I own a lot more than 1-3%. But would agree I’m over-risked, and 1-3% is reasonable. I would not leave out other cryptos though, especially Ethereum. I don’t personally care so much for ADA or BNB but I have some.

The crypto industry/space/community has established itself enough where I don’t see it going away. Hard to say which will have the best price performance going forward. I have spent a good deal of time educating myself on crypto and still believe Ethereum has the best future potential. I admit though that I know nothing about the future. So I hold 50 different coins, mostly weighted by marketcap. After 5 years, so far so good.
Out of curiosity - what is it about Ethereum that makes you think it has the greatest potential?
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Re: Non US Investing: Should we put 5% of port in Bitcoin?

Post by SlowMovingInvestor »

finrod_2002 wrote: Mon Mar 01, 2021 2:38 am That said other crypto projects do provide some value to software engineers /ICT companies. Ethereum for example offers a way to deploy software without having to own servers or having to maintain them. Actually more than that. It offers a complete integrated development pipeline with a building, testing and deploying environment. The Ethereum currency is actually only a sort of side effect of the whole system. And actually the fact that Ethereum is so highly priced right now is more of a burden to people that want to build something on that network because of the higher transaction costs and fees to use the network itself. Like Ethereum there are other such projects like for example Cardano.
Prior to cloud based services, that would have been a bigger deal. But these days, it's not difficult to spin up multiple servers or even headless services like Lambda.

Some applications will benefit from a fully distributed, trustless system. But many other services don't need that, and certainly don't need smart contracts to run on every node with attendant scalability problems, high gas prices, constrained programming and data sharing environments. (I know there are projects to work around all these issues).

The crypto tokens (whether Ether or others) are a crucial part of this - the main reason people are willing to spin up servers and let others run smart contracts on them is that they hope to acquire or add to token holdings by mining, initial drops or staking and then make big money from these tokens becoming valuable and sought after.
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