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"Index fund" has a meaning if the economy itself the fund is built on top of is stable. For example, stock market index fund makes sense because stocks are bui

"Index fund" has a meaning if the economy itself the fund is built on top of is stable. For example, stock market index fund makes sense because stocks are built on top of capitalism, which has proven to work for a long time. Nobody would buy a index fund from a communist country, because time has proven communism is not profitable. I think people are missing the point if they're investing in crypto index funds, because the whole point of cryptocurrencies right now is that the economy it's built on is extremely unpredictable. The whole point of "index fund" is to minimize risk, but they're not exactly minimizing risk since the whole industry could just go to zero if something radical happens (for example BTC crashes), while not really getting a good deal in terms of upsides which you can get by actively trading. For most people who lack knowledge I think a better strategy is to invest in aggressive crypto hedge funds which are springing up like crazy nowadays--that is, if you value the potential gains more than potential loss. And for the rest of those who are risk-averse, I would just keep it in the bank if I were them. Risk-averse people investing in cryptocurrency is like going to las vegas and thinking they'll make tons of money.

icelancer 9y ago
>>For example, stock market index fund makes sense because stocks are built on top of capitalism, which has proven to work for a long time. Nobody would buy a index fund from a communist country, because time has proven communism is not profitable. That is not what index funds are for, or aren't for, at all. Parts of bond index funds I own are invested in "communist" countries and I'm glad to have the diversification.
- cocktailpeanuts 9y ago
  There is no communist country in the world right now...
  - bloak 9y ago
    Was there ever? The Warsaw Pact countries had "communist" parties, but the country itself was usually called "socialist", and the propaganda tended to refer to "building socialism", as if they hadn't even finished socialism yet, let alone communism. So "communism" seemed to be a sort of nirvana that people were supposed to eternally strive towards rather than something that they could claim with a straight face they already had. Anyway, China is ruled by a "communist" party, and I guess they have as much right as anyone else to decide what they mean by "communist", or whatever the corresponding expression in Chinese is. Of course the lack of consensus about what "communism" means is as nothing compared with the confusion about what "capitalism" means. We can't just follow Marx because Marx was writing about a world (19th-century England) that no longer exists.
    - cocktailpeanuts 9y ago
      As we agree, there has never been a pure communist country. When I mention communist country, I'm talking about this hypothetical communist country. If such an economy did successfully exist, the concept of "money" will be very different in their world. I used this as an analogy to explain how the concept of cryptocurrency is very different from the gold standard or fiat based money we've been accustomed to. A lot of people think of cryptocurrency as just another speculative investment asset like stocks, but that's the stupidest thing anyone can do, because unlike stock market which exists on top of capitalist economy, backed by government's legal system, cryptocurrency is a whole new world. In fact, the whole point of cryptocurrency is that it's "trustless"--if you lose your money to a scammer, no government will help you, it's your fault for being an idiot. Cryptocurrency and stocks look the same to most people because all they see is a way to get richer, but most of them don't realize they're jumping onto a completely different economy. This is why I think index funds are meaningless. Index funds in traditional economy can never go to zero because governments will bail them out. Cryptocurrencies in my opinion have a good chance of going to zero (and this is coming from a cryptocurrency believer). And when it does go to zero, there is no government to bail anyone out, and coinbase won't help you either, they'll just move on.
jgh 9y ago
There are index funds for pretty much anything you can build an index out of. Hell, there are index funds on an endless downward spiral[1]. Intentionally. [1]:https://finance.yahoo.com/chart/VXX https://finance.yahoo.com/chart/VXX
- cocktailpeanuts 9y ago
  That's totally in line with my argument. When you say "pretty much anything", that's "pretty much anything tradable with what we consider money". Cryptocurrency is a completely different class of currency than what we are accustomed to (bank backed money), so this argument exists on a completely different level.

icelancer 9y ago

>>For example, stock market index fund makes sense because stocks are built on top of capitalism, which has proven to work for a long time. Nobody would buy a index fund from a communist country, because time has proven communism is not profitable. That is not what index funds are for, or aren't for, at all. Parts of bond index funds I own are invested in "communist" countries and I'm glad to have the diversification.

cocktailpeanuts 9y ago
There is no communist country in the world right now...
- bloak 9y ago
  Was there ever? The Warsaw Pact countries had "communist" parties, but the country itself was usually called "socialist", and the propaganda tended to refer to "building socialism", as if they hadn't even finished socialism yet, let alone communism. So "communism" seemed to be a sort of nirvana that people were supposed to eternally strive towards rather than something that they could claim with a straight face they already had. Anyway, China is ruled by a "communist" party, and I guess they have as much right as anyone else to decide what they mean by "communist", or whatever the corresponding expression in Chinese is. Of course the lack of consensus about what "communism" means is as nothing compared with the confusion about what "capitalism" means. We can't just follow Marx because Marx was writing about a world (19th-century England) that no longer exists.
  - cocktailpeanuts 9y ago
    As we agree, there has never been a pure communist country. When I mention communist country, I'm talking about this hypothetical communist country. If such an economy did successfully exist, the concept of "money" will be very different in their world. I used this as an analogy to explain how the concept of cryptocurrency is very different from the gold standard or fiat based money we've been accustomed to. A lot of people think of cryptocurrency as just another speculative investment asset like stocks, but that's the stupidest thing anyone can do, because unlike stock market which exists on top of capitalist economy, backed by government's legal system, cryptocurrency is a whole new world. In fact, the whole point of cryptocurrency is that it's "trustless"--if you lose your money to a scammer, no government will help you, it's your fault for being an idiot. Cryptocurrency and stocks look the same to most people because all they see is a way to get richer, but most of them don't realize they're jumping onto a completely different economy. This is why I think index funds are meaningless. Index funds in traditional economy can never go to zero because governments will bail them out. Cryptocurrencies in my opinion have a good chance of going to zero (and this is coming from a cryptocurrency believer). And when it does go to zero, there is no government to bail anyone out, and coinbase won't help you either, they'll just move on.

jgh 9y ago

There are index funds for pretty much anything you can build an index out of. Hell, there are index funds on an endless downward spiral[1]. Intentionally. [1]:https://finance.yahoo.com/chart/VXX https://finance.yahoo.com/chart/VXX

cocktailpeanuts 9y ago
That's totally in line with my argument. When you say "pretty much anything", that's "pretty much anything tradable with what we consider money". Cryptocurrency is a completely different class of currency than what we are accustomed to (bank backed money), so this argument exists on a completely different level.