That being said, I do feel like I can study and become educated about my local residential real estate market and it is an interesting topic to me so that is where I spend my time, effort, and excess capital.
Regarding, investment vs gambling. Yes all investing is gambling but there are things people do to try and stack the odds in our favor. For example, buying a share of McDonalds and buying into your friends new lawn mowing business are both gambling but the existence of years and years of history showing that McDonalds can turn a long term profit does make it a different level of risk. So in theory when there is a lot of historical data to go off of, and or we truly understand a business, and or we have the ability to directly influence the success of a gamble we call that investing. The less we have of the above I would call gambling. I recognize that this a very subjective statement. Just my opinion.
To the idea of belief, I agree the belief in gold or paper money is what makes it valuable but it is the fact that there is belief by billions of people for 100s, if not, thousands of years. Simply stating that people have believed for a decade or so is not sufficient.
Regarding Bitcoin being a currancy, that will never happen until its value stabilizes. We all need to be relatively certain that 1 Bitcoin will be worth roughly the same amount tomorrow, next week, next month, and next year otherwise it won't become a currency. Why would I buy a car using bitcoin if next month that Bitcoin is worth 50% more. I just way overpaid for my car. Not saying it won't ever happen, just saying it won't happen soon.
When I say fundamentals I am not comparing it to gold or dollars. I am comparing it to other investments like real estate or publicly traded companies. Where I am able to discover fundamentals and make decisions based on those. By Fundamentals I mean, as an example, how much revenue does a business earn, what are its expenses, what sort of profit does it have left over to pay dividends or reinvest in the business. What sort of debt does it have. How consistently has it show that it can be profitable. Those are fundamentals.
Bitcoin doesn't have any fundamentals other than we hope it becomes a currency, we hope it is able to retain value. Not good enough for me.
I understand what Matt was saying about billions going into it. My point is that investing in something because others are is not a sufficient reason for me. I need the other things. I need to be able to evaluate the investment. I don't know how to evaluate Bitcoin other than lots of people seem to be buying in.
All that being said, invest away. There are lots of places that smarter people than me invest that I wouldn't touch. For me local real estate is where I think I have a competitive advantage. I am not aware of my ability to have a competitive advantage investing in public companies (thus I just own them all) or in Bitcoin (thus I none).
In fact the only reason I own the stock market is because it has a longer history of showing it can grow an investment than I have in real estate. I have 15 years of history in real estate the stock market has 100s of years.
Whew...that was long. I am interested in rebuttal. It is an interesting topic.
Originally posted by
@Matt R.:
Originally posted by @Eric Carr:
@Jacob Sampson
@Matt R.
Jacob, you are wrong about belief. The only reason gold, or the US dollar, have value, is BELIEF and trust. Which are nearly synonymous. As far a a dollar goes, you cant eat it, wear it, sleep on it, or send it to someone across the world within a few minutes for pennies.
About your comment of speculation. As for being an investor, you listed large companies that you say were not good investment choices. And since you or anyone cannot tell the future, if you have invested in ANY stock, is that not speculation? No one knew those you listed would not be good bets before they weren't.
I think the point Matt made about big money only, is that billions are going into it, demand is high, so Grayscale raised the wall. Bitcoin is now bigger than Visa, Paypal, and all the US banks, most world corporations, and is heading closer to eating Berkshire Hathaway.
You also mentioned fundamentals. What fundamentals does cash or gold have?
You don't seem to yet know the fundamentals of Bitcoin, but have already made the decision that it is gambling.
I agree that is does not matter what a single person might believe. It is all about the math and numbers now. Funds can't ignore the math is where it appears we are now. But for the other readers in a nut shell , the elements of the fundamentals for bitcoin are as follows: store of value, programmable money and capital asset all rolled up into one value number.
