Ask the grumpies: Why don’t you speculate?

Jjiraffe asks:

What do you think about cyber currency/bitcoin? Are you investing? Why or why not?

Short answer:  I think it’s a speculative bubble and I’m not into either gambling or effort.  I’m not into gambling because I’m risk averse.  I’m not into effort in terms of stock picking of any kind because I’d rather keep my time and match the market (plus on average people who try to pick individual stocks on average do worse than people who just match the market).  So there’s a lot of things I could do that I don’t– I don’t try to time the market, I don’t try to pick the next hot thing, I don’t try to tax harvest, I don’t set up my portfolio in order to sell losers for tax purposes.  I’m only just now starting to think about which kinds of investments should go in tax-advantaged vs. taxable funds.  I don’t get any joy from gambling and I don’t think I’d get enough additional happiness from being a big winner (given the probability of winning) to justify the additional sadness from losing money which I would inevitably do because I tend to buy and hold until there’s nothing left to hold just because dealing with taxes is such a pain.  Set and forget is ideal for me.

So… I think cyber currency is not a long-term investment, it’s more gambling than investing.  I’m not a gambler, so I’m not “investing”.  What other people do with their money is their business.  Some people will win big and lots of people will lose their shirts.  I don’t need to be in either category.

There’s a lot more stuff across the internets on bitcoin and why it’s not a great idea to invest.  (And lots of stuff from people caught up in the hype.)  Here’s Mr. Money Mustache on the topic.  He has an excellent economic and cyber analysis of it– it really isn’t a good currency.  He also has some good links on his post if you want to read more about the details.

9 Responses to “Ask the grumpies: Why don’t you speculate?”

  1. Comradde PhysioProffe Says:

    As per the usual, people who gambled on cryptocurrency with lucky timing and won think they’re brilliant investing geniuses and anyone who doesn’t put money into them is a pathetic loser. I’d rather go to a casino and play craps or blackjack; at least they give you free booze. It’s amazing the post-hoc rationalizations people come up with to explain how it’s all their cleverness & perspicacity and not dumb f*cken luck. Also as per the usual, if it was really that brilliant of an idea, all these crypto investing geniuses would be keeping their mouths shut & quietly becoming billionaires, not trying to shill gibberish can’t-lose schemes on the internet for $19.99.

    • nicoleandmaggie Says:

      The thing about bubbles (as with pyramid schemes) is that you want to keep the momentum going by getting in early and having other people push up the price after you’ve invested. You need everyone else to be a late adopter.

  2. monsterzero Says:

    I wasn’t going to pay $100 for a bag of Mr. Money Mustache’s fingernail clippings, but now that he’s raised the price to $70000 I’d be stupid not to buy.

  3. Xin Says:

    No interest in investing in crypto for me. I don’t have any interest in gambling, or in investing in something I don’t understand in the least.

    Also, this is generally more an issue with investments in less well-known “altcoins” or other bitcoin/blockchain-related projects, but the number of schemes out there that are likely to be straight-up fraud is mind-boggling. I worked on legal issues related to something in that vein and had to dive into more… nontraditional sources (reddit, the more obscure blockchain-centric internet publications) to research the projects at issue, and… It does not inspire confidence, let’s just say. It may be a good area for an attorney to learn about, however. (Regulators and federal prosecutors don’t particularly need to understand it to prosecute it, nor do pissed-off investors who lost big, or their lawyers, need to understand it to sue.)

    • nicoleandmaggie Says:

      Everything old is new again. I remember reading a Trollope book about fraudulent investments during railroad and canal bubbles concurrent to learning about them in college economics classes.

  4. First Gen American Says:

    It’s all smoke and mirrors.

  5. Collection of 8 Good Things | Too Many Fish to Fry Says:

    […] for Maggie and Nicole for answering my question about whether to invest in cyber currency. Their answer, and this link, runs counter to the hype […]

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