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By your logic any investment is a ponzi scheme. You buy a stock with the hope that you'll sell it at a higher price later on, etc.

deleted 6y ago
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kamaal 6y ago
>>You buy a stock with the hope I don't buy anything on hope. I do lots of analysis fundamental and more. I invest only if the company is and will, with, enough metrics to support it will perform in the future. The stock price is backed by the health and growth of the business. The easiest way to to do this is an index fund. Which by some definitions tracks large segments of the economy itself.
- pushrax 6y ago
  You buy based on maximum expected value for your risk tolerance and then hope you don't end up on the low end of the distribution of outcomes. Example tail outcomes: - Anti-capitalist uprising destroys all records of ownership. - Massive fraud in companies you invest in. - Competitors outside your holdings outcompete and take the market share. It's pretty reasonable to bet that these won't happen at a sufficient scale to affect you, especially with international diversification, but you do also hope they won't. Also, the stock price is backed by people's perception of the health and growth of a business, and by the price and performance of alternative assets. Pricing is hard. Obviously fundamental earning power influences price, but it's not the only or biggest force in price discovery, especially on <10y scales. As we have seen in the past year, expectations of money supply have a drastic nonlinear effect on stock prices across the market. A major (and unlikely) Fed strategy change could halve the market and keep it below ATH for a decade.
lottin 6y ago
Not at all. Investing in a stock is the same thing as investing in a business, since you literally own part of a business. And businesses produce income, aka profits. Bitcoin doesn't produce income. Your profits from "investing" in bitcoin can only come in the form of capital gains.

deleted 6y ago

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kamaal 6y ago

>>You buy a stock with the hope I don't buy anything on hope. I do lots of analysis fundamental and more. I invest only if the company is and will, with, enough metrics to support it will perform in the future. The stock price is backed by the health and growth of the business. The easiest way to to do this is an index fund. Which by some definitions tracks large segments of the economy itself.

pushrax 6y ago
You buy based on maximum expected value for your risk tolerance and then hope you don't end up on the low end of the distribution of outcomes. Example tail outcomes: - Anti-capitalist uprising destroys all records of ownership. - Massive fraud in companies you invest in. - Competitors outside your holdings outcompete and take the market share. It's pretty reasonable to bet that these won't happen at a sufficient scale to affect you, especially with international diversification, but you do also hope they won't. Also, the stock price is backed by people's perception of the health and growth of a business, and by the price and performance of alternative assets. Pricing is hard. Obviously fundamental earning power influences price, but it's not the only or biggest force in price discovery, especially on <10y scales. As we have seen in the past year, expectations of money supply have a drastic nonlinear effect on stock prices across the market. A major (and unlikely) Fed strategy change could halve the market and keep it below ATH for a decade.

lottin 6y ago

Not at all. Investing in a stock is the same thing as investing in a business, since you literally own part of a business. And businesses produce income, aka profits. Bitcoin doesn't produce income. Your profits from "investing" in bitcoin can only come in the form of capital gains.