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Oh man, gold... there's an even better example of psychology and hype over inflating the value of something. Sure Bitcoin's bubbling, but what can beat a shiny metal horded by bunker dwellers convinced "fiat" currency is just a conspiracy to steal their precious bodily fluids?

Because if you do it right you can make a lot of money doing not very much actual work. Meanwhile those building "mining machines" can just leave the computer working at making bitcoins rather than doing work.

In short its the new "get rich quick scheme". It's the same reason a lot of other online currencies are seeing a surge in popularity; everyone investing is betting on which one will increase in value and then gambling on when to pull out to get the most profit.

Some will win and some will lose

Some are born to sing the blues?

Seriously this reminded of another impact Bitcoin has had - it's massively increased the prices of computer hardware since graphics card GPUs are apparently ideal for doing the mining calculations.

 ScarletRose wrote:
Oh man, gold... there's an even better example of psychology and hype over inflating the value of something. Sure Bitcoin's bubbling, but what can beat a shiny metal horded by bunker dwellers convinced "fiat" currency is just a conspiracy to steal their precious bodily fluids?

Well, in regards to investing, most gold investors don't actually own bars of gold. They own gold miners or gold related ETFs. So Gold is kind of a loose term. Yes, some guys might have a couple bars of it in a bank vault, but again, how are you going to cash it in for something when the don't bypass the language filter like this. Reds8n
hits the fan. So most have a small portion of their portfolio in gold-related investments and sell those when they spike when peeps retreat from equities.

 Kilkrazy wrote:

Yes, Bitcoin has value as a currency within criminal circles mainly because it is untraceable rather than because it is trustable. There is a currency value, of course. I meant that Bitcoin is no longer operating in the general economy as a currency.

BTC isn't used for black market purchases, it hasn't been for months. The transaction fees are ridiculous and can double or even triple the cost of whatever you're buying, dark net exchanges use Litecoin for small time stuff like pot or shrooms. If you're going to buy something that the FBI/InterPol/whatever is going to be breathing down your neck over you don't use a coin with a distributed ledger. Frankly the people using cryptos for illegal purchases a lot of them think like normal small business owners, they want stable currency and minimal processing fees.

The point is gold is either a real physical material or ownership of businesses that deal in it. Stocks are ownership of businesses that exist in the world around us. Those things have tangible value. Cryptocurrencies only have psychological value--there isn't actually anything there.

 Kilkrazy wrote:
I have Ethereums.

There is a finite amount of Bitcoin available, actually, because eventually it becomes too difficult to perform the computations necessary to mine them. This is one of Bitcoin's flaws as a working currency.

That's not finite. It's simply more difficult to create a bitcoin, but it is not a hard finite cap on how many bitcoins could exist. As opposed to gold, where there is an exact and finite amount of Gold atoms on this planet.

And of course, eventually somebody is going crack the code that generates bitcoin formulas, which would result in "Print bitcoin on demand". That's the real flaw with Bitcoin. Somebody will eventually crack the main formula and then Bitcoin will truly be useless.

With regards to the DOW markets... this is a correction eh?

It's bouncing today... was -900 and now +400ish. Prolly land at +/- 10pts at the end of the day.

As for Bitcoin... to me, the future seems to be something like Berkshire Shares something kinda sorta stable... (minus the dividends of course).

 ScarletRose wrote:
Oh man, gold... there's an even better example of psychology and hype over inflating the value of something. Sure Bitcoin's bubbling, but what can beat a shiny metal horded by bunker dwellers convinced "fiat" currency is just a conspiracy to steal their precious bodily fluids?

You mock it, but as mentioned earlier Gold has value as a means of wealth storage. Provided there is at least some sort of functioning society in existence where trade still occurs.

Currency is really the only reason modern society exists as without it you are only left with barter. And barter is woefully time consuming and cumbersome. If you have chickens and want to buy a cow, but the guy with the cow doesn't want any chickens. You have to track down someone who wants chickens and will give you something else you can eventually trade for what the guy with the cow wants.

Gold is a convenient medium of exchange to facilitate this. It does have some worth in and of itself because its pretty and people like to make jewelry out of it. So you can be fashionable and have a convenient way to carry a medium of exchange around with you.

So in many ways, Gold is better than something like Paper money(which truly is worthless in and of itself) if you are worried about a collapse of the overall economy. At the least, its never bad to have a diversified portfolio.

 Grey Templar wrote:

 Kilkrazy wrote:
I have Ethereums.

There is a finite amount of Bitcoin available, actually, because eventually it becomes too difficult to perform the computations necessary to mine them. This is one of Bitcoin's flaws as a working currency.

That's not finite. It's simply more difficult to create a bitcoin, but it is not a hard finite cap on how many bitcoins could exist. As opposed to gold, where there is an exact and finite amount of Gold atoms on this planet.

And of course, eventually somebody is going crack the code that generates bitcoin formulas, which would result in "Print bitcoin on demand". That's the real flaw with Bitcoin. Somebody will eventually crack the main formula and then Bitcoin will truly be useless.

I think KillKrazy is right, you're just getting caught up on the word "finite". It is finite, they increase the mining difficulty to make sure they're not mined out before a certain date. The mine time for a block is always kept at ~5 min, the network scales the complexity of the block to match the avg hash rate to hit that ~5 min. Which just leads to an arms race to increase hashing power relative to the network, especially during a boom. In theory the rise in value of BTC was supposed to compensate for increased mining costs but in practice it failed. Which drove up the exchange fee for processing transactions from BTC to USD. It fluctuated between $6-50 just to convert from BTC to USD in the last 2 months.

The more popular BTC got the worse, it became as a currency. It became too fat to fly after a certain point.

 whembly wrote:
With regards to the DOW markets... this is a correction eh?

It's bouncing today... was -900 and now +400ish. Prolly land at +/- 10pts at the end of the day.

Yeah as I mentioned earlier I bought the dip and it is paying off. I think this will rebound quickly.

The thing is, there just isn't a lot of places where investors can put their money and get the same kind of returns the market has provided the last 40 years (on AVERAGE) about 12%. Yes there have been some bad years, and some stellar years. Bonds, at these rates, aren't good. But as rates go up and they will drain some money from the equity market. But until then, peeps are either going to stand around with cash in their hand looking at each other, or they are going to invest it somewhere. Right now the action is in stocks.

 Grey Templar wrote:

 Kilkrazy wrote:
I have Ethereums.

There is a finite amount of Bitcoin available, actually, because eventually it becomes too difficult to perform the computations necessary to mine them. This is one of Bitcoin's flaws as a working currency.

That's not finite. It's simply more difficult to create a bitcoin, but it is not a hard finite cap on how many bitcoins could exist. As opposed to gold, where there is an exact and finite amount of Gold atoms on this planet.

And of course, eventually somebody is going crack the code that generates bitcoin formulas, which would result in "Print bitcoin on demand". That's the real flaw with Bitcoin. Somebody will eventually crack the main formula and then Bitcoin will truly be useless.

It's a hard cap in the sense that eventually the resources required to mine a new coin will exceed the capacity of the planet to generate them. IDK how many coins would have been made by then, but it's a bit theoretical given you can't spend them now, and people are only mining them for their value as a bubble asset.

In related news, the value of bitcoins has dropped below $6,000.

 NinthMusketeer wrote:
The point is gold is either a real physical material or ownership of businesses that deal in it. Stocks are ownership of businesses that exist in the world around us. Those things have tangible value. Cryptocurrencies only have psychological value--there isn't actually anything there.

I can use cryptos to get moon rocks, boiiiiiiii and the gubmint can't stop meeeeee!

Or more intelligently put. There's value in cryptos as a medium of exchange for semi-illegal businesses. ie Marijuana businesses in the US.

I can't imagine being a business, and accepting payment for something that is wildly volatile. Imagine if going into a grocery store with dollars, and prices are in bitcoin, and there is a digital conversion monitor showing the current price for each item, and its rising and falling all over the place. One minute your dollar can buy a lot, the next it can't. And if you are the business owner, one minute you are making a killing, the next not so much.

If I were living in Venezuela, bitcoin and others would be an option. In the US? its silly. Maybe crypto can be a hedge against the US dollar, which I never hear anyone talk about, but again, if the US Economy joined Venezuela, we'd have much bigger problems on our hands than having a little bitcoin could solve.

And it's traceable, and it requires an hour's wait roughly to know if a transaction reliably occurred.

Bitcoin really accomplished absolutely nothing it set out to do. I suppose at least some people got rich off it. Still a little bitter I didn't. At least I didn't lose anything I guess.

KTG17 wrote:
I can't imagine being a business, and accepting payment for something that is wildly volatile. Imagine if going into a grocery store with dollars, and prices are in bitcoin, and there is a digital conversion monitor showing the current price for each item, and its rising and falling all over the place. One minute your dollar can buy a lot, the next it can't. And if you are the business owner, one minute you are making a killing, the next not so much.

They use crypto because they have to, not because they want to. Illegal business after all. To be clear I'm talking about LTC not BTC.

You'd be surprised at the complexity of market spaces in the dark net, there's all kinds of methodology to middle man the transactions to minimize hassle. I mean there's even a Google equivalent. However it's all decentralized now into a more traditional drug trade business model (referrals only) since the FBI and Dutch police dredged the river half a year ago.

 daedalus wrote:
I suppose at least some people got rich off it. Still a little bitter I didn't. At least I didn't lose anything I guess.

Being jealous of others ability to stack paper is a waste of energy. Everyone is in different points in life when the opportunity presents itself and you have to have the lucky timing to have assets to speculate with. Many of them got lucky and caught a wave and just as many failed. Passive income from index investments are still a thing...

LOL Snap is up 25% after hours for losing money but beating estimates. Only on planet Earth.

Futures up 870 lol. Doubt that holds.

Yeah, things are going to be fine.


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 avantgarde wrote:
They use crypto because they have to, not because they want to. Illegal business after all. To be clear I'm talking about LTC not BTC.

Well, I was thinking of the legit businesses, but I can see that too.

Being jealous of others ability to stack paper is a waste of energy. Everyone is in different points in life when the opportunity presents itself and you have to have the lucky timing to have assets to speculate with. Many of them got lucky and caught a wave and just as many failed.

I agree with this. There are a lot of peeps who bought Bitcoin at 20,000 and I am sure they are pretty depressed right now.

Passive income from index investments are still a thing...

Which I highly recommend. Just put it away in a low cost ETF like VOO or VTI and forget about it.

 avantgarde wrote:

 NinthMusketeer wrote:
The point is gold is either a real physical material or ownership of businesses that deal in it. Stocks are ownership of businesses that exist in the world around us. Those things have tangible value. Cryptocurrencies only have psychological value--there isn't actually anything there.

I can use cryptos to get moon rocks, boiiiiiiii and the gubmint can't stop meeeeee!

Or more intelligently put. There's value in cryptos as a medium of exchange for semi-illegal businesses. ie Marijuana businesses in the US.

Ehhh. IDK about that.

You still have the issue that the value of Bitcoin is more volatile than any sane person would want in a currency.

Best case I could see you occasionally accepting payment in it, and immediately selling it off so you don't lose anything. You certainly wouldn't want to keep any amount of assets in Bitcoin form for very long. Plus its still a transaction done in electronic form. At which point you might as well have just used a credit card or a money wire for the transaction. If you actually cared about anonymity.

Illicit businesses still will just operate with regular money. The goal when running an illegal business is to not have it be easily traceable. Physical cash is still better at that since Bitcoin still lives on the internet.

Bit coin was always a high risk and volitile place to invest money. It never was stable or reliable.

Unlike shares or comodities it has no even small asset value.

Defenitely a high risk investment, the gains where huge but so have been potentially loss and price changes.

Its gone from 20k to 6-8k in what a month or two. Several banks stopped buying it on certain cards.

The bit coin bus may be reaching its ending.

Well, that was interesting.
When I said:

It's like investing in gold. It's valuable because everyone wants it, and everyone wants it because it's valuable. It feeds into itself.

Somehow, all of you completely missed my point. I chose the word gold as an easy example, but please don't get stuck on that one word. Replace "gold" with any other word of your choice. The point is that, all too often, a thing is valuable because people want it. And when a thing is valuable, even more people will want it. It creates a cycle of ever-increasing value and ever-increasing demand.
That "thing" could be gold. It could be Bitcoin. It could be Action Comics #1. It could be a really good brand of artisan made shaving soap that's made in small quantities.

 Tannhauser42 wrote:
Well, that was interesting.
When I said:

It's like investing in gold. It's valuable because everyone wants it, and everyone wants it because it's valuable. It feeds into itself.

Somehow, all of you completely missed my point. I chose the word gold as an easy example, but please don't get stuck on that one word. Replace "gold" with any other word of your choice. The point is that, all too often, a thing is valuable because people want it. And when a thing is valuable, even more people will want it. It creates a cycle of ever-increasing value and ever-increasing demand.
That "thing" could be gold. It could be Bitcoin. It could be Action Comics #1. It could be a really good brand of artisan made shaving soap that's made in small quantities.

The point you're missing here is that gold as wealth storage did not fell from the sky and is not really comparable to any other examples you've listed here. What you say above is indeed true in many cases, like tulips, BTC, MtG cards, vintage post stamps or lighters, but is fundamentally different with gold. If you have chosen any other word as a substitute, then the response would be different. But you chose gold specifically.

 Grey Templar wrote:

 avantgarde wrote:

 NinthMusketeer wrote:
The point is gold is either a real physical material or ownership of businesses that deal in it. Stocks are ownership of businesses that exist in the world around us. Those things have tangible value. Cryptocurrencies only have psychological value--there isn't actually anything there.

I can use cryptos to get moon rocks, boiiiiiiii and the gubmint can't stop meeeeee!

Or more intelligently put. There's value in cryptos as a medium of exchange for semi-illegal businesses. ie Marijuana businesses in the US.

Ehhh. IDK about that.

You still have the issue that the value of Bitcoin is more volatile than any sane person would want in a currency.

Best case I could see you occasionally accepting payment in it, and immediately selling it off so you don't lose anything. You certainly wouldn't want to keep any amount of assets in Bitcoin form for very long. Plus its still a transaction done in electronic form. At which point you might as well have just used a credit card or a money wire for the transaction. If you actually cared about anonymity.

Illicit businesses still will just operate with regular money. The goal when running an illegal business is to not have it be easily traceable. Physical cash is still better at that since Bitcoin still lives on the internet.

Again I'm speaking of the various cryptos used which hasn't been BTC for months. BTC is more volatile because A) Bitcoin is the flagship hype wagon that everyone piles on or off. B) The popularity of BTC significantly affects exchange fee rates to convert from USD to BTC.

LTC exchange rate range for last two months: $0.25 to $1.55
BTC exchange rate range for last two months: $6 to $55

Secondly I'm talking about semi-legal businesses, because of the amorphous legality and the lackadaisical enforcement from the USDOJ of domestic trade, anonymity concerns aren't at the forefront. I'd not be surprised if the largest distribution network of pot in the US was the US Postal Service. That's how little people care about anonymity.

As a business owner you could be running a completely legal dispensary or farm out in Cali or Colorado but wanna make some cash on the side in "dry" states. They don't care if a trail back to them goes into a ledger. It's big money since traditional business models can't compete in pricing with stuff grown legally and the dispensaries have access to labor intensive products your traditional dealer isn't going to sell at nearly a competitive price or find at all. I'm talking moon rocks, dabs and the big ones: edibles and vape fluid.

As a customer if you expect your state to legalize in the next 5-10 years and the local law enforcement aren't enforcing, a common situation in many states, why gaf about your IP address going into a massive ledger either.

I'm not disputing BTC, as in the coin itself not cryptos as a whole, is a poor currency in general. I am also not arguing the value of the LTC is intrinsic, the value comes from the murky legality of the situation and LTC as a "good enough" exchange medium when you can't move money through legal channels. Once the legal status becomes well defined, say if pot is nationally legalized, LTC will lose a lot of value.

Ugh now I feel dirty writing that. I swear I don't browse the dark net looking for drugs and stolen credit cards guys.

nou wrote:

The point you're missing here is that gold as wealth storage did not fell from the sky and is not really comparable to any other examples you've listed here.

I am missing no point whatsoever because THAT WAS NOT MY POINT AND NEVER WAS A PART OF MY POINT. Did I mention "wealth storage"? NO.
Do not, I repeat, do not put words in my mouth or misrepresent what I have said to pursue your own arguments.

I'm done here.

sebster wrote:Just as most people just like watching sport for its own sake and don't gamble, most people buy stocks with no interest in making quick gains on short term volatility. They buy and they hold, getting those bi-annual dividends, and maybe cashing out in retirement. In 2008 when the market plunged, 97% of investors... did nothing. They just held on to their stocks, watched the paper price plummet and then recover, because they're invested long term.

I don't know if I remember correctly but I think most people don't buy stocks for long term investment/retirement. I think it was Buffet who said that an index fund is the better long term option because those have smaller fees but also because more than 50% of the market are speculating (not necessarily day trading but for a much wider definition of speculating). That combination of higher fees and sometimes winning (looks good) and sometimes losing (gets ignored the moment you win again) leads to people thinking they are outperforming index funds but overall they are not smarter and in the long term an index fund tends to do better.

If I remember correctly he (or it was the dude who Google brought in to explain their workforce about stocks before they got their IPO) explained that speculators (as in people who don't just leave this for a long time) would need to be reduced to less than 40% of the pool (or something like that) to be able to actually abuse the situation of index funds dominating and being less flexible (and work around that information to create profits at the cost of index funds). Of course if so many people were to actually move to index funds this reversal of benefits would then lead to people moving away from index funds (and into speculation) thus again creating a situation where index funds are under 60% (or whatever the number was). The secondary point was that index fund never had that high of a percentage because so many people think they can outsmart the market (while the middlemen skim off their fees and get rich without risking anything).

whembly wrote:As for Bitcoin... to me, the future seems to be something like Berkshire Shares something kinda sorta stable... (minus the dividends of course).

Like in Alien where the crew gets paid in company shares (implying that it's become more stable than government issued currencies)?

 Alpharius wrote:

 Galas wrote:
People that think Bitcoin is used by criminals should read about Monero.

Why so cryptic?

Why not just bottom line it for us?

Or do you need a payment in cryptocurrency first?!?

https://en.wikipedia.org/wiki/Monero_(cryptocurrency)

Unlike many cryptocurrencies that are derivatives of Bitcoin, Monero is based on the CryptoNight proof-of-work hash algorithm, which comes from the CryptoNote protocol[7]. It possesses significant algorithmic differences relating to blockchain obfuscation.[8][9] By providing a high level of privacy, Monero is fungible, meaning that every unit of the currency can be substituted by another unit. This makes Monero different from public-ledger cryptocurrencies like Bitcoin, where addresses with coins previously associated with undesired activity can be blacklisted and have their coins refused by other users.[3]

In particular, the ring signatures mix the spender's address with a group of others, making it exponentially more difficult to establish a link between each subsequent transaction.[5][10] Also, the "stealth addresses" generated for each transaction make it impossible to discover the actual destination address of a transaction by anyone else other than the sender and the receiver. Finally, the "ring confidential transactions" mechanism hides the transferred amount

 Mad Doc Grotsnik wrote:
I mean, it's electronic. What's to stop the people that invented it just awarding themselves Fifty Squillion Bitcoins at any point in time?

No-one has any power to just create new coins. New coins are only created through an automated process, which are allocated to people who supply computers for tracking processing. That's what 'bitcoin mining' is.

In that sense bitcoin is actually really clever. Because no-one can just make more of the currency, unlike current fiat currency where the various Federal Reserves, Reserve Banks, Central Banks etc around the world can choose to print more money if they want. That's what got people really excited, this was a currency that didn't need any faith in government.

Only problem is those really excited people didn't understand currency, and had a very strange, ideological opinion of the Fed. Because what the Fed does is control money supply to ensure currency inflation stays in a narrow band which doesn't upset commerce - keeping inflation around 2% meant shops didn't have to worry about changing prices constantly, and there's an incentive to spend money now, not just sit on it. Whereas bitcoin, because it is unmanaged and increasingly scarce, it attracts speculators, which causes the price to fluctuate widly.

The irony is what makes people excited about bitcoin as an investment is what makes it terrible as a currency, and because it is bad as a currency, means it will never end up a good investment.


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 NinthMusketeer wrote:
I have a slightly different interpretation of the matter. In my eyes there is fundamental value to stocks, as they are a share of a real company, yet the perception of that value is affected by group psychology, etc. Same page there. What I see is that since bitcoin (and the like) has no fundamental value the overall valuation of the stock market is used as one by proxy. So bitcoin essentially piggybacks on the same mood of the market without as much of a psychological 'identity' of it's own, while the latter operates independently.

So bitcoin as a purely speculative, ends up piggybacking on the trends of the stock market (which themselves have a cause that is a combination of fundamental and psychological elements)?

That, to me, is an excellent explanation. Seriously, I pinched this from a twitter thread where it was being discussed by economists, and I don't think any of them gave answers that were close to being as complete, and as concise. Mad props to you.


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nou wrote:
And for anyone still believing, that there is any significant "fundamental value" within stockmarket, read this: http://stockcharts.com/school/doku.php?id=chart_school:chart_analysis and see for yourself how much of "proffesional stock trend analysis" is based solely on "chart numberology", not far removed from depiction in Aronofsky's "Pi" movie (great film BTW).

We're talking at cross purposes here. Fundamental value refers to the idea that the asset has on some level an actual value to the owner divorced from its sale price. So for instance the price of an apartment in NY might swing wildly in value based on the moods of the market, and all that chaos might leave someone wondering what the real value of the property is, and some concluding that it's all nonsense. But at the end of the day, the apartment can be lived in, or it can be rented - it will deliver some fundamental, real world value to its owner.

That's what I'm saying about stocks. Prices go all over the place and it's a fool's errand to claim any real knowledge about what the stock's price 'should' be... but that doesn't mean the stocks have no value. They pay a dividend to the holder. That's a fundamental, real world value

And yeah, Pi is a great movie. I've been an Aronofsky fan ever since

And answering OPs question - in days of interwebz stockmarket analysis follows the same pattern of mass behaviour as "netlisting" in 40K. "Serious investors" follow same "serious" webpages (there is huge homogenisation of content between different sites dedicated to the same, limited area of interest) and base their knowledge of "chart analysis" on same tutorials/schools/tools.

I think chartists went out of fashion with suspenders and power suits. These days the big trend for retail investors is in to passive funds, while the big firms move increasing the quant stuff, trying to make their money by getting in ahead of trades by a fraction of a second.

nowadays you can spread your emotions instantly to the masses - one single Tweet or FB post, that can be written and sent during momentarily upset can reach and upset thousands of people - like avalanche. In pre- social media times it was a lot, lot harder to "synchronise" emotional reactions this way, as you don't usually stay upset over trivia long enough to write and send a paper letter and you can phonecall only one person in such state. So only deeper upset/unease got spread far enough to get magnified to entire countries, unless it has been "catched" by mass media coverage.

I don't doubt the ability of people to put out mass impact information, but the ability to coordinate such an attack to spread across multiple institutions is dubious at best. If anything the various schemes built to manipulate in this way have declined, as modern communication means leaving a record. The days of pump & dump and short to panic are way down, because you run these scams out of a call centre anymore, instead you have to use hucksters like zerohedge, and that tends to be a lot more difficult to hide from regulators.


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 whembly wrote:
With regards to the DOW markets... this is a correction eh?

People like to say 'correction' because it sounds like what's happening has meaning. As if someone knows what the correct price should be, and can see the market moving towards that 'true' price.

The market is just wobbling because people got the jitters. There has been a long bull, which started as a healthy recovery from the GFC, but since then has kept going and going and so people are looking for a reason to jump before the train crashes. So small downward movements become big downward movements, then when they settle everyone jumps back in.

Seriously, the whole thing is just silliness, and so we should take care when pundits feed us terms like 'correction' as they imply a level of reason and control that really isn't there.


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 Grey Templar wrote:
You mock it, but as mentioned earlier Gold has value as a means of wealth storage.

That's a tautology. Gold's ability to be used a store of value is not evidence of gold's value.

So in many ways, Gold is better than something like Paper money(which truly is worthless in and of itself) if you are worried about a collapse of the overall economy. At the least, its never bad to have a diversified portfolio.

People have this idea that if there's governmental/economic collapse to the point where people aren't accepting USD, they're not going to take gold either. Gold is valuable for its decorative purpose and its use in electronics, neither of which are particularly high on people's priority lists during total civilization collapse.

So in terms of having a real value, gold backed currency and actual are no better as currencies than pure fiat. But gold does give you lots of issues, as it can deflate over the long term and it in the short term it can swing wildly in price, both of these can cause major issues that fiat currency does not.

This is why we moved past gold and gold backed currencies. They sucked.


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Mario wrote:
I don't know if I remember correctly but I think most people don't buy stocks for long term investment/retirement. I think it was Buffet who said that an index fund is the better long term option because those have smaller fees but also because more than 50% of the market are speculating (not necessarily day trading but for a much wider definition of speculating). That combination of higher fees and sometimes winning (looks good) and sometimes losing (gets ignored the moment you win again) leads to people thinking they are outperforming index funds but overall they are not smarter and in the long term an index fund tends to do better.

There's I think a few things to note there. Most money in the market is there for long term capital appreciation. Remember that most money is in large institutional investors like pension funds. There's also a huge growth in passive funds and shift to passive management, Vanguard and Blackrock are now the two largest investment companies I believe, the former is purely passive and the latter primarily passive.

I think most individual investors are planning long term. But the issue is a lot of investors think they have to trade constantly, chasing trends. They waste some money in commissions, and a lot more money buying at peaks and selling in troughs. It isn't that their overall goal isn't long term, its that they get caught up in short term information loops.

Oh and lastly, almost everyone underperforms the market. It sounds weird, but it happens because winners and losers in the market aren't a mirror image of each other. Instead what you get is some companies that lose value or go nowhere, a whole lot of companies who make modest gains, and a handful of companies that grow incredibly. Most people, even passive investors looking to buy a diversified list of stocks, won't own that many companies. They'll maybe 50 stocks, out of the many thousands listed. So most people won't be holding Apple before it took off, and as a result they'll underperform the market.

 sebster wrote:

nou wrote:
And for anyone still believing, that there is any significant "fundamental value" within stockmarket, read this: http://stockcharts.com/school/doku.php?id=chart_school:chart_analysis and see for yourself how much of "proffesional stock trend analysis" is based solely on "chart numberology", not far removed from depiction in Aronofsky's "Pi" movie (great film BTW).

We're talking at cross purposes here. Fundamental value refers to the idea that the asset has on some level an actual value to the owner divorced from its sale price. So for instance the price of an apartment in NY might swing wildly in value based on the moods of the market, and all that chaos might leave someone wondering what the real value of the property is, and some concluding that it's all nonsense. But at the end of the day, the apartment can be lived in, or it can be rented - it will deliver some fundamental, real world value to its owner.

That's what I'm saying about stocks. Prices go all over the place and it's a fool's errand to claim any real knowledge about what the stock's price 'should' be... but that doesn't mean the stocks have no value. They pay a dividend to the holder. That's a fundamental, real world value

And yeah, Pi is a great movie. I've been an Aronofsky fan ever since

And answering OPs question - in days of interwebz stockmarket analysis follows the same pattern of mass behaviour as "netlisting" in 40K. "Serious investors" follow same "serious" webpages (there is huge homogenisation of content between different sites dedicated to the same, limited area of interest) and base their knowledge of "chart analysis" on same tutorials/schools/tools.

I think chartists went out of fashion with suspenders and power suits. These days the big trend for retail investors is in to passive funds, while the big firms move increasing the quant stuff, trying to make their money by getting in ahead of trades by a fraction of a second.

nowadays you can spread your emotions instantly to the masses - one single Tweet or FB post, that can be written and sent during momentarily upset can reach and upset thousands of people - like avalanche. In pre- social media times it was a lot, lot harder to "synchronise" emotional reactions this way, as you don't usually stay upset over trivia long enough to write and send a paper letter and you can phonecall only one person in such state. So only deeper upset/unease got spread far enough to get magnified to entire countries, unless it has been "catched" by mass media coverage.

I don't doubt the ability of people to put out mass impact information, but the ability to coordinate such an attack to spread across multiple institutions is dubious at best. If anything the various schemes built to manipulate in this way have declined, as modern communication means leaving a record. The days of pump & dump and short to panic are way down, because you run these scams out of a call centre anymore, instead you have to use hucksters like zerohedge, and that tends to be a lot more difficult to hide from regulators.

That is why I used the term "significant". There is of course some fundamental value in stocks (as percentage of actual price) of real-world companies, but changes of value have only vague correlation to actual actions performed by those companies. Emotional effect of "exceeding expectations" or "failing expectations" are more important than actual performance/growth/decline in fundamental rems. I don't know about US stockmarket, but in Poland there were cases, when total stock value of a company was lower than re-sale value of land/property/machines owned by such company.

And you misunderstood this "synchronisation" part - it is not a "targeted tool", it is emergent interaction of masses and is self driven and spontaneous, but it influences everything to quite large degree and as a new phenomenon is not understood well enough to be "weaponised". But "mass hysteria" episodes are nowadays much deeper than decade or two ago. Think of it more like "changed fundamental property of society". Are you familiar with "liquid sand" (aerated sand) phenomenon? This synchronisation is more akin to such change in behavior of a "social material" than "targeted" building of any specific "sand castle". I'm also mentioning this here in reference to stockmarket as a sidenote, I'm personally much more fascinated how this mechanism influences politics and societies. Economics, as being a derivative of social interactions is simply not immune to this effect. This is partially reason why Richard Thaler got his Nobel prize only after internet became a thing - individual stock player psyche did not changed much between "great crysis" and nowadays, but this "synchronisation via global village" became influential enough to patterns of mass irrational behaviour become become visible enough to study them.

And answering to your comment about "leaving a record" and regulators, this is completely untrue for cryptocurrencies, as those are still totally unregulated and had quite a number of scams coexisting with "primary" cryptocurrency market already. Cryptocurrency (and forex) market is also full of "chartists" as you call them, because those are "direct play" markets for individuals. You also undervalue another inherent property of modern internet: people have innate desire to "be right" not to "have true knowledge", and because it is very easy to find echo-chambers, the result is that many, many people are, what I call, "very well and thoroughly miseducated" and will hold their ground no matter the real evidence. This can be seen in pretty much any internet discussion on any wide enough subject. In relation to economics, this translates to bizarre and inrational behaviours being common and in fact on the rise. BTC bubble is quite strong evidence for this.


[sidenote]: I'm operating on metaphore level as English is not my primary language and it is often tedious to translate accurately for me and metaphores are "good enough" means of non-academic discussion on dakka

 sebster wrote:
The irony is what makes people excited about bitcoin as an investment is what makes it terrible as a currency, and because it is bad as a currency, means it will never end up a good investment.

Nah, bitcoin is already terrible as a currency (and a rather stupid investment) before even getting to the question of stability and being able to deliberately control its supply and value. Bitcoin is terrible as a currency because there's absolutely zero reason to adopt it from the point of view of any legal business. Bitcoin offers you almost nothing compared to taking payment in conventional government-issued currency, at best the processing fees might be lower than the processing fees charged by the credit card company. The only people with any reason at all to deal with bitcoin are drug dealers, hitmen, etc, who need a harder to trace method of taking payment for their illegal goods and services. And why would any sane person not associated with those illegal businesses want to get tied up in a currency that is so closely linked to them and has so little value anywhere else? Even if you magically give bitcoin government-style value control it's still going to be a worthless gimmick whose value is entirely from gullible people hoping it will magically increase in value forever, and scammers hoping to make an easy profit off the gullible investors before the whole thing collapses.

There was exactly one logical reason for big companies like Steam to briefly accept BTC as payment method - it was easier and more cost-efficient for such popular platform to accumulate BTC for speculative purposes via payment than via mining. Valve dropped BTC when exponential growth phase of BTC bubble was obvious enough (dec.6th) to expect it to burst soon.

I have been following the drastic fall of bitcoin as I got into it late. Luckily I'm not head over heals invested but Im gonna lose enough if it continues that my WH40k addiction will have to go on hold until this levels back out.

I can't wait for Bitcoin to finish it's inevitable crash so the prices for PC stuff can go back to normal. I just barely managed to get my wife a 1060 before tulip mania ripple miners jacked the price up enormously.

The real reason Nvidia has been trying to cut down on sales of GPUs to crypto miners isn't some altruistic defense of PC gaming, it's that they're trying to soften the blow of when a bajillion used 1080s and 1070s go on ebay to try and recover some tiny scraps back from failed coin enterprises.

The whole thing is incredibly stupid all around.

There's a guy who's been trying to sell his rig on the local craigslist here. I take particular schadenfreude in that he's been listing it for about the last month, apparently without takers.