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>> When you are betting Full stop. You are trading or investing - if the word "betting" passes through your brain, stop now. The public surge of interest in cr

>> When you are betting Full stop. You are trading or investing - if the word "betting" passes through your brain, stop now. The public surge of interest in crypto currencies is a redistribution of wealth from retail speculators to professional speculators. You aren't betting on the technology, developer community, ecosystem, or adoption anymore. At this point, you are betting you aren't the last one to the party.

notyourday 9y ago
Do you know what is a bet gone wrong? It is investment.
joering2 9y ago
I think you took his word too literally. When I read it, it simply means you put your hopes into something. I am betting that my new relationship with be futile and bring me happiness. Doesn't mean I went to see bookie about it.
rdlecler1 9y ago
Buffett calls investments bets all the time. Let’s call it what it is.
PhasmaFelis 9y ago
When you play the stock market (telling phrase there), are you not making a bet that your stock will increase in value?
- tomkarlo 9y ago
  Not necessarily, and not in the long term. You can buy stocks with no expectation they will increase in value (or even maintain value) if the dividend yield is high enough. And stocks have value because of this - the assumption in any stock, even one currently without a dividend, is that eventually it will pay out some form of a dividend to its holders. You may buy a stock hoping it will will rise in value, but that rise is predicated on the eventual delivery of cash via dividends or some other mechanism of distribution. Contrast that with say, Gold, where in fact it costs money to hold and there's no expectation it will ever generate any kind of dividend.
  - TheSpiceIsLife 9y ago
    How is the long term not gambling? No one knows what going to happen tomorrow let alone in ten plus year. My bet is: it all comes down to risk tolerance. In the long term some forms of investments have shown, historically, to be consistently less risky, or more risky, than others.
    - tomkarlo 9y ago
      Gambling and investing both involve risk, but they're not the same thing, and there's important differences. In particular, in most gambling, the sum of returns to participants is less than the amount wagered by all parties, whereas in equity investment it's generally / historically the opposite. Additionally, whereas gambling is generally fairly time-bounded, investing isn't, and in fact often rewards longer holds via dividend and coupon yields in addition to the potential difference between purchase and sale. More to point: most studies show that you do best in investing simply by having money invested for long periods, and being diversified to mitigate secular risk. That wouldn't work in gambling.
      - TheSpiceIsLife 9y ago
        You've made some great points, thank you.
  - jeremyjh 9y ago
    There are plenty of stocks that no one ever expects any distribution or dividend from, but they know it represents a claim on real value (assets and incomes) in the business, and that there is a market where they can resell it for more money if the value of the underlying assets increase. All the incomes may go back into the business but that doesn't mean they don't increase real value.
    - tomkarlo 9y ago
      At the end of the day, on even these stocks, the value is still predicated upon either those assets being sold and the value being distributed, or those incomes turning into a dividend or liquidation value. A business that reinvests its income into its own business does to because it believes that the return on that investment in the future exceeds the rate of return demanded by its equity investors. Otherwise, doing that would reduce the value of the stock. It's impossible to assess, of course, but the true value of any equity is the net present value of the future cash it will generate for its holders. Full stop. Equity holders don't care about value in the business that won't translate into dollars coming out of the stock at some point in time.
- imtringued 9y ago
  Yes but the increase comes from the company having more revenue by producing and selling more cars, iphones, CPUs, GPUs, pizzas, etc. Cryptocurrencies like bitcoin don't generate an income. Therefore they shouldn't be increasing in value at all beyond the rate of inflation. They should stay at a stable price adjusted by inflation +/- some volatility. If bitcoin suddenly increases in price there are only two possible reasons. Either inflation of USD is higher than expected (unlikely) or more speculation happens which drives up the volatility.

notyourday 9y ago

Do you know what is a bet gone wrong? It is investment.

joering2 9y ago

I think you took his word too literally. When I read it, it simply means you put your hopes into something. I am betting that my new relationship with be futile and bring me happiness. Doesn't mean I went to see bookie about it.

rdlecler1 9y ago

Buffett calls investments bets all the time. Let’s call it what it is.

PhasmaFelis 9y ago

When you play the stock market (telling phrase there), are you not making a bet that your stock will increase in value?

tomkarlo 9y ago
Not necessarily, and not in the long term. You can buy stocks with no expectation they will increase in value (or even maintain value) if the dividend yield is high enough. And stocks have value because of this - the assumption in any stock, even one currently without a dividend, is that eventually it will pay out some form of a dividend to its holders. You may buy a stock hoping it will will rise in value, but that rise is predicated on the eventual delivery of cash via dividends or some other mechanism of distribution. Contrast that with say, Gold, where in fact it costs money to hold and there's no expectation it will ever generate any kind of dividend.
- TheSpiceIsLife 9y ago
  How is the long term not gambling? No one knows what going to happen tomorrow let alone in ten plus year. My bet is: it all comes down to risk tolerance. In the long term some forms of investments have shown, historically, to be consistently less risky, or more risky, than others.
  - tomkarlo 9y ago
    Gambling and investing both involve risk, but they're not the same thing, and there's important differences. In particular, in most gambling, the sum of returns to participants is less than the amount wagered by all parties, whereas in equity investment it's generally / historically the opposite. Additionally, whereas gambling is generally fairly time-bounded, investing isn't, and in fact often rewards longer holds via dividend and coupon yields in addition to the potential difference between purchase and sale. More to point: most studies show that you do best in investing simply by having money invested for long periods, and being diversified to mitigate secular risk. That wouldn't work in gambling.
    - TheSpiceIsLife 9y ago
      You've made some great points, thank you.
- jeremyjh 9y ago
  There are plenty of stocks that no one ever expects any distribution or dividend from, but they know it represents a claim on real value (assets and incomes) in the business, and that there is a market where they can resell it for more money if the value of the underlying assets increase. All the incomes may go back into the business but that doesn't mean they don't increase real value.
  - tomkarlo 9y ago
    At the end of the day, on even these stocks, the value is still predicated upon either those assets being sold and the value being distributed, or those incomes turning into a dividend or liquidation value. A business that reinvests its income into its own business does to because it believes that the return on that investment in the future exceeds the rate of return demanded by its equity investors. Otherwise, doing that would reduce the value of the stock. It's impossible to assess, of course, but the true value of any equity is the net present value of the future cash it will generate for its holders. Full stop. Equity holders don't care about value in the business that won't translate into dollars coming out of the stock at some point in time.
imtringued 9y ago
Yes but the increase comes from the company having more revenue by producing and selling more cars, iphones, CPUs, GPUs, pizzas, etc. Cryptocurrencies like bitcoin don't generate an income. Therefore they shouldn't be increasing in value at all beyond the rate of inflation. They should stay at a stable price adjusted by inflation +/- some volatility. If bitcoin suddenly increases in price there are only two possible reasons. Either inflation of USD is higher than expected (unlikely) or more speculation happens which drives up the volatility.