I am so happy about this. I hope this is going to sour crypto for "investors". I use quotes, because they really are not -- investing should be reserved for fronting cash to create some value (like buying stock to infuse capital into a corporation). As it is all crypto trading is purely speculation.
The world would be so much better if money tended to be exchanged in good faith, to improve something rather than just to exploit market instability.
>investing should be reserved for fronting cash to create some value (like buying stock to infuse capital into a corporation). As it is all crypto trading is purely speculation.
Ok but let's be real- buying a stock is not really "creating value". The stock already exists. Company A has issued 100 shares. People are buying/selling it in the market.. no one is creating value there. Sure they may be arbitrarily driving the value up, but that's not creating real value.
If you want to argue that an IPO is "creating value" because people basically front the money to give capital.. ok fine. But let's not pretend you as a random person buying and selling google shares that already exist is creating value.
Also, I would say the people sitting here buying and selling stocks are most of the time 99% pure speculation. They have zero control over what actually happens in the company. Sure they can do "research" and guess what might happen.. but it's still nearly all gambling.
Investing is the horrible word for how nearly the entire financial system works. People have created gambling as a way of life, and convinced everyone else that they must gamble their money to make more. Which, surprise surprise, nearly always benefits the rich. Guaranteed pension/good social security? Nah, throw your money into our 401k so we can prop up the rest of the market arbitrarily and continue to drive up everything the rich own so they are richer! And you've all fallen for it.
> Ok but let's be real- buying a stock is not really "creating value". The stock already exists. Company A has issued 100 shares. People are buying/selling it in the market.. no one is creating value there. Sure they may be arbitrarily driving the value up, but that's not creating real value.
If it wasn't possible to resell stocks, capital acquired via stock issuance would be much more expensive. The stock market allows stocks to function as a means of seeding capital.
It's like saying "paying back your mortgage doesn't get buy you a house." The mortgage only exists because it gets paid back.
> Also, I would say the people sitting here buying and selling stocks are most of the time 99% pure speculation. They have zero control over what actually happens in the company. Sure they can do "research" and guess what might happen.. but it's still nearly all gambling.
Yes, which general advice is to spread your capital across the whole market. It used to be that you had to spend your capital building up your own business, which is even worse than trying to pick your own stocks. Now you can diversify your risk world-wide, as to avoid any sort of local calamities.
The difference between speculation and investing isn't in that you want to earn money (everybody who buys stock want to increase their wealth). The reason is for why you pick this particular instrument.
When I buy stock (or when Berkshire Hathaway does it) I buy into business that I hope has sound fundaments and is going to grow and create more value over time. I spend considerable effort trying to understand the situation the business is in, do they have dangers ahead of them, do they have sound leadership, etc. This is investing -- buying things that you hope are going to increase in value over long time.
Speculation is when you buy things for reasons that are not at all connected with the thing you are buying. For example you noticed people are buying crypto, the price is going up, so why not jump in on the wagon and get your cut of the profit. This is speculation because it totally ignores what is it that you are buying, and the only thing that you care is that the price is going up.
Unless you have an equity position you haven't given the company anything for the shares when you buy Berkshire stock. You are essentially riding off of Buffett's success and making money without doing any work.
By buying existing stock you help create a functioning market, which in turn helps other people make investments. That they can sell their stock in the future factors into investment decisions. Therefore imp it is incorrect to say buying existing stocks doesn't create value.
> As it is all crypto trading is purely speculation.
The reason I stay invested is the supply-side economics.
The supply is well-known in advance, and is advantageous to Bitcoin. US M2 money supply grew 8.04% in the past year [0], while Bitcoin's grew ~1.75% [1].
Yes, demand has its 80% ups and downs, but each crash was to a level higher than the previous.
> Yes, demand has its 80% ups and downs, but each crash was to a level higher than the previous.
You're actually looking at demand more than supply. You're right that supply isn't going up much, but you have no evidence or theory about why people will be more interested in Bitcoin in 5 years than they are now. You really have to look at both.
The supply of my toenail clippings has grown by less than either of these over the past year. If you'd like to apply your supply-side economics and invest, send me a DM.
Being happy about retail investors losing money is immoral. I hope you realize that.
We have a lot of investments in the US that do nothing except force people to grind even harder. Look at the housing market. Why should housing be an investment when we absolutely need it to live and there are other investment vehicles that do just as well if not better?
> Being happy about retail investors losing money is immoral. I hope you realize that.
No, it is not immoral. Retail "investors" should know better than "invest" into things with very shaky connection to reality where it is predicted value next Wednesday can be anywhere between zero and infinity. If they loose all your money on crypto that is purely their fault for "investing" into something which has no real value and can loose its virtual value in no time.
They wanted their chance at huge profits on an extremely volatile market and extreme volatility is what they got.
How are you being bullied? Someone just stated their opinion with regards to crypto investors knowing the risks when they invested in such a volatile asset.
>investing should be reserved for fronting cash to create some value (like buying stock to infuse capital into a corporation).
Low interest rates have killed this cause. If corporations can get cash from the banks at near zero rates, the only remaining use case for investments is heavy speculation. In a sense, the post-2008 monetary policy was about making things look good on paper, while hollowing out the economy with bullshit jobs, bullshit stocks and bullshit business models.
As bad as the spiraling inflation could be, I hope the shock coming from it will bring the economy back to the common sense.
The stock market isn't speculation (though there is a lot of speculation on stock market -- these two sentences are not in conflict).
Speculation is something that happens when you start buying and selling for reasons that are not at all connected to the performance of the company.
There is a lot of useful, value-creating reasons for people to be able to sell their share they bought at initial stock offering.
And think about how useful/worthwhile a share would be if you could never sell it. Remember, there isn't selling if there isn't buying. If you want to sell your share there must be somebody ready to buy from you.
Crypto is not a technology, it's a religion. The reason behind this is that it takes faith to believe that today does not represent tomorrow.
There is more nuance behind crypto besides its technological innovation like AMM's ,ZK-proofs & distributed computing. It's the idea that you can be a self-soverign individual, owing fealty to no nation.
It's often brought along at the disillusionment of the current united states world order. We see rampant corruption, an absolutely ancient leadership completely out of touch with the current generation and an economy that seems to forever favor the rich. There is no light at the end of the tunnel in the current economic system for a large majority of the population.
Bitcoin promises(ed?) the ability to transact with anyone on the planet outside the vieew of the current regime. Bitcoin promised "Proof of work" over "Proof of violence". It has allowed us to create "ad-hoc governance" like neveer before. it gave an entire generation of people light at the end of the tunnel.
I am not saying that any of these things are correct, or 'Right'. Simply stating how i've seen the community evolve and why.
I don't agree with GP but there are legitimate reasons why people are sympathetic to this.
One reason would be the increased difficulty of a government to seize or freeze assets for people who are determined to be politically problematic (see: e-CNY and SWIFT).
Another would be the accelerating debasement of currencies which provides opportunity for the rich to become richer in wealth & assets, while wages for the working class are diminished by inflation.
The world would be so much better if money tended to be exchanged in good faith, to improve something rather than just to exploit market instability.