4 ms·

You are right, one should conjure up a disaster scenario. So, here’s a question - if you had 100$, what number between 1-100 would you put as investment into Bi

You are right, one should conjure up a disaster scenario. So, here’s a question - if you had 100$, what number between 1-100 would you put as investment into Bitcoin? You can’t use any number outside the range provided.

xyzelement 6y ago
It's kinda a weird question. If I only had $100, none of it would go into BTC. Personally I am not invested in BTC at all because I have a pretty thorough "short thesis" on it (you can see a bit of it in my comments in this thread.) I wouldn't be opposed to betting some play amounts on it (I'd bet short, however) - same as money that I had "invested" in prediction markets - not investments in the "I am building my wealth this way" kind of sense.
- tchalla 6y ago
  It was hard question and intentionally so. I allowed you to lie within your boundaries and yet you chose to not answer. You picked zero despite me explicitly stating the only number you could pick was between 1-100$. If you go outside the framework of a thought experiment, to play safe - we can’t move a discussion forward. So pick a number based on the hypothetical scenario you mentioned. That’s the entire point of a thought experiment, to test boundaries.
  - xyzelement 6y ago
    Not sure I follow but I am intrigued. OK well given that the least I can bet is $1, I will bet $1.
    - tchalla 6y ago
      Thanks for your answer. Since you chose $1 since it is the least bet, I would like to increase your options. You can now choose any real value between 0.01$ to 100$. You are free to change your answer of $1 to anything you'd like. You do not need to answer the question. The point I'm trying to make is that as an investor you can invest in an asset class even if you can imagine an Armageddon (crash to zero for BTC) scenario. You just have to allocate the right proportion towards the asset incorporate the volatility. Remember, the same scenario could also happen for any investment asset. The lesser the likelihood of the Armageddons the higher the allocation. You can simply reduce your asset allocation to what you perceive as the likelihood of the Armageddon scenario. I can tell you for sure that none of us can predict a scenario with a 100% probability. Given that, an allocation of 1$ or even 0.01-0.99$ is not a bad idea. Oh, as far as BTC getting to zero - I can't imagine how that can happen without every government on the planet banning it [0]. Currently, you have governments in well developed economies consider it as an ordinary tangible asset [1] and even trading them from exchanges (9th largest in Europe) [2]! [0] https://www.visualcapitalist.com/the-feds-balance-sheet-the-other-exponential-curve/ https://www.visualcapitalist.com/the-feds-balance-sheet-the-... [1] https://www.winheller.com/en/banking-finance-and-insurance-law/bitcoin-trading/bitcoin-and-tax.html https://www.winheller.com/en/banking-finance-and-insurance-l... [2] https://www.bsdex.de/en/ https://www.bsdex.de/en/
      - xyzelement 6y ago
        This sounds like a weird way to invest. According to this logic I should invest $.01 in BTC and then to borrow from a funny commenter in this thread, $.01 in Dodgecoin, $.01 in Ether, $.01 in baseball cards, $.01 in wine, $.01 in beanie babies, etc etc etc etc etc - that basically any investment that exists deserves my dollars. I disagree. There's plenty of stuff one "could" invest in and very few one "should." I look at it on expected value basis and then, risk adjusted. Because I have a short case on BTC, I expect any investment in it to have expected value of 0 so any $ allocated to it would be wasted. Instead I spread my money in investments I expect to have positive value, and I invest in many of them for diversification benefits (which may be is what you were getting at?) But the point of diversification is to secure uncorrelated positive returns. A negative return on the other hand is just a negative return. I totally agree with you that I could be wrong in my short case on BTC, my logic rests on it. And just in defense of my case - I think about markets as someone who's studied and worked in them for 18+ years. Doesn't mean I am right and I have an open mind. So whenever I encounter someone who has the opposite view, I explain to them my case with the hopes that they can point me to what I am missing, but I always walk away with the impression they hadn't thought about the issue deeply and with nuance. Again, I could totally be wrong, but as an investor if it seems like I did my homework and the others are driven by hype/FOMO/not understanding then I am gonna sit it out :)
        tchalla 6y ago
        > This sounds like a weird way to invest. According to this logic I should invest $.01 in BTC and then to borrow from a funny commenter in this thread, $.01 in Dodgecoin, $.01 in Ether, $.01 in baseball cards, $.01 in wine, $.01 in beanie babies, etc etc etc etc etc - that basically any investment that exists deserves my dollars. Honestly, I found that comment disrespectful and making a mockery of a point - it's all too common these days. If I were to take the opposite of the comment, we should NOT invest in anything and stay 100% in cash because each and every asset has risks and volatility. > I disagree. There's plenty of stuff one "could" invest in and very few one "should." You know that I agree with you right? I never said you SHOULD invest in BTC. I was making the point that IF one wants to invest in the BTC, then one can do so by a minimal asset allocation. It fits within your "expected value" framework. > But the point of diversification is to secure uncorrelated positive returns. A negative return on the other hand is just a negative return. I totally agree with you that I could be wrong in my short case on BTC, my logic rests on it. I agree. But, surely if you were willing to consider an Armageddon scenario for BTC; you could also consider a 100% upside scenario too. We did a thought experiment on the Armageddon scenario, I haven't seen any calculations on the upside. > And just in defense of my case - I think about markets as someone who's studied and worked in them for 18+ years. Doesn't mean I am right and I have an open mind. So whenever I encounter someone who has the opposite view, I explain to them my case with the hopes that they can point me to what I am missing, but I always walk away with the impression they hadn't thought about the issue deeply and with nuance. Again, I could totally be wrong, but as an investor if it seems like I did my homework and the others are driven by hype/FOMO/not understanding then I am gonna sit it out :) I am grateful for you that you took the time to listen. I could not find a e-mail or contact on your profile. I'd be happy to take this offline and I want to understand what I am missing here.

xyzelement 6y ago

It's kinda a weird question. If I only had $100, none of it would go into BTC. Personally I am not invested in BTC at all because I have a pretty thorough "short thesis" on it (you can see a bit of it in my comments in this thread.) I wouldn't be opposed to betting some play amounts on it (I'd bet short, however) - same as money that I had "invested" in prediction markets - not investments in the "I am building my wealth this way" kind of sense.

tchalla 6y ago
It was hard question and intentionally so. I allowed you to lie within your boundaries and yet you chose to not answer. You picked zero despite me explicitly stating the only number you could pick was between 1-100$. If you go outside the framework of a thought experiment, to play safe - we can’t move a discussion forward. So pick a number based on the hypothetical scenario you mentioned. That’s the entire point of a thought experiment, to test boundaries.
- xyzelement 6y ago
  Not sure I follow but I am intrigued. OK well given that the least I can bet is $1, I will bet $1.
  - tchalla 6y ago
    Thanks for your answer. Since you chose $1 since it is the least bet, I would like to increase your options. You can now choose any real value between 0.01$ to 100$. You are free to change your answer of $1 to anything you'd like. You do not need to answer the question. The point I'm trying to make is that as an investor you can invest in an asset class even if you can imagine an Armageddon (crash to zero for BTC) scenario. You just have to allocate the right proportion towards the asset incorporate the volatility. Remember, the same scenario could also happen for any investment asset. The lesser the likelihood of the Armageddons the higher the allocation. You can simply reduce your asset allocation to what you perceive as the likelihood of the Armageddon scenario. I can tell you for sure that none of us can predict a scenario with a 100% probability. Given that, an allocation of 1$ or even 0.01-0.99$ is not a bad idea. Oh, as far as BTC getting to zero - I can't imagine how that can happen without every government on the planet banning it [0]. Currently, you have governments in well developed economies consider it as an ordinary tangible asset [1] and even trading them from exchanges (9th largest in Europe) [2]! [0] https://www.visualcapitalist.com/the-feds-balance-sheet-the-other-exponential-curve/ https://www.visualcapitalist.com/the-feds-balance-sheet-the-... [1] https://www.winheller.com/en/banking-finance-and-insurance-law/bitcoin-trading/bitcoin-and-tax.html https://www.winheller.com/en/banking-finance-and-insurance-l... [2] https://www.bsdex.de/en/ https://www.bsdex.de/en/
    - xyzelement 6y ago
      This sounds like a weird way to invest. According to this logic I should invest $.01 in BTC and then to borrow from a funny commenter in this thread, $.01 in Dodgecoin, $.01 in Ether, $.01 in baseball cards, $.01 in wine, $.01 in beanie babies, etc etc etc etc etc - that basically any investment that exists deserves my dollars. I disagree. There's plenty of stuff one "could" invest in and very few one "should." I look at it on expected value basis and then, risk adjusted. Because I have a short case on BTC, I expect any investment in it to have expected value of 0 so any $ allocated to it would be wasted. Instead I spread my money in investments I expect to have positive value, and I invest in many of them for diversification benefits (which may be is what you were getting at?) But the point of diversification is to secure uncorrelated positive returns. A negative return on the other hand is just a negative return. I totally agree with you that I could be wrong in my short case on BTC, my logic rests on it. And just in defense of my case - I think about markets as someone who's studied and worked in them for 18+ years. Doesn't mean I am right and I have an open mind. So whenever I encounter someone who has the opposite view, I explain to them my case with the hopes that they can point me to what I am missing, but I always walk away with the impression they hadn't thought about the issue deeply and with nuance. Again, I could totally be wrong, but as an investor if it seems like I did my homework and the others are driven by hype/FOMO/not understanding then I am gonna sit it out :)
      - tchalla 6y ago
        > This sounds like a weird way to invest. According to this logic I should invest $.01 in BTC and then to borrow from a funny commenter in this thread, $.01 in Dodgecoin, $.01 in Ether, $.01 in baseball cards, $.01 in wine, $.01 in beanie babies, etc etc etc etc etc - that basically any investment that exists deserves my dollars. Honestly, I found that comment disrespectful and making a mockery of a point - it's all too common these days. If I were to take the opposite of the comment, we should NOT invest in anything and stay 100% in cash because each and every asset has risks and volatility. > I disagree. There's plenty of stuff one "could" invest in and very few one "should." You know that I agree with you right? I never said you SHOULD invest in BTC. I was making the point that IF one wants to invest in the BTC, then one can do so by a minimal asset allocation. It fits within your "expected value" framework. > But the point of diversification is to secure uncorrelated positive returns. A negative return on the other hand is just a negative return. I totally agree with you that I could be wrong in my short case on BTC, my logic rests on it. I agree. But, surely if you were willing to consider an Armageddon scenario for BTC; you could also consider a 100% upside scenario too. We did a thought experiment on the Armageddon scenario, I haven't seen any calculations on the upside. > And just in defense of my case - I think about markets as someone who's studied and worked in them for 18+ years. Doesn't mean I am right and I have an open mind. So whenever I encounter someone who has the opposite view, I explain to them my case with the hopes that they can point me to what I am missing, but I always walk away with the impression they hadn't thought about the issue deeply and with nuance. Again, I could totally be wrong, but as an investor if it seems like I did my homework and the others are driven by hype/FOMO/not understanding then I am gonna sit it out :) I am grateful for you that you took the time to listen. I could not find a e-mail or contact on your profile. I'd be happy to take this offline and I want to understand what I am missing here.