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Comment by d0gbread | Hacker News Reader

My favorite line from the article is "There are simply no alternatives" as people build cash reserves and buy stores of value like gold and Bitcoin. People are hungry for an alternative, but yes I suppose if you only consider stocks and bonds this article has a point.

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This,

I want an alternative, high interest savings accounts and CD used to be a good safe place for some savings, now your losing value relative to inflation.

A mixed portfolio makes no sense. Nobody has a pension, everyones retirement is in the market, none of this seems good to me long term, all very fragile.

Either your in stocks or Bitcoin at this point or your at negative rates relative to inflation.

What about real estate? Unlike stocks, land/buildings have some inherent value

who is going to predict the post covid future of commercial real-estate market?

Well, if someone predicts accurately the future of commercial real estate, that who is likely to be a fair bit richer than they are today.

Stocks have inherent value as well, due to dividends. Price growth is not the only way to make money in the market.

also, book value, though it's usually much smaller than market cap. if a stock ever fell below its book value you could buy it out and liquidate its assets to make money, so the book value should be a price floor for the stock.

This is extremely uncommon these days, but back in the dark days of the 1980s buying stocks below book value was a common way that people like Warren Buffet made a lot of money.

I'm in real estate (rental properties), an IRA spread across 5 growth funds, and maybe 10-20% bitcoin at this point. Edit: Exited my stock positions this year

As a novice to bitcoin investing, could you share the best (most secure/trusted) way to buy bitcoin? Thank you!

Depends somewhat where you live and what you plan to do with the Bitcoin (long term hold or actively trade).. but major exchanges in major countries are pretty trustworthy these days.

Kraken, Gemini, and Coinbase are all quite trustworthy, if any of those are available in your locale.

Buying and holding for 4+ years has produced amazing gains in Bitcoin since its inception. Trading often and fooling around with alt coins has caused many great losses and pain. Don't invest more than you can stomach losing or holding in the red for a few years.

Thank you for the info. I live in the US and plan to buy and hold (for diversification) with the money I can stomach to lose. I'll try out Coinbase because it's the one that is the most familiar to me. Happy holidays!

Coinbase is the easiest to buy. But, I suggest you try another option. Coinbase's whole goal is to make money (surprise!) by selling many "coins" easily. Swanbitcoin or kraken are my suggestions. DYR.

For reference to support parent: that tax implications of the bitcoin I owned and sold after 7 years of sitting on it was much simpler than the bitcoin I bought and sold over and over again trying to make money on both sides of an order book during high volatility.

I am a US citizen. I have fully complied with tax law as I understand it. To my knowledge, I’ve never been involved in any darknet marketplaces. I’ve seen an opportunity much sooner than my peers.

I have been waiting for the current price volatility since the last ATH spike in January 2019 since exiting a majority of my bitcoin positions. The block reward halving last summer combined with an ever increasing mining difficulty is a no brainer to me. Good luck

There’s 7000 shitcoin trading on an infinite number of shitcoin exchanges providing infinite liquidity; that’s what I see. What is there to stop bitcoin?

dollar cost average with swan bitcoin and try fold app

I ran a public node as my wallet for years on both Ubuntu and Windows frankly, the same wallet.dat was used on my public node for years but that’s terrible opsec.

Do not recommend a novice doing this. Like someone below has mentioned there are numerous exchanges now that will gladly serve as your gateway into bitcoin.

Just remember though, if you not in control of the private keys securing your wallet, it isn’t your money.

Do not blindly believe cryptocurrency exchanges are not running a fractional reserve. Without a transaction I’d on the bitcoin network, it never happened.

FWIW I started in bitcoin trading for anything in a chat room on irc. The landscape has changed significantly since.

I had the same question.

     "And that could explain why investors don’t shy away from stocks even at record valuations. There are simply no alternatives."

To repeat the question, why isn't real estate considered as an option?

Real estate was the last bubble.

That was a lending bubble. Real money could be driving up the price this time.

Real estate is going up, and now it is happening everywhere in the US, not just in the hot coastal cities.

The real question is why aren't they allowed to build more housing? I mean come on. All the profitable activities are basically banned. Building housing gets banned. Although I am in favor of environmental laws they basically ban certain profitable activities which now have to be done abroad.

To be honest all that excess of money should be invested into renewables. No country can have too much renewables because they are low maintenance. The excess energy can be used to create more profitable employment opportunities.

What you'd really want is a machine you can buy that provides you useful goods and services at almost-zero maintenance cost. The stock market is sort of a proxy for this wish: You have excess capital, and you want to invest it in something that yields a return. Maybe that's a machine producing goods you can sell, maybe it's a machine that produces food and gives medical aid to you, the owner. You don't want to operate such a machine (if it is available at all), so you outsource the responsibility for a percentage of your return.

It seems almost absurd that the world can end up in a state where it is impossible to invest capital in a way that provides any significant return at all. All is relative, but people still want to eat and get shelter from the rain.

The stock market is increasingly disconnected from investments in real-world improvements of productivity and even if they manage to invest there in some tiny measure, it's not delivered to most people in the economy. That's the highest risk item in this whole discussion.

I've had the sense that growth investments are almost completely closed to the public in the United States. This trend has been gradually solidifying ever since the dot-com bubble, and has reached its logical conclusion today. The only IPOs happen when companies reach 100-billion dollar valuations, and sometimes not even then. IPOs seem more likely for private companies that have lost their growth potential.

There's certainly some potential for growth and returns still available when companies reach this stage, but the lion's share is taken out already. The index funds are also often at the ass end of this phenomenon, buying in only at very high valuations. The most absurd example happening a week ago, with Tesla entering the S&P500 as the sixth biggest company.

I'd like the possibility of investing in a fund of unlisted companies. The growth sector that's not represented in the major indexes is far too big to ignore. I try to compensate by having a portion of my wealth in "small cap" companies, but there is still a very significant sector that's completely missing.

Maybe you can buy SPACs, or SPAC etf

SPACs are interesting, but they manage to be so by injecting an additional layer of uncertainty to the investment. They may be in practical terms not so bad, but in investment terms it's very low-commitment in the stability direction of investments take under the SPAC as I understand it. If investors have no say, then the balancing role of investment attention and selection in the market is limited and still a fundamental disconnect.

>It seems almost absurd that the world can end up in a state where it is impossible to invest capital in a way that provides any significant return at all.

It's pretty obvious. You don't have to invest that money in the same country where that money was created in the first place. If you exchange USD for yuan and the Chinese exclusively buy US assets with their newly acquired USD then there is no reason for workers to produce anything in the US. The factory can be in China after all.

In theory you could build housing with that money and employ construction workers but that is crazy talk in the US.

But this is the issue with zero interest rates.

There is no incentive to save, but alternatively, it also pushes interest rates on mortgages to near zero which increases the demand side by opening up home ownership to people that before couldn't afford it which pushes up prices.

The same occurs with stocks, with no returns in other asset classes everyone floods in to stocks and pushes the prices higher.

This is definitely the new normal going forward, because you can't increase interest rates without dramatically reducing purchasing power, which in turn leads to slow down across many areas of the market.

Maybe investment in real but non-liquid assets would make sense. If stocks are bogus valued then the real money would be "in-the-know" asset purchases. Personally I am trying to get what I see is under-valued unique rural property in a locale favored by an apparently changing climate.

Better act fast, the rural property markets are on fire. Where I grew up I can always remember hundreds of for sale signs as long as I lived here because there just weren't any jobs. Now, everything sold last fall. It's unprecedented.

What do the property owners plan on doing with that land if there aren't any jobs? Or are there jobs there now?

Remote work is my guess.

Thanks to COVID there are now jobs everywhere where there is an Internet connection

My concern is when retirement comes, and it is time to start selling off stocks. If there are more retirees than employees buying stocks via their 401k, won't that cause a price crash?

Annuity buy-backs, anyone?

Someone at Wall Street must have thought of that and pitched the securitisation already. Think about it - large companies agreeing up front to spend a minimum of X billion a year buying back their stock. And then WS banks parceling both sides of the risk and exposure to investors seeking anything with non-negligible yield.

slowly transition your assets away from growth stocks to bonds and dividend-issuing stocks as you age

Not really, because the process is very gradual. You don’t sell all your stocks the day you retire, you gradually wind down until you hit some reasonably conservative allocation in your 80s or so like 30% stock/70% bonds. This certainly can put some downward pressure on the stock market if the rate of this winding down is higher than the rate that young people are adding to their 401ks but it’s counterbalanced by many other forces.

Retirees generally only liquidate a portion of their funds. They start withdrawing something like 4% per year roughly half a decade ahead (to avoid withdrawing during a crash) of retirement. As others said they also shift away from risky investments.

Gold has terrible historical returns compared to equities. If you bought gold 30 years ago and sold now, you'd have about a 5x return. You would have done significantly better if you bought stocks 30 years ago and sold them at the bottom of the market in March. If you sold now, you'd have done more than twice as well.

BTC might go up, might go down. But it's a risky asset and there's only so much money that can flow into a non-productive asset.

You could have said the same in 1929.

The last 30 years has had an expanding market. We're now facing a deeply contracting market. Equities will lose most of their value; gold will do the opposite.

Gold and bitcoin won't help you. When stock prices move down, correlations between stocks go up. If you look at the last couple downturns you can see that this correlation between assets and asset classes has increased. Stocks dropping leads to people selling their bitcoin and gold which causes those prices to drop. Falling prices make speculators get scared and sell to cut their losses which drives prices down further and the cycle continues. What you really want to find is an asset that is negatively correlated to the stock market while stocks are dropping.

Please share an example of something that has this property.

For a long time timber (as in, owning a forest and letting people log it occasionally) has been one of the favorites of large endowments and hedge funds.

https://investmentsandwealth.org/getattachment/cc0f7589-7411...

There aren't many examples. Volatility is the best one I'm aware of. However, if you're regularly buying volatility to hedge your stock exposure you're going to lose a lot of money that way.

Long term US bonds are definitely the most prominent example for the last 40 years. Past 100 years though, not really.

Check the ETF TLT compared to total US stock market, VTI, on https://www.portfoliovisualizer.com/backtest-portfolio or the asset classes on https://www.portfoliovisualizer.com/backtest-asset-class-all...

Their negative correlation zig-zag is remarkable the past few decades. Some research postulates that in a decreasing interest rate environment (past 40 years), they’re negatively correlated, while in a rising rate environment they’re positively correlated, leading to the past 100 years minimal (almost 0) long term correlation.

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