Vanguard Founder Jack Bogle Says ‘Avoid Bitcoin Like the Plague’
bloomberg.com
bloomberg.com
Didnt quite understand this quote - is he down on gold too?
Actually a simple Perl script would do. Plus if it comes down to that, those criminals can run their own exchanges.
The Black market in countries like India is large enough beyond our comprehension. Large enough that its mixed so well into everyday life, taking action on it could cause massive economic distress.
Bitcoin is the next step in the game for these kind of things. Its like a dream come true.
Blockchain technology is not proprietary to bitcoin, so given this is fungible what value are you pricing in when buying bitcoin? Access to use bitcoin...
Year gold S&P500
1972: 64 118
2015: 1060 2044
Ratio: 16.5 17.3
True, gold does not have a yield, but it has gone up a lot over the years.
1) Gold returns, over the very long term, are roughly in line with S&P500 returns (but ... we're talking decades, as in plural).
2) in the short term Gold returns are essentially zero. With both the good and bad that comes with: almost no volatility, and when there is volatility, it's sudden large jumps up.
The one that isn't well known:
3) Most governments prevented this investment from working when it mattered by (in the US case) outlawing gold. Other governments did different things with similar results.
So Gold is a great investment, IF you're willing to wait 20+ years at least, and of course assuming you trust the government (the exact opposite of what most gold bugs will tell you).
a) your pick of the moment. You might be tempted to pick today as a neutral point in time. Of course, it's not. The S&P500 is at a complete all-time-high. It's literally never done this well, ever. Gold is not doing so well. In fact, gold has done quite poorly for about 5 years now, and perhaps a bit better over the last year (despite central bank interventions to keep it down I might add). Comparisons at this time, will of course be skewed towards the S&P returning more. In 2012 Gold would have been the outperforming asset, and trust me on this one: it will be again. When ? Good question.
Which will be the best investment for the next 10 years. The asset that's never ever been up this high, or the asset that has systematically kept it's value for 7000 (not a typo) years, but has been going down quite a bit for the last 5 years ? Much more difficult question isn't it ?
I think it's quite a safe bet to say that gold will, firstly, have much worse returns than the S&P500 over the next month or two, and much better returns than the S&P500 over the next 2-5 years.
When it comes right down to it, it's effectively a bet on government policy. If the FED restarts Yellen's "competitive devaluation" craze of 2011 (which is definitely a possibility), gold will have an amazing performance. Again, not going to happen over the next 2 months. Very likely going to happen within the next 5 years.
b) transaction costs from buying and selling when the index gets modified, which are not counted in the index (they are counted in things like SPY, which does indeed systematically underperform the index).
c) (closely related to b) the fact that quite a few stocks got thrown out when they either went bankrupt or the stocks dropped enough. This is not reflected in the index, but of course anyone actually invested would get dented in the process, more so than for transaction costs.
https://www.investopedia.com/articles/investing/022416/5-fam...
The trouble is there is no true answer to how much the S&P500 returned over the past century to an actual investor. One thing's for sure: it would be less than the index, and (especially in the earlier part of the century) significantly so.
Edit: yes, there is some selection bias in my intervals:
1970s: gold beats SP500 by a mile
1980s: gold stagnates, SP500 soars
1990s: same as 80s
2000s: see 1970s
2010s: so far, SP500 is ahead.
Conclusion: you need a VERY long investment horizon to compare these two assets.
"The second major category of investments involves assets that will never produce anything, but that are purchased in the buyer’s hope that someone else – who also knows that the assets will be forever unproductive – will pay more for them in the future. Tulips, of all things, briefly became a favorite of such buyers in the 17th century.
This type of investment requires an expanding pool of buyers, who, in turn, are enticed because they believe the buying pool will expand still further. Owners are not inspired by what the asset itself can produce – it will remain lifeless forever – but rather by the belief that others will desire it even more avidly in the future.
The major asset in this category is gold, currently a huge favorite of investors who fear almost all other assets, especially paper money (of whose value, as noted, they are right to be fearful). Gold, however, has two significant shortcomings, being neither of much use nor procreative. True, gold has some industrial and decorative utility, but the demand for these purposes is both limited and incapable of soaking up new production. Meanwhile, if you own one ounce of gold for an eternity, you will still own one ounce at its end.
What motivates most gold purchasers is their belief that the ranks of the fearful will grow. During the past decade that belief has proved correct. Beyond that, the rising price has on its own generated additional buying enthusiasm, attracting purchasers who see the rise as validating an investment thesis. As “bandwagon” investors join any party, they create their own truth – for a while. Over the past 15 years, both Internet stocks and houses have demonstrated the extraordinary excesses that can be created by combining an initially sensible thesis with well-publicized rising prices. In these bubbles, an army of originally skeptical investors succumbed to the “proof” delivered by the market, and the pool of buyers – for a time – expanded sufficiently to keep the bandwagon rolling. But bubbles blown large enough inevitably pop. And then the old proverb is confirmed once again: “What the wise man does in the beginning, the fool does in the end.”
Today the world’s gold stock is about 170,000 metric tons. If all of this gold were melded together, it would form a cube of about 68 feet per side. (Picture it fitting comfortably within a baseball infield.) At $1,750 per ounce – gold’s price as I write this – its value would be $9.6 trillion. Call this cube pile A.
Let’s now create a pile B costing an equal amount. For that, we could buy all U.S. cropland (400 million acres with output of about $200 billion annually), plus 16 Exxon Mobils (the world’s most profitable company, one earning more than $40 billion annually). After these purchases, we would have about $1 trillion left over for walking-around money (no sense feeling strapped after this buying binge). Can you imagine an investor with $9.6 trillion selecting pile A over pile B? Beyond the staggering valuation given the existing stock of gold, current prices make today’s annual production of gold command about $160 billion. Buyers – whether jewelry and industrial users, frightened individuals, or speculators – must continually absorb this additional supply to merely maintain an equilibrium at present prices.
A century from now the 400 million acres of farmland will have produced staggering amounts of corn, wheat, cotton, and other crops – and will continue to produce that valuable bounty, whatever the currency may be. Exxon Mobil will probably have delivered trillions of dollars in dividends to its owners and will also hold assets worth many more trillions (and, remember, you get 16 Exxons). The 170,000 tons of gold will be unchanged in size and still incapable of producing anything. You can fondle the cube, but it will not respond.
Admittedly, when people a century from now are fearful, it’s likely many will still rush to gold. I’m confident, however, that the $9.6 trillion current valuation of pile A will compound over the century at a rate far inferior to that achieved by pile B."
[0] http://www.berkshirehathaway.com/letters/2011ltr.pdf
Edit: If you enjoyed the above excerpt, I'd recommend reading it in context, pp. 17 (start at the heading) through end of 19. I've excerpted only the middle part on gold, but he also explains the dangers of holding cash, and further explains why he favors productive investments.
And with bitcoin you can't even fondle the cube.
Current price of bitcoin is ~9.9k total supply is well over 17 million. lets call it 10k and 20 million. We're sitting at ~ 0.2 trillion. For that you could buy paypal, square, moneygram and Western Union and still have plenty left over.
That's fairly surprising. Bitcoin alone is within striking distance of the market cap of visa.
How many of those 17 million have been effectively lost forever?
For example, if you purchase SaaS products with Bitcoin, you don't need to trust that the service provider or their merchant provider will handle your personally identifiable information with care (eg. billing info), because you didn't have to provide the information.
Perhaps there are other utility uses for Bitcoin that will eventually lead to demand based on something more than fear?
That is what is happening with bitcoin, people realize it can have monetary use and buy it to capture the difference between intrinsic value (zero) and future monetary value. Of course, this can fail badly if bitcoin won't be used as money.
Additionally, there is a positive feedback mechanism that can be deadly for fractional reserve fiat currencies. People get credit, buy bitcoin, this inflates the fiat supply and drives bitcoin price higher, alluring more people to repeat the process. This process is called hyperbitcoinization.
I disagree. I don't think Bitcoin should strive to be a store of value like Gold is. Today most Gold investing is just based on fear, because people see a government misbehaving and lose faith in its ability to maintain the value of its fiat and then flee to something that still has some properties useful in monies.
This is no where near the main usefulness of Bitcoin though, which IMHO are: its extremely divisible, portable, efficient and has cheap transaction costs. Its also by far the most free in terms of your ability to enter into a transaction with anyone the world over, regardless of what a particular government thinks about that transaction.
> I will happily invest in Bitcoin when its history as a store of value and a medium of exchange is measured in millennia.
The history of Gold as a medium of exchange and store of value has virtually no bearing on whether or not you should invest in it in 2017. Gold pays no dividends, has no interests, does not appreciate over the long term, and can't protect against incident forms of inflation. On top of all that, it has none of the above mentioned technological advantages Bitcoin brings.
There are arguments to be made for Gold but they are in its utility in modern industry, etc.
Those were/are all the main uses for gold for much of human history. Bitcoin has improved on or has potential to improve on those, but its relative volatility puts gold to shame.
>The history of Gold as a medium of exchange and store of value has virtually no bearing on whether or not you should invest in it in 2017...There are arguments to be made for Gold but they are in its utility in modern industry, etc.
I would argue the history of gold is the only reason to invest in it. It is extremely overvalued compared to its industrial and commercial uses. However its history shows it is a decent diversification vehicle to protect against loss of value of fiat currencies. This applies to the doomsday scenarios you alluded to in your comment as well as the less drastic economic downturns.
I've heard differently.
Vice: One Bitcoin Transaction Now Uses as Much Energy as Your House in a Week
https://motherboard.vice.com/en_us/article/ywbbpm/bitcoin-mi...
Average transaction fees have gone up substantially.
https://bitinfocharts.com/comparison/bitcoin-transactionfees...
This and easy tax evasion (governments will hardly ever support it) are the two main factors that put me bearish on Bitcoin. Not on blockchain though.
There are even conspiracy theories that the US government itself created bitcoin, for the same reason that the US navy labs invented Tor. To provide people in other countries with censorship resistent tools.
This is exactly whats wrong with bitcoin and people who like it. Its certainly very arguable whether its efficient and cheap compared to whats already commonplace but putting that aside... you think tax evasion and tax fraud are features inherent in bit coin.
You can smuggle cash, gold and goods to any country you want and skip out on the taxes and regulations. That's not some futuristic innovation.
So is USD out for you too, then? It's not even 300 years old yet. If you mean fiat currency in general, that's also out, as we haven't had that for multiple millennia yet either.
I think that's kind of an abuse of the term "invest". If you read their prospectus it's clear that they are looking for foreign currency arbitrage opportunities:
> The applications of the FIs must have at least 80% of their PL represented by assets directly related or synthesized via derivatives to the variation of the North American. The applications, together with those of the FIs invested in assets or of public or private issuers, other than the UF, and assets traded abroad, are limited to 50% of PL. The FIs will be able to operate in derivative markets with the sole purpose of protecting positions held in cash until the such limits, provided that they are referenced in assets and / or financial indicators aligned to your goal. The fund may invest in FIs which apply a maximum of 10% of financial assets traded abroad.
>nobody holds USD because they think the value will go up long term
People can and do implicitly invest in USD. For example, I might use an FX hedge on a foreign investment to protect against foreign currency volatility in favor of exposure to USD because I have more faith in its value during the lifespan of my investment.
>Holding fiat currency means you lose money constantly due to inflation
Sure, but it's also protected against losses in a market downturn. Cash is outperforming if market returns are negative and in excess of inflation loss (which becomes more likely as poor market performance slows inflation). Not arguing that people should hold cash out of fear, but your characterization of cash seems a little simplistic.
I sort of think that's an abuse of the term "invest". Sure you're investing in some kind of instrument that is highly affected by the value of the USD, but you're not really investing in USD. You're not long USD by holding that investment. By that metric people who short Bitcoin or Bitcoin exchanges are also "investing" in bitcoin.
Investing involves risk management, not just positive returns, and hedging a long position with a position in something like USD is not comparable to shorting.
Consider that it is very possible to invest in a financial security to reduce risk and hedge losses, not just to get a return on the capital itself. Investing encompasses a lot more than just literal value investing; this isn’t an abuse of terminology, your usage here is rather limited.
And to credit Jack Bogle, six years after making that statement, gold is trading lower.
https://www.newsmax.com/finance/InvestingAnalysis/bogle-gold...
But yet there AMZN, GOOG, and others sit, responsible for a large part of the return in Bogle's revered index funds.
If you knew with 100% there will never be a buyback or dividend by AMZN while you are a holder of their stock, arguably you are making the same trade as someone buying bitcoin or gold: expecting someone else to come along (who perhaps expects to have a longer lifespan) to pay you more for the stock than you did.
Note: I am not arguing that buying AMZN is a bad idea, I am saying that the argument that there is no "underlying rate of return" for bitcoin is a poor argument coming from someone who is also telling investors to buy those stocks, many of whom will certainly never see direct yield on their investment, just capital gains.
I think the difference here is that people can intuitively justify changes in the value of a stock regardless of buybacks and dividends because company performance is a tangible, measurable factor (even if only by proxy of flawed but useful metrics). The value of gold is more vaguely determined by market perception/speculation (e.g. gold doesn't have quarterly earnings reports with detailed accounting). Ultimately something has value as long as people believe it has value, but I think the discomfort from folks like Bogle comes from the lack of a rigorous method for valuation vs. assets like equities.
Gold actually does have some intrinsic value—it's useful. It's stable, nonreactive, resistant to corrosion and conducts electricity. It's been used as a value store since antiquity above others particularly because it is stable and noncorrosive. The conducive properties are just an added benefit we now have a use for. A gold coin from a hundred years ago is still a gold coin. A Bitcoin from today may not be a Bitcoin as we know it a few years from now. And if it is, it may be difficult to transact.
Bitcoin, on the other hand, really has no use. There was this idea that it might be used to speed up transactions but as we saw leading up to the fork, that's not guaranteed. Anyone with enough capacity can basically seize control of the currency, so it's anything but stable. I think things like Ripple have a far higher value proposition than Bitcoin today—more of what Bitcoin once was.
Ripple is run using a different consensus algorithm, and is effectively managed by a central authority.
The point of Bitcoin has very little to do with speeding up transactions, all though this isn't a negative.
The point is sending transactions that are very difficult to censor. And yes, it does a very good job of this as there are a whole lot of transactions that governments would love to censor, but they AREN'T being censored, right now.
The amount of resources required to execute this attack is moving higher at a rapid pace. Also, a 51% attack can gum up new transactions and potentially double spend, at least until people realize the attack is happening and stop signing new transactions. It can't rewrite blocks from the distant past to send everyone's coins to the attacker's address.
Actually I think you are misunderstanding him? He isn't saying that gold doesn't have intrinsic value; he's saying it doesn't inherently generate more value.
That's what I've been realizing latey: there is something to support Bitcoin, and that something is the blockchain. The reason banks and big financial companies are interested in it is not for its speculative value. They are interested in the fact that it is both decentralized and immutable. As long as financial corporations are willing to exchange Bitcoin for USD, then Bitcoin is a reasonable store of value.
There's also value in Bitcoin because it's a good entry point into other cryptocurrencies that could turn out to be better general-purpose exchange media, like Litecoin.
It's a bit like US Treasury Bonds. Nobody buys them for the tiny rate of return they offer, but they have genuine, valid use as a financial instrument. Normal people, however don't typically buy them, and normal people probably shouldn't be buying Bitcoin either unless they have some spare cash to gamble on it.
Bitcoin just has the power of faith in the network and that liquidity will exist when you want to cash out. Neither of which is certain.
Bitcoin really doesn't have any support. Exchanges don't have close to the liquidity needed to allow everyone to withdraw their coins in fiat currency.
Dollars are just green pieces of paper. We accept them for goods and services because... everyone ELSE agrees to accept them for goods and services. It's circular.
How is the might of the US military relevant here? If you lived in South Korea, would you accept the South Korean won, or would you refuse your salary because their military is too weak compared to the United States? I would take my salary in South Korean won because all of my neighbors and strangers will take it in exchange for goods and services. Circular.
The circular argument that cryptocurrency has value has turned into a self-reinforcing cascade. Ironically, because of network effects, the more users and speculators there are in Bitcoin, the more utility it actually has, because others will accept it as money. This - and the human tendency toward envious imitative buying - causes the price to rise even further.
Cryptocurrencies are easier to secure and transfer than gold, which we only think has "value" because it's shiny and rare. Yet gold is worth $8 trillion. Why not crypto?
(caveat: Bitcoin could fall precipitously in the short, medium, or long term. My argument is that cryptocurrency - Bitcoin, Ethereum, or something else - will be more valuable than gold in 10 years or so.)
If I understand correctly, it's because nobody's going to come and steal our resources. Of course, given the relative peace in the world, probably nobody is going to steal South Korea's either....
If you think about it, there is nothing circular about US dollar's supremacy. If you reside in the US, you are bound by the Legal Tender law -- meaning, by law, you have to accept US dollars as a valid payment for meeting financial obligation. The US dollar is also the defacto reserve currency of the world. All important commodities, for instance oil, are priced and traded in USD -- though there have been a number of bilateral agreements between oil-producing nations and consuming nations (eg, Iran-Turkey, Russia) to breakout of this, the USD still rules the day. If you want to understand how the US dollar became the reserve currency of the world, you do necessarily have to understand the WW2 (ie, military conflict), the Brettonwood agreement that came after the war, the collapse of the agreement in the 70's, and what US has been doing militarily and diplomatically to maintain their dollar hegemony since, but, in short, it isn't just about some arbitrary blind trust in the US dollar by the world (or circular reasoning) that we ended up with the system that we now have.
> How is the might of the US military relevant here? If you lived in South Korea, would you accept the South Korean won, or would you refuse your salary because their military is too weak compared to the United States? I would take my salary in South Korean won because all of my neighbors and strangers will take it in exchange for goods and services. Circular.
IMO, this is a terrible example to demonstrate your point. In case of national security threat or economic crisis, it's not uncommon to see smart monies fleeing to gold or other safer currency (eg, Swiss Franc, Japanese Yen, or USD). South Koreans are less likely to hold their own currency if the US decides to withdraw all 30K US troops and break any agreements in place to militarily assist the South in case of military conflict.
Say tomorrow, a large portion of poor in the US, decide to teach the top 0.1% a lesson. They decide to stop trading in dollar, and start their own currency. They would also make it impossible for the current wealthy to liquidate their existing wealth in the new currency. What do you think will happen to the US economy in this situation?
What we are talking about is basically a group deciding to decimate the entire economy and start over. The only way to stop these people is using some kind of police/military kind of a force.
So like https://ipfs.io/ or various other append-only logs? Or the certificate transparency project?
The blockchain is the least efficient way to create a distributed append-only log if there are a fixed number of trusted actors publishing to it.
Banks can far more easily publish append-only logs of transactions without the extra noise of "mining" and comparing longest chains based on proof-of-work.
None of the blockchain projects or proposals being worked on by enterprise financial institutions are decentralized. A decentralized ledger is conceptually antithetical to a small group of organizations which trust each other and want to retain control over the shared ledger.
It can be immutable, but for that matter I don't really think it's immutable in the same sense as a decentralized, permissionless ledger is. The organizations in charge of the blockchain can create a hard fork, which everyone participating with the organizations will have to abide by, because the blockchain is not decentralized.
In fact, what we actually have is a consortium of companies deploying distributed database structures and calling them blockchains. I'm sure there is a legitimately new innovation that can emerge from this sort of blockchain, but it won't be decentralization or immutability.
And people do by treasury bonds for their rate of return, when the investment must be as riskless as possible.
People buy treasury bills when they care more about return OF capital than return ON capital. Bitcoin and gold are also solid assets in this regard, particularly because they are bearer assets that don't represent a liability or promise-to-pay by some third party.
If by 'return of capital' you mean a propensity for an asset to retain its value, bitcoin is utterly inappropriate. Even gold is far too volatile and is only rationalised on those grounds against (very) long tail risk.
Yes, the fact that blockchains act as a public database is way way better than the outdated stuff that banks spend billions of dollars on. But it is still not the 'innovative' and interesting part of blockchains.
Banks are massive, massive institutions, and it is hard enough to coordinate people and resources within them, much less across them.
Back-office operations are indeed cumbersome and a major cost-center, and there is much value to be captured in simplifying all of it. If "blockchain" can serve a Schelling point to help get right people in these institutions to talk with one another so as to get on the same page, then there's a chance that some progress can be made towards solving these problems.
It's "blockchain" because "blockchain" is the new hotness, that's all. Any real world, inter-dealer distributed ledger will, in all practicality, be more like a cluster of SQL databases backing some kind of state-machine replication protocol than a cryptocurrency.
Happy BTC10k, by the way.
For -no interest- $20mil in funding and an industry work group seem like -interest-
Bitcoin's only value is what people will pay for it and has nothing backing it up.
It's not really comparable.
It's really not much like a fiat currency at all. The closest thing might be penny stocks.
The speculative value is well out of line with its use value.
Gold just sits on a vault--which is a great thing for rich people to use a small % of their wealth for. Just in case. Gold has other uses and a 5000+ year history. Compare it to hundreds of coins out there
[1] https://www.npr.org/2015/10/17/436993646/three-investment-gu...
[2] https://personal.vanguard.com/us/funds/snapshot?FundIntExt=I...
[3] https://investor.vanguard.com/mutual-funds/actively-managed
Note that gold has inherent value in its use for conductivity or jewelry, but it doesn't create any more, which is the same at bitcoin.
In other words, I think he would argue that there's nothing "wrong" with buying gold, but you buy gold as speculation and not as an investment.
Moreover, investors flee to gold in times of panic. If you hold 50%-50% gold and stocks, one will tend to up when the other goes down, letting you sleep at night.
This is being solved, see https://en.wikipedia.org/wiki/Lightning_Network
The increased price makes the system more valuable because it increases the amount of funds that can be transferred through and decreases the cost of that transfer (more order depth for getting into and out of bitcoin).
Today, it's feasible to send $1M with Bitcoin. A few years ago, there wasn't enough market depth to do that very efficiently.
The other 'killer app' is companies/organizations holding all of their funds in a transparent, public way by making their addresses known. I think there will be a lot of value in this, but we're probably a decade away from the space maturing.
If people lose faith that it will keep going up, then it stops holding value.
It’s pure speculation based on the greater fool theory.
There are a limited number of beanie babies too.
A run on these exchanges will destroy the value of bitcoins and cause a panic.
Exchanges provide a venue for buy-sell to meet. If someone wants to "cash out", someone has to want to "cash in". Lately every time the price dropped folks saw it as the time to buy more, or just "finally buy bitcoin, because it'll go up soon".
A big crash happens when the equilibrium shifts drastically, when more people wants to get out than get in, it'll crush the price (because more people wanting to get out will lead to even more people wanting to get out).
If you accept that premise of what a viable currency should be, then it seems like the volatility of Bitcoin and other cryptocurrencies have thus far made them failures. I mean, if a national currency had similarly rapid changes in value, wouldn't we see financial chaos, riots, and revolution?
Not everyone agrees with that statement. For example, see:
The first link describes the hypothetical utility of bitcoin, but does nothing to explain a natural reason that bitcoin should have returns or appreciation. In fact, since the author describes bitcoin as a "medium to store wealth," the assumption should be that every buying transaction has an opposite selling transaction, which means there would be little to no overall price impact from any of the described activities.
I wouldn't scramble to dismiss what Jack Bogle says. He may be 88, but he has earned a reputation as a clever, knowledgeable, and decent fellow.
Genuinely asking, isn't this the plan for many people? How is bitcoin different than other commodities or property in this regard? Would Bogle say the same thing about those investments?
Equity in a company means you own part of that company.
Owning Bitcoin means you own a BTC.
Raw land? Non-income-producing property? Gold? Not so much.
Bitcoin is different from all those things.
Not really, the value of the stock approaches zero, and when the company closes up shop I doubt you get anything at all as an investor. Assets would typically be sold to pay off outstanding debts.
Yes, companies can go out of business, but that's not the point Bogle is making. He's not saying stocks are riskless. He's saying that their valuations are tied to notional future earnings and the dividends they will generate.
The key distinction is that, mercurial though their price fluctuations may be - traditional commodities such as oil or real estate at least have some intrinsic value, and hence, an intrinsic floor to their valuations. Meanwhile, to the extent that any of these "coins" have such an intrinsic value - if they can even be thought of as "currencies" at all - it is extremely hard to pin down.
Which is Bogle's central point: to the extent that any of these instruments have "value", it's in the belief that ... that value will keep going up, and up, and ever up.
this is an absurdly untrue statement
https://www.investopedia.com/ask/answers/09/difference-betwe...
One more in the many death's of bitcoin...
Part of the beauty of index investing - names can rotate in and out of your benchmark based on whatever criteria the index uses (e.g. market value) but you're not bound to a company that drops from the index (you are, however, exposed between the time it becomes ineligible and the next rebalance).
Sure, it may still double or triple in the next few months. Or it can loss 50% over a matter of days
try to enjoy yourself
Same deal (give or take a few name and parameter changes) as with the preconditions for every speculative bubble - and crash - since the beginning of time, basically.
Vanguard is almost singlehandedly responsible for returning trillions of dollars of costs, in the form of fees and underperformance by active managers, back to investors. Millions of investors have benefited.
there are plenty of esoteric and dubious assets in the vanguard obligatory diversification model. Get bitcoin in the 1% allocation right next to CDO-ABACUS-2007-SENIOR
Is it late now? I think wait a bit and then start DCA that portion of your portfolio.
Had I opted for diversification in my investment, I'd have seen my wealth even triple that now. And this is not in crypto only.
There's no Bitcoin-only economy that requires you to use Bitcoin to operate in it, like currencies. There's too many competitor crypto-currencies, and the bar for competition is sufficiently low that it's unlikely that Bitcoin will be the long-term winner. That makes it a losing bet; maybe not this decade, but sooner or later.
Also, the slowness of Bitcoin transactions means that when the crash happens, and people start rushing out, they won't be able to get out very quickly. Hopefully people will see it as easy come, easy go.
Would he? If he put 1% of his portfolio into bitcoin, he'd have moved the bitcoin price into the 100s of thousands of dollars or millions by himself and then who would he find to buy them from him?