4 ms·

Same with every asset, I would think.

by jraedisch 7y ago

eru 7y ago
Yes. And that's why short-selling is so important.
- lr4444lr 7y ago
  Wow, never thought I'd hear such a good defense of short-selling, but you're right.
  - eru 7y ago
    Thanks for the compliment. It's pretty much the orthodox standard argument, so no stroke of genius from me. Orthodox economics is severely underrated. Oh, and bitcoin got a decent short-selling facility with the futures trading a while back. (No clue why you are getting downvoted.)
throw0101a 7y ago
> Same with every asset, I would think. When you buy (e.g.) real estate you can get value out of it without thinking about selling it for a profit later. Especially if it's your primary residence. Same with most vehicles: they depreciate over time, but there is utilitarian value in the asset. Unless it's Steve McQueen's Mustang or something. Not every "asset" is about ROI.
- philipov 7y ago
  That's the difference between assets in general, and investment vehicles, which are a very particular kind of asset regulated by the SEC.
  - ncallaway 7y ago
    Yes, but most investment vehicles are assets (or are eventually backed by assets). Real estate, and the various loans and derivatives, all eventually end up at real, productive assets that you might want to own. Stocks and the various index funds and derivatives, all eventually end up with ownership of a company. A company which, if profitable, can pay dividends back to the owners. I'd argue that it's a much rarer class of investment vehicle which is purely speculative.
    - philipov 7y ago
      If you have a house you ever intend to sell, you will also try to make the neighborhood it is in sound more attractive, to increase its sale value, regardless of whether you can extract utility from it.
maest 7y ago
aka "talking one's book"
nkrisc 7y ago
Many other assets have at least some intrinsic value.
swalsh 7y ago
I bought my house to live in, but it has gone up. Many of the stocks I've invested in I purchased because they pay dividends, and I expect they will continue to in the future. As long as that is true, I don't care if the price of the stock increases much. I have a case of fine wine in my basement, most wine doesn't age well, but some do. I expect these will increase in price... But I'm planning to drink more than a few bottles.
graeme 7y ago
Nope. Assets have a sale value and an ownership value. Suppose a company makes $100,000 per year and this is expected to continue. How much would you pay for it? Now, suppose it makes $100,000 per year, but for some reason once you have it, no one will buy it off you. How much would you pay for it? You'd pay less in the second case, but not that much less. The company has a value which it gives to you for having ownership of it. Meanwhile, bitcoin produces....$0 per year for owning it. The only value is in sale at a higher price. You have to bet on appreciation. This is something fundamental people often misunderstand about, say, stocks. The price is set by supply and demand for the stock, but the value is determined by the cashflows. Usually price and value move at least somewhat in sync. But if stock markets went insane and valued everything at $0 for some reason, you'd still want to own companies.
- itsumoiru 7y ago
  If you still put your money down for the stock, the value isn't $0 anymore. It's whatever you value it.
  - graeme 7y ago
    It’s a hypothetical, where the whole world has gone mad except you. Nobody buys. So it has a price you would purchase at, but $0 sale value to you as there are no other buyers. The true value of an asset is separate from the price (which is $0 in this case as you can’t sell it) A thought experiment to show the difference between price and value. Bitcoin currently has a price. No actual intrinsic value other than the hope of value in the future.
    - orisho 7y ago
      I think it does have intrinsic value - that value lies in allowing some people, in some areas, to circumvent tracking or avoid authorities. To those people, BTC brings value which cannot be had elsewhere. My personal belief is that this is what fuels BTC's value, and the rest is speculation (but then it's similar to stocks). I don't think that whether it has this property (and value) is in question - the question is how much of BTC's price is fueled by that value.
2zcon 7y ago
Not currency, unless you're a forex trader. And not if you're aiming to collect a dividend* or to exert control over a company. *In the tech hysteria, it's easy to forget that this is where the fundamental value comes from.

Same with every asset, I would think.

eru 7y ago

Yes. And that's why short-selling is so important.

lr4444lr 7y ago
Wow, never thought I'd hear such a good defense of short-selling, but you're right.
- eru 7y ago
  Thanks for the compliment. It's pretty much the orthodox standard argument, so no stroke of genius from me. Orthodox economics is severely underrated. Oh, and bitcoin got a decent short-selling facility with the futures trading a while back. (No clue why you are getting downvoted.)

throw0101a 7y ago

> Same with every asset, I would think. When you buy (e.g.) real estate you can get value out of it without thinking about selling it for a profit later. Especially if it's your primary residence. Same with most vehicles: they depreciate over time, but there is utilitarian value in the asset. Unless it's Steve McQueen's Mustang or something. Not every "asset" is about ROI.

philipov 7y ago
That's the difference between assets in general, and investment vehicles, which are a very particular kind of asset regulated by the SEC.
- ncallaway 7y ago
  Yes, but most investment vehicles are assets (or are eventually backed by assets). Real estate, and the various loans and derivatives, all eventually end up at real, productive assets that you might want to own. Stocks and the various index funds and derivatives, all eventually end up with ownership of a company. A company which, if profitable, can pay dividends back to the owners. I'd argue that it's a much rarer class of investment vehicle which is purely speculative.
  - philipov 7y ago
    If you have a house you ever intend to sell, you will also try to make the neighborhood it is in sound more attractive, to increase its sale value, regardless of whether you can extract utility from it.

maest 7y ago

aka "talking one's book"

nkrisc 7y ago

Many other assets have at least some intrinsic value.

swalsh 7y ago

I bought my house to live in, but it has gone up. Many of the stocks I've invested in I purchased because they pay dividends, and I expect they will continue to in the future. As long as that is true, I don't care if the price of the stock increases much. I have a case of fine wine in my basement, most wine doesn't age well, but some do. I expect these will increase in price... But I'm planning to drink more than a few bottles.

graeme 7y ago

Nope. Assets have a sale value and an ownership value. Suppose a company makes $100,000 per year and this is expected to continue. How much would you pay for it? Now, suppose it makes $100,000 per year, but for some reason once you have it, no one will buy it off you. How much would you pay for it? You'd pay less in the second case, but not that much less. The company has a value which it gives to you for having ownership of it. Meanwhile, bitcoin produces....$0 per year for owning it. The only value is in sale at a higher price. You have to bet on appreciation. This is something fundamental people often misunderstand about, say, stocks. The price is set by supply and demand for the stock, but the value is determined by the cashflows. Usually price and value move at least somewhat in sync. But if stock markets went insane and valued everything at $0 for some reason, you'd still want to own companies.

itsumoiru 7y ago
If you still put your money down for the stock, the value isn't $0 anymore. It's whatever you value it.
- graeme 7y ago
  It’s a hypothetical, where the whole world has gone mad except you. Nobody buys. So it has a price you would purchase at, but $0 sale value to you as there are no other buyers. The true value of an asset is separate from the price (which is $0 in this case as you can’t sell it) A thought experiment to show the difference between price and value. Bitcoin currently has a price. No actual intrinsic value other than the hope of value in the future.
  - orisho 7y ago
    I think it does have intrinsic value - that value lies in allowing some people, in some areas, to circumvent tracking or avoid authorities. To those people, BTC brings value which cannot be had elsewhere. My personal belief is that this is what fuels BTC's value, and the rest is speculation (but then it's similar to stocks). I don't think that whether it has this property (and value) is in question - the question is how much of BTC's price is fueled by that value.

2zcon 7y ago

Not currency, unless you're a forex trader. And not if you're aiming to collect a dividend* or to exert control over a company. *In the tech hysteria, it's easy to forget that this is where the fundamental value comes from.