5 ms·

> I will happily invest in Bitcoin when its history as a store of value and a medium of exchange is measured in millennia. So is USD out for you too, then? It'

by dsacco 9y ago

> I will happily invest in Bitcoin when its history as a store of value and a medium of exchange is measured in millennia. 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.

landryraccoon 9y ago
People invest in USD? What does that mean? Currency speculators might arbitrage USD if they think the exchange rate is inaccurate but nobody holds USD because they think the value will go up long term. Holding fiat currency means you lose money constantly due to inflation.
- cesarb 9y ago
  Yes, people do invest in USD. I looked up a random dollar fund (BB Cambial Dólar LP Mil), and its total return over the last 5 years was 73.92%. That's AFAIK significantly more than the accumulated inflation in the same period.
  - landryraccoon 9y ago
    > invest in USD 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.
    - cesarb 9y ago
      I'm sorry, but I'm not seeing where in that list says it is looking for arbitrage opportunities. What you quoted is just the list of restrictions on the kinds of investments the fund can make. The "targets" part, which you didn't quote, says the returns should attempt to follow the USD. And it seems to be working: the total return over 5 years was 73.92%, while the USD over 5 years increased 73.95%. That is, had I bought USD 5 years ago and sold it now, the return should be about the same as that fund. Which is the point: it's simpler to invest on that fund (or others like it) than to buy USD directly.
      - deleted 9y ago
        [deleted]
- longerthoughts 9y ago
  Pretty sure the point was to highlight that people hold faith in the value of USD as a currency in spite of its youth, not to discuss its merits as a long-term investment. >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.
  - landryraccoon 9y ago
    > I might use an FX hedge on a foreign investment to protect against foreign currency volatility 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.
    - dsacco 9y ago
      You are long USD if you believe USD will remain relatively stable while many other securities actually diminish in value for various reasons. Even if the investor is not ultimately correct, this qualifies as investing. 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.
- dsacco 9y ago
  It means they prefer an investment which is relatively stable. I’m not talking about forex arb, I’m talking about investing in treasury bonds or USD ETFs. 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.

by dsacco 9y ago

landryraccoon 9y ago

People invest in USD? What does that mean? Currency speculators might arbitrage USD if they think the exchange rate is inaccurate but nobody holds USD because they think the value will go up long term. Holding fiat currency means you lose money constantly due to inflation.

cesarb 9y ago
Yes, people do invest in USD. I looked up a random dollar fund (BB Cambial Dólar LP Mil), and its total return over the last 5 years was 73.92%. That's AFAIK significantly more than the accumulated inflation in the same period.
- landryraccoon 9y ago
  > invest in USD 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.
  - cesarb 9y ago
    I'm sorry, but I'm not seeing where in that list says it is looking for arbitrage opportunities. What you quoted is just the list of restrictions on the kinds of investments the fund can make. The "targets" part, which you didn't quote, says the returns should attempt to follow the USD. And it seems to be working: the total return over 5 years was 73.92%, while the USD over 5 years increased 73.95%. That is, had I bought USD 5 years ago and sold it now, the return should be about the same as that fund. Which is the point: it's simpler to invest on that fund (or others like it) than to buy USD directly.
    - deleted 9y ago
      [deleted]
longerthoughts 9y ago
Pretty sure the point was to highlight that people hold faith in the value of USD as a currency in spite of its youth, not to discuss its merits as a long-term investment. >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.
- landryraccoon 9y ago
  > I might use an FX hedge on a foreign investment to protect against foreign currency volatility 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.
  - dsacco 9y ago
    You are long USD if you believe USD will remain relatively stable while many other securities actually diminish in value for various reasons. Even if the investor is not ultimately correct, this qualifies as investing. 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.
dsacco 9y ago
It means they prefer an investment which is relatively stable. I’m not talking about forex arb, I’m talking about investing in treasury bonds or USD ETFs. 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.