30 comments on “Well, yes

  1. Hoo yah. £7,465.99.

    I torture myself looking at the rise across even the last 2 years. If only…. 12 months ago it was £585. 4 years ago about £8.

    What I didn’t appreciate at the time, and the reason I didn’t buy, is that you can buy fractions of a bitcoin.

    Still there’s Ethereum (£357.22) and LiteCoin (£69.78), and probably others (AltCoin). Plenty of ways to lose our shirts.

    (Prices per comment date/time)

  2. If only Snippa had the courage to put a timescale on his forecasts. He is like a British weather forecaster who forecasts rain every day.

  3. Not really. It would be nice if my pension fund could guess at random events and so make money by riding the chaos. But they can’t. If they bought bitcoin back when it would just mean that they are not investing in any rational sense. Which might pay off well in the short run but it bound to end badly in the end.

    They might as well play the ponies.

  4. As per SMFS.

    I mean it would be great if experienced professional investors could spot at exactly what point an irrational trend is going to blow up, and ride it for exactly the right time before getting off, but it’s really just guesswork.

    Not that I’d want them to be betting against the trend either, because irrationality can persist a long time.

    A factoid I recall about the dot.com boom – there were people who identified a long long time in advance that the valuations were silly and rising, and who ultimately turned out to be proven very right indeed, but had they bet on it all blowing up in everyone’s faces then they’d have run out of money before their shorting strategy paid off. But I’ve forgotten the fine print of the fact; could anyone fill me in?

  5. It isn’t the case that everyone loses money on Ponzi schemes. If you can get in and get out early enough, you can do very nicely – that’s what brings in the investors marks. The trick is not to get left inside when it all collapses (as it inevitably will).

  6. What would be worse, having your pension fund:

    (voluntarily) choosing to invest in Bitcoin as an investment/punt to try to increase your fund value, or

    (required compulsorily under Murphy’s proposed edict) eschew chasing investment returns and instead put money into Murphy’s Green Infrastructure Bonds

    ??

  7. My youngest son, who is the equivalent of a barber, gave me a tip a few days ago that BitCoin was a great investment. So did one of my nephews, the unemployed one too dumb to become a barber.

  8. Fred – I reckon that means Bitcoin is at the greed/delusion stage.

    Course, I know next to nothing about Bitcoin other than it seems to be a bunch of fedora guys buying dodgy Japanese cartoon erotica on their computers. But maybe that’s all I need to know.

  9. Ritchie on LBC right now. Phone in and abuse! The question is what is more frightening: brexit, the banks or the prospect of a Corbyn govt.

  10. “A factoid I recall about the dot.com boom – there were people who identified a long long time in advance that the valuations were silly and rising, and who ultimately turned out to be proven very right indeed, but had they bet on it all blowing up in everyone’s faces then they’d have run out of money before their shorting strategy paid off. But I’ve forgotten the fine print of the fact; could anyone fill me in?”

    You may be thinking of Tony Dye:

    http://www.economist.com/node/10926344

    He was sacked just as the dotcom bubble burst. Sadly died about 10 years ago.

  11. Fred Z said:
    “My youngest son, who is the equivalent of a barber”

    What’s the equivalent of a barber but isn’t a barber? An Australian sheep shearer?

    (Welsh sheep shearers are of course equivalent of a hairdresser)

  12. he’s put all his pension into potato futures – what with the irish/brexit thing he’s probably hoping for the irish famine mk2

  13. I bet that bloke who had all those bitcoins on an old hard drive he threw out has jumped off a tall building. I think he had several million worth when it was $1000/bitcoin. He’d be on the Times Rich list now……….

    Edit: he had 7500 of them……$75m worth. Ouch.

    http://www.bbc.co.uk/news/av/technology-25138627/quest-for-lost-hard-drive-with-4m-stored-bitcoins

    At what point in the future (if for example Bitcoin became a fully accepted part of the global financial system and was worth many times what it is today) would it make sense to dig up that landfill looking for that hard drive? $100m? $1bn? $10bn?

  14. I heard a great story a couple of years ago about a French guy whose Aviva Life Insurance scheme allows him to pick the assets weekly, and the contract pays out at the end of the duration (x decades). It’s basically a savings scheme with insurance benefits.

    Anyway, the important point is that he can effectively decide based on the price rise/fall of available assets what last week’s investment was (i.e. he picks his investments after he knows whether they have made money).

    I’m not very good at explaining stuff like this. Go read the story here.

  15. My youngest son, who is the equivalent of a barber, gave me a tip a few days ago that BitCoin was a great investment.

    That’s the equivalent of Joe Kennedy getting stock tips of a shoe-shine boy just before the crash, or Tesco check-out girls chatting about the buy-to-let market. There was a BBC presenter on this morning talking about it as well. A friend of mine once said “if you can see the bandwagon, it’s already too late to jump on”.

  16. @Jim

    Thanks but not him in particular – I think it was a calculation somewhere showing that someone who had followed a strategy of shorting tech stocks from, hmm, 1997 or 98 maybe, would have inevitably run out of cash before the crash hit. Basically you might be correct about the bubble but if irrationality persists long enough you may be unable to profit from it.

  17. @MBE
    First one I remember, personally, was Australian mining shares. So the dot.com boom was occurring on well explored territory, as far as I was concerned
    Bitcoin’s subtly different. The value of Bitcoin is in confidence. Confidence that it’ll be exchangeable for items of value in the future. In that, it’s not fundamentally different from any currency. It’s not as if you’re looking at an enterprise that needs to make a return on investment & whether that return is infeasible to justify the price. They way Bitcoin’s structured, it’s actually far superior to any national currency because it doesn’t have a government lurking behind it, meddling with its value.
    Put a price on confidence. Currently that’s 7,465.99 in pounds, GB. How much confidence do you have in £GB? Or €uros? Or Dollars U$

  18. One thing that interests me is not confidence in the algorithm itself but confidence in the exchange mechanisms. Individual not systemic. But that really is no different from the conventional banking system. Will your money go where you want it or be stolen along the way? Your Bitcoin wallet be hacked or something. But surely this should be insurable risk? And insurers would have an incentive to reduce the risk. So would operate in much the same way as bank regulators, keeping the system kosher. A market solution rather than a regulatory?

  19. Even if you had bought bitcoin when it was £10, the chances are that you would have sold out a long time ago…

  20. What, so BitCoin effectively “lives” on your hard drive? That’s madness, it’s like hiding a pile of tenners inside the cooker.

    Plus, what sort of moron doesn’t copy all the stuff off an old hard drive onto their replacement drive?

  21. @Justin. Yes there is a chap who “owns” Aviva France. I saw him at an FT event once. His fund is worth millions but Aviva wrote to him and the other policyholders said “we will buy you out of the contract”. Everyone else said yes. He said no so they refused his trades on some technicality. He took them to court. The case is still ongoing. The maximum liability for Aviva group is the value of Aviva France as they will just let it go.

  22. “if you can see the bandwagon, it’s already too late to jump on”.

    And if you’re on something that is starting to look like a bandwagon get off quick.

    If only I’d once followed that advice 🙁

  23. @jgh

    Bitcoin does live on your hard drive if that’s where you put it. And it will to start with if you “mined” it. And you’re right; keeping it there is as safe as storing wads of tenners in the oven.

    Almost everyone else has a virtual wallet, and these are (almost always) stored by the broker ( still on a hard drive somewhere, but with multiple redundancy ).

    It’s not really much different conceptually to having a bank account or portfolio with a stock broker.

  24. Purely out of curiosity I bought £50-worth of Bitcoins in 2011 – 13.33something of them. Decided they were pretty useless as a transactional device because the price of goods was so unstable, expressed in BTC. So, sat back and pretty much forgot about them until I sold them for £927 in 2013 – got the money out just before Mt Gox went down the pan, fortunately.

    At the time, I thought I’d done quite well. Ah, hubris!

  25. This is of course part of the point. Your pension fund would never have invested in bitcoin, indeed you would be lucky if it was even invested in equities. “Risk management’ has been corrupted by those wishing to fuel the real bubble out there which is in fixed income – and yes naturally that does include governments needing to issue the stuff and delighting in the idea that they can actually get paid for doing so. Thus long term investors are required to eschew short term volatility (instead of embracing it) and to hug a benchmark (and thus essentially adopt a momentum strategy). This is investment by spreadsheet, administered by lawyers and bureaucrats and is exactly why we got the financial crisis- all those leveraged credit products weren’t risky at all you see…my spreadsheet said so. So no, there is zero chance that your pension fund had bitcoin.

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