As BTC likely goes back to 3k, more exchanges will fail. I'll stick with boring index funds. People are always looking for lifehacks or shortcuts to get rich. Almost never works unless you're early. Odds are you are not.
I did lose money, even when I shorted with 1x leverage. The crypto pumped 3x in few hours. Sometimes trading against Binance's bots like playing chess against a chess master who cheats a lot. But with smart moves, some luck and patience there are some trading enterance points that may bring you some gains.
Shorting is different from an option. They are often confused because you can say you have a "short position" or a "long position" with either (long position would be buying shares).
Most people are more familiar with buying puts or selling call options are superficially similar - you make money if the price goes down.
Options give the holder the right to buy/sell a share at a specific price before a specific date. They expire worthless after that date.
Shorts are immediately borrowing shares - not just the right to buy/sell shares. They do not generally expire, although they do have interest.
GP said " if they shorted the market." which is a bit ambiguous, it sounds like they are talking about a literal short, but in this context they likely mean either.
I do hope wollsmoth reads that before continuing to provide his thoughts on the matter. Thank you for taking the time to inform those who may not be aware & I don't disagree with anything you wrote.
yeah, I mostly know about puts and calls. I read around, you can borrow shares but the interest rate can be a little crazy so I'm not sure it's a better long term strategy than just getting/creating options contracts every n months.
You're definitely going to pay for the risk one way or another.
Over simplified, otherwise it's too complex for this explanation, if you're trading please don't use my explanation -
Buying either cash-secured Puts or Calls are not subject to margin-calls like shorts/long shares are.
So if the price goes up too high before it comes crashing down, your broker might force you to liquidate your position, leaving you with max loses, and no profit from the following crash.
Because puts or calls do not rely on margin and you get to choose if you execute them, so they are more resistant to massive spikes in either direction.
tldr - Purchased options are not subject to margin calls like shorts
edit: removed mentions of selling options and IV - they're too complex for this quick explanation
If you want to buy any crypto, you should either buy it as an entertaining gambling habit, or you should buy it because you believe in the core philosophy behind it.
If you buy it as an "investment", you were missold.
Ah yes the FIRE lifehack that absolutely cannot go wrong and will allow everyone to sip margaritas by the beach at 45. Still way safer than any crypto, but I hope you see how that's just another cult at this point.
If there are going to be media/influencers pushing tips to achieve a FIRE lifestyle, I can’t imagine what I’d prefer they encourage besides low cost broad market index funds. Don’t really see the problem there: investing like that really is most likely the best use of excess capital in the long term.
> Still way safer than any crypto, but I hope you see how that's just another cult at this point.
Putting some numbers on the narrative will help the discussion. Jack Bogle asserted that index funds could "easily" account for 50% of the market and still not cause problems for index investors [1]. At 100%, he readily acknowledged it would be catastrophic; he also notes that the probability of 0% or 100% of the market accounted by index funds are zero.
As of 2017 about 35% of the market is accounted for by index funds [2]. It took 10 years to reach that level from 15%, or on a simple-minded straight-line extrapolation about 2% per year. So if that trend held we're probably around 45% now.
The closest Bogle has ever come to throwing out a maximum percentage accounting for the market is 75% but he backtracked on that [3]. So somewhere between 50-75% might exist a kind of tipping point.
Contrast this with Michael Burry's thesis that passive indexing has already grossly distorted the market [4]. Those index funds which have stopped deploying more than say 80% of AUM into a distribution of daily dollar value traded among the securities within the indexes they mimic do indeed create the risk he talks about, IMHO. I'd like to hear someone refute that thesis, as well as explain how to independently identify how much of VTSAX's AUM are actually invested into the actual equities in their index. There are plenty of "index funds" that mimic price action instead of truly indexing, but I'm specifically interested in the old standbys that really do put a huge chunk of their AUM directly into the individual equities that make up the index.
The S&P 500 has yielded like a 9% return for almost 65 years - since your grandpappy was knee-high to a grasshopper. The nice thing about index funds is they track indices that are curated. Only the 500 best companies (according to a metric) are included and the companies are rotated in and out as that changes. It's not really a cult, what matters is your time horizon.
> Only the 500 best companies (according to a metric) are included and the companies are rotated in and out as that changes.
That is the thing.
What would the return have been if my grandpappy bought SAP500 65 years ago and kept those stocks he bought at the time until today? I have never seem such a number.
I mean if the loser stocks are rotated out it is hard to keep up with the index due to losses and transaction costs.
a bit out of date, missing at least one global financial crisis, but there's a 2004 paper looking at the returns of holding the original S&P500 companies from its start 65 years ago, with some alternative portfolios too.
Some of the particular decisions in the setup may or may not agree with grandpappy, I only skimmed, but it looks like the "survivor's portfolio" has returns in line with S&P500-with-replacement and even outperformed the newcomers slightly.
19 of the largest 20 companies were still around in some form when including mergers and acquisitions... however again this is 2004, and at least Kodak and Sears went out of business since then, IIRC?
Far stranger than going out of business, KODK became a meme stonk when Trump announced they were going to manufacture hydroxychloroquine causing it to 10X overnight back in early 2020. [1]
Telling me more about the songs of the cult won't make me more likely to join, most of all because I've already joined. That doesn't mean it isn't a cult and that Burry doesn't have a great point when he says that there's trillions of dollars indexing stocks that have very little liquidity in comparison.
I mean technically it could. For example, to buy goods from China in AU, I need to pay in USD./
For 100 USD in goods, I could have to send AUD cross border to receive 100 USD and then definitely have to send 100 USD cross border to China - nominally triggering 200 USD in payment volume for 100 USD in GDP.
And then for companies using a Double Irish, Dutch Sandwich... well, the volume adds up.
I asked because it seems logically impossible since cross border payments are included in the aggregate of the world gdp. The same mechanism you are describing for the velocity of money also works inside national borders
Most people in the world can definitely not use cryptocurrencies.
Maybe the average nonprivileged will succeed once or twice, but this is like going to Vegas and using the martingale system: It'll make you win consistently, right up to the point where you lose everything you have.
I've always found the "what about the third world" arguments bizarre. As if villages and huts are filled with technical geniuses who will never lose their passwords.
And if not wallet keys, then all the blockchain mini-banks who give you no recourse if you lose your second factor, and don't have to because they're not regulated.
And that's the mini-banks who aren't plain rugpulls, or get hacked.
The people who are privileged enough to successfully be able to use cryptocurrencies are also privileged enough to even more successfully use proper banking.
No they are not, in what world can you transfer money instantly and settle it across borders in seconds? I'd love to see an insecure bitcoin transaction as well.
I don't know much about crypto or cross-border payments.
Is there current crypto solutions that work better than something like transferwise if i wanted to transfer USD to EUR for instance? (cheaper?, faster?, simpler?, reliable?)
Except in one aspect: Because cryptocurrency for these purposes at best use a loophole in AML/KYC laws, at worst just plain break them, if you do it right there's less risk of getting caught (guilty or innocently) in mandated money laundering tripwires.
I've had banks call me about source of funds, and sometimes require proof, for large "unusual" transactions. I was an innocent victim of these audits. It delayed my transactions by maybe minutes.
Yes, probably some percentage of people who've lost money, through no fault of their own, to these extra checks. But for every single one of those there are at least thousands who've lost cryptocurrency due to them not having these checks and audits.
And on top of that of course cryptocurrency transactions are much fewer and move less value.
Yes. Bitcoin - It's cheaper, faster, simpler and more reliable.
It's not just faster on the front end. It settles pretty much instantly on the back end as well, so no counter party risk like in the case of using banks.
you still have currency risk and exchange rate slippage, but even worse because you are introducing a third currency. Any "innovation" crypto does in cross border payments is skirting regulation which clearly will not scale well. Regulators will just crack down when the market is sufficiently large for their attention.
I personally find SBF smart and interesting but nonetheless very happy to see this very silly ecosystem collapse.
Perhaps bitcoin or a couple other tokens will have longterm staying power still, but remains mysterious to me why there should be so much surplus value to extract around it. Current banks and financial institutions (which are not even that efficient) manage to move around a magnitude more in investments and do not end up taking up the same level of surplus value, somehow.
What's wild is just a few weeks ago SBF was strongly insinuating to the WSJ that FTX was planning to acquire COIN. Not surprisingly COIN has taken a noticeable drop since this news.
I won't even buy puts on crypto companies since the space is completely insane, even if you know the whole thing is a fraud it's still got some clever ways to bite you if you go near it.
I do not get involved with shorting companies either - but with interest rates higher it does strike me as magnitude more difficult to keep some of these companies (or schemes) floating.
It will still go on. He wasn't the only one, but he definitely supercharged funding as of late.
I think all the longtermism stuff that has come to prominence recently is a side-effect of too much money in EA trying to make up new causes that are magically more effective than philanthropy that currently exists.
I mean I really don't get what they're about. Most of what I know about these guys seems to revolve around shuffling money around so it's not clear to me what exactly is effective or altruistic about what they're doing.
Traditional metrics for charities only included efficiency metrics. Then there was a movement that said actually effectiveness is more important than efficiency even though it's harder to measure, and started trying to measure effectiveness (like Givewell, 80000 hours, etc...). It's called effective altruism because it focuses on effective giving(i.e. altruism).
How much of the actual EA funding is going to longtermist charities vs how much is going to your boring old malaria/infrastructure/de-worming/factory farming initiatives?
I always thought the longtermist stuff was mostly because it was an easy way to criticize EA in a way that drove clicks.
The effective altruism movement has been around for over a decade. SBF's financing has been very beneficial, but EA isn't dependent on one financier or organization. At this point it's like moneyball: a concept that can be used by anyone.
I can't understand the effective altruist movement in a world of Modern Monetary Theory. When money means nothing and central banks can print infinite money, the only reasonable way to effect change is by donating directly to an extended hand on the street or actually physically helping, imo, but I'm open to changing my mind.
GiveWell explains their reasoning here[1]. For each of their top charities, they give a measure of cost-effectiveness and explain why they believe the charity has such a high impact.[2]
For a decade, one of GiveWell's top charities was GiveDirectly[3], which simply gives your money to poor people in developing countries. In August, GiveWell changed their evaluation criteria to prioritize charities with funding gaps.[4] This bumped GiveDirectly out of their top charities, along with some deworming programs. GiveWell still thinks these charities are extremely effective, just not as much as their new list of top charities.
I'd expect the opposite: if FTX's failure means the FTX foundation money is gone then there's more need for money on the margin and more EAs will choose to earn to give.
Isn't the whole point that they work for mega-corps and then donate all the money instead of actually doing anything directly? I am pretty sure I read about this somewhere. I don't think effective altruists are the type to actually do anything other than go along with the status quo.
> work for mega-corps and then donate all the money instead of actually doing anything directly?
Early on most effective altruists were working to earn money and fund important things. More recently, with the money from Open Philanthropy (Dustin Moskovitz, FB), FTX Foundation (SBF, FTX), and others there's been less need for money relative to need for doing things, so many of us have switched away from earning to give. Me included: https://www.jefftk.com/p/leaving-google-joining-the-nucleic-...
> do anything other than go along with the status quo
EAs are overall pretty weird folks: there are a lot of criticisms you could make but that they're just going along with the status quo is a surprising one ;)
The whole point is you can fly to Africa and build wells. Which feels really good because you can see your impact.
Or you can work as an investment banker and pay 100 Africans to build wells, which doesn't feel as good, but builds 100x as many wells and employs Africans.
I am going to go out on a limb here and say you have not moved any significant amount of money around, especially internationally. Trying moving $250,000, between the paperwork, back and forth, fees, it is a nightmare.
If you want to legally move the money you still need to do paperwork and pay fees, as well as the additional slippage from introducing a third currency.
You really do not with Bitcoin. If there are local regulations with declaration, sure. But the fees are dramatically lower to move the funds than using banks.
For our purposes (and most businesses), those are marginal improvements. And there's absolutely no way the very significant risks involved with handling cryptocurrency are worth it to us.
And you lose the right to effect any chargebacks if any errors happen anywhere in the process, including mistyping the receiver address. I would happily pay 0.04% for such a powerful insurance.
That’s worse, than few days ago among crypto-whales it was already common knowledge, and they were pulling out. It’s common people who ended up losing on this.
So much about decentralization and unregulated market
There are no "common people" in this scenario. Just different groups of gamblers with different levels of knowledge and foresight. Hard to feel sympathy for anyone who loses money in crypto at this point.
But some gamblers have a larger share of the total market(lets call them whales), and are therefor incentivized to coordinate their actions with other whales. They also have more resources to acquire information on the market that may give a competitive advantage. Whereas commoners tend to discuss in common areas, and they don't have enough of a share of the market to move the price through coordinated action.
I'd love to see that number broken down. I expect it to be mostly "used cryptocurrencies", not traded them, and those cryptocurrencies to be mostly BTC and ETH, possibly XMR, but not some utility token of an exchange.
Oh interesting, I kind of assumed it was investing just because it's easy to open a Coinbase account and buy $20 of Bitcoin. It's pretty involved to set up a wallet, send crypto, and then do something with it. Web3 is not particularly user friendly.
Darknet markets did make it pretty easy, and often had instructions to use e.g. anycoin direct to send cash straight to your market balance to then order drugs or alien artefacts or whatever with, so you "use" BTC or XMR (and the electrum-style slim wallets made things somewhat easy). Plus there was the whole hype of cryptokitties and NFTs etc which would bring you into contact with ETH.
The number of Americans having any money invested in the stock market in any form (i.e. including 401k, mutual funds etc) peaked at 60%. I'd be surprised to see people trading/investing in crypto to be > 3%, but who knows. Annoying that they just have these broad questions. "Have you, at any time in your life, ever eaten solid food or murdered a president?"
Yeah i know quite a few people who have bought drugs online with crypto but don't trade/invest in it. For the majority of people it's just not on their radar.
This is the problem - people think more regulation would solve this problem and it fails time and time again.
Decentralization is the solution. A decentralized exchange like Uniswap, Balancer or GMX will never suddenly go bankrupt and lock up your money because everything is public and transparent.
Eventually with ZK Proofs we'll be able to have privacy and open source transparent protocols. Which will be a massive upgrade for finance.
It’s due to astroturfers like this guy [1] here on HN manipulating the narrative with intentional misinformation and HN taking the bait and upvoting like crazy because it sounds intelligent and authoritative.
They may be insolvent now due to FTT dip, but at the time this comment was written, he was right. They were almost certainly not insolvent. I think this all started with a tiny bit of FUD about Alameda and FTX being naughty with user deposits. CZ saw that and did a supreme job of taking advantage, but probably this would have all blown over otherwise.
Easy to look at someone's post in hindsight and see that they were mistaken. Probably
Are you intentionally trying to mislead people? The whole point at that time was that their claims to solvency were entirely predicated on an indefensible valuation of their FTT holdings. We've now seen, as expected, that that FTT valuation was totally bogus.
Does FTT pay dividends? If not, it's not a stock. Its valuation is what people are paying for it on the market. If it's trading for $25 on every exchange, it's $25. Their valuation was accurate.
This feels like an extinction-level event for crypto. If they survive, I guess Coinbase will be the King because they are very conservative so they really won't run into any of these liquidity issues that these other companies are finding themselves in.
The biggest thing is that they no longer need to worry about competing on price because people know they will get their money back from Coinbase, I imagine.
The conclusion I've come to in crypto over the last decade is that it is interesting. I love the idea of small purchases at food trucks with it as an alternative to credit card fees for small business.
On the other hand I don't see why crypto needs to go up in value or how that actually helps anyone except people that got in early.
India has a great fiat mobile payments system that doesn't require those credit card fees. The real solution is to ditch ACH.
>On the other hand I don't see why crypto needs to go up in value or how that actually helps anyone except people that got in early.
The price rises when someone buys into it. Because no one would sell for less than they just bought, their ask price is slightly higher in general. This makes the quote price rise - same with stocks.
The main problem it solves is trust. I don't see the need for it in a system/govt you trust which is the case in most stable/developed countries like the US or Europe or India. But a fully backed stablecoin available in unstable countries do have a use case.
I'm confused, were they leveraging people's stowed crypto? How can you have a liquidity crisis where you aren't leveraging up? Or is it more than an exchange? Another scam where the billionaire luminary ran away with the cash? Apologies, don't follow crypto
And another https://news.ycombinator.com/item?id=33520585