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The article is arguing that you aren't likely to be able to pick the ones that will grow faster than the economy as a whole over the time frame you intend, beca

The article is arguing that you aren't likely to be able to pick the ones that will grow faster than the economy as a whole over the time frame you intend, because it relies on an extreme amount of right-place-right-time luck. If you were looking for the next Beanie Baby for the last 20 years, do you think you would've found it? I think it's also arguing that the particular appreciation you need to capture largely only happens at the "before you heard of it" part of the curve. I don't think it has quite enough specifics there, e.g. would buying a Honus Wagner card in 1990 compared to a bunch of stocks have paid off over the last 30 years? I haven't done that research myself.

charlieyu1 5y ago
$1 on Bitcoin ten years ago are worth over ten million dollars now. And I think people thought Bitcoin had potential, even back then. Definitely something you wouldn’t mind spending a few bucks on. But back in the day it was quite different for average folks without enough tech knowledge to mine or buy crypto.
- zenlikethat 5y ago
  Getting in early on BTC, ETH, or crypto of your choice from this bull run was probably a pretty non-reproducible fluke though. Once the leverage in crypto markets gets cracked down on (up to 100:1 leverage is definitely contributing to the wild moves including to the upside), the return profile won't look like that any more. And with NFTs, there's just this endless sea of them. Even within one collection, most of the supply stays dormant so there's no telling who might wake up at any moment and completely flood the market.
  - inter_netuser 5y ago
    why does 100:1 leverage contributes to upside, but isn't cancelled out by 100:1 to downside?
    - TameAntelope 5y ago
      Because you can't go below zero. There's a floor to how much you can lose, and it's "everything you've put in", not "everything plus additional debt". ...typically, anyway.
      - vageli 5y ago
        > Because you can't go below zero. There's a floor to how much you can lose, and it's "everything you've put in", not "everything plus additional debt". If you're leveraged, you are borrowing money, which means you can lose more than you put in as you could lose the money you borrowed and thus would owe on the debt. Further, if you are shorting bitcoin for instance, there is no floor.
        zenlikethat 5y ago
        You can't generally go beyond 0 though. You'll get liquidated before that due to the exchange's risk engines. If it goes beyond, that loss is passed on to the lenders.
    - zenlikethat 5y ago
      Well, for starters the funding and borrow rate(s) are often positive because people just tend to be bullish. So things have to get pumped up somehow before they come crashing down, it's a much stronger tendency among the crypto faithful to be bullish than to be bearish. I also think the other commenter's insight about how gains on the short side are capped at $0 price is relevant. So while there is downside pressure from liquidation cascades on the levered positions, the main point is that volatility in general will smooth out. The juiced up all time highs we've seen so far have been driven by leverage. Maybe BTC sells off to $12K but if there was no leverage in the system I think it would take a lot longer to bring up to $69K than it did before.
- majormajor 5y ago
  Where are you getting your numbers? They don't match my recollection, or some articles I'm seeing: https://www.investopedia.com/articles/forex/121815/bitcoins-price-history.asp https://www.investopedia.com/articles/forex/121815/bitcoins-... "Bitcoin's price rose again on April 13, 2011, from $1 to a peak of $29.60 by June 7, 2011, a gain of 2,960% within three months. A sharp recession in cryptocurrency markets followed, and Bitcoin's price bottomed out at $2.05 by mid-November.4 The following year, its price rose from $4.85 on May 9 to $13.50 by Aug. 15." So let's use that $2.05 price as "ten years ago," I'm willing to give you 10 and a half years ;). A dollar in bitcoin then would be worth about $20,000 now. So sure, pretty good. Nowhere near tens of millions, though. And that $30->$2 change, and a few more up/down cycles between 2012 and 2017, shows that plenty of people thought it had already peaked. See also the various "oh no I lost my hard drive with the bitcoins I'd mined since I didn't think it was that important" stories. So sure, getting in for just a few bucks before 2011 and holding? Yeah, you're looking super great! But most people hadn't heard of it by then, and that's not who the article is talking about... when they did hear of it, you had a huge wave of pump-and-dump shitcoins proving the point of the article: the average person getting in at that point was largely too late for the level of return they were looking for.
  - DennisP 5y ago
    You'd have to go a little further back. The first real price for BTC was in 2010, when someone paid 10,000 BTC for two pizzas, worth about 40 bucks. From that to the current price of $40K per BTC is a gain of ten million times. https://en.wikipedia.org/wiki/History_of_bitcoin#2010 https://en.wikipedia.org/wiki/History_of_bitcoin#2010 Of course, you had to be a serious deep-in-the-weeds enthusiast to get in that early. Maybe that's the sort of people who tend to make money on collectibles, too.
    - kingcharles 5y ago
      I had plenty of coins in 2010 that I'd mined, the problem was that they were just a toy at the time and so when I lost the keys that same year, I didn't give a shit. Now of course I have regrets :)
  - deleted 5y ago
linkjuice4all 5y ago
There’s some predictability in terms of people trying to buy all the things they wanted as a kid when they finally have the adult income to afford it. Some examples include muscle cars, BMX bikes, LEGO sets, and other things that a large population of children were aware of and wanted. If you just stock-pile the big sellers or scoop up the used stuff when it bottoms out in value then you might be able to profit. The big issue is carrying costs. If I could have parked a bunch of 70s/80s Porsches in a climate controller garage for 30+ years I’d be cashing in right now.
- majormajor 5y ago
  How are 90s baseball cards, pogs, and yo-yos looking? Or "regular" opened copies of NHL 94 or what have you? I think we often overlook all the shit we were into that hasn't gotten expensive. We'd have to basically index-fund this shit if we had really been trying to invest in it in 2000 or so, and I think the losers would be a big problem for our fund. Maybe you bought a 3000GT instead of a Supra because you didn't see The Fast and the Furious coming. Whoops. Let's try to predict the future instead: which of things that 2022 kids are into should we be buying up for 20 years from now? Roblox items? New Pokemon cards? (I don't know if I actually can come up with any other things off the top of my head, lol.)
  - NavinF 5y ago
    > which of things that 2022 kids are into should we be buying up for 20 years from now? Streamer memorabilia: https://www.gwern.net/Startup-ideas#streamer-memorabilia https://www.gwern.net/Startup-ideas#streamer-memorabilia Tho I think the average HNer is too out of touch to make good investments in this field and would be better off asking their kids
  - jonhohle 5y ago
    Regular copies of NHL ‘94 aren’t worth much (because yearly sports releases have a lot of copies and are typically fungible with the year prior or later), but is still a fantastic game and worth the $17 market price. That said, 16-bit games have doubled to quadrupled in market price in the last 3-4 years and are becoming increasingly hard to find. I’m interested in seeing how a recession affects prices, but some rarer, low print games have been expensive for a decade add and probably won’t lose much value. Obviously, who would have known, but at least in video games you can watch prices start to rise about 20 years after a consoles original life.
Natsu 5y ago
> If you were looking for the next Beanie Baby for the last 20 years, do you think you would've found it? Even easier, if you just pick the right 6 numbers you could end up with millions of dollars.
- raffraffraff 5y ago
  Unfortunately this is why I've given up on investing anything more in stocks or crypto. Everything I invested since before COVID is down. My coinbase account currently has only 34% of the value I put into it 2 years ago, and I spread my investment over the top 5 hot currencies at that time (ethereum, cardano, algorand, sushi, bitcoin). My stock investments are doing better at 65% of what I invested (tech, engineering, infra, pharma). Most are doing ok (down about 10%) but one in particular has absolutely tanked even though their pharma products are doing great and they've got two promising drugs in clinical trials. It's value has gone down 65% in the last year. People will tell you to do you DD but the simple fact is, you can't. The market doesn't operate on any type of logic, a cat can do as well as a stock broker at picking stocks, and huge investment firms only win out in aggregate because they can (usually) absorb gigantic losses. Right now I'm "bag holding" for the foreseeable. I consider these things "back pocket lottery tickets" that might one day give me a small win. But for the future I'm maxing out my pension and saving enough to buy a rental property, because one thing that has never dipped through boom and bust (at least where I live), is rent. Edit: I lie, part of my TC is stock, so wherever I work, I am "investing in them" too
  - ddorian43 5y ago
    > People will tell you to do you DD No they do not tell you to DD. Just do boggleheads method. And its your fault for "investing" in shitcoins (all coins are shitcoins). And the time horizon is 20 years and not 2. You can buy a house and it needs a repair in the 2nd year and you are again in the hole. You get a bad tenant and again bag holding. Everybody has promising clinical trials all the time.
  - tasuki 5y ago
    > investment [...] hot [...] at that time I don't think "hot at a point in time" is a good way to choose investment. Perhaps exactly the opposite? Edit: uhh, and the other things? I honestly think you were a little unlucky...
bcrosby95 5y ago
> "before you heard of it" Not quite true for MTG. It was insanely popular in the mid-to-late '90s, and you could still pick up a black lotus for $250. Dual lands, which are now $100+ each, could be had for $5 each. For MTG, the problem was more "is this gonna keep increasing in value". In hindsight the answer is yes.
- Ekaros 5y ago
  And in foresight, maybe further question how long will it keep going up? What is the size of new player base considering how expensive it actually is. And how long will the old guard or current active players stay alive and active.
DeathArrow 5y ago
>The article is arguing that you aren't likely to be able to pick the ones that will grow faster than the economy as a whole over the time frame you intend, because it relies on an extreme amount of right-place-right-time luck. If you were looking for the next Beanie Baby for the last 20 years, do you think you would've found it? While that might be true for toys, it's not entirely true for art. Some old paintings of reasonable quality which aren't already sold at exorbitant prices will go up in price because of scarcity. After the buyers will decide they can't afford the best known ones and current favorites, their attention will switch to what can afford. For modern art you have to find quality. Because at some point in time its value will rise. So, it's possible to knowingly buy art which will appreciate, the only question is if it will beat the stock market. As for that, if I'll buy something, I won't do it as an investment. I will be happy to not lose money.
- nradov 5y ago
  How do you determine quality in modern art?

charlieyu1 5y ago

$1 on Bitcoin ten years ago are worth over ten million dollars now. And I think people thought Bitcoin had potential, even back then. Definitely something you wouldn’t mind spending a few bucks on. But back in the day it was quite different for average folks without enough tech knowledge to mine or buy crypto.

zenlikethat 5y ago
Getting in early on BTC, ETH, or crypto of your choice from this bull run was probably a pretty non-reproducible fluke though. Once the leverage in crypto markets gets cracked down on (up to 100:1 leverage is definitely contributing to the wild moves including to the upside), the return profile won't look like that any more. And with NFTs, there's just this endless sea of them. Even within one collection, most of the supply stays dormant so there's no telling who might wake up at any moment and completely flood the market.
- inter_netuser 5y ago
  why does 100:1 leverage contributes to upside, but isn't cancelled out by 100:1 to downside?
  - TameAntelope 5y ago
    Because you can't go below zero. There's a floor to how much you can lose, and it's "everything you've put in", not "everything plus additional debt". ...typically, anyway.
    - vageli 5y ago
      > Because you can't go below zero. There's a floor to how much you can lose, and it's "everything you've put in", not "everything plus additional debt". If you're leveraged, you are borrowing money, which means you can lose more than you put in as you could lose the money you borrowed and thus would owe on the debt. Further, if you are shorting bitcoin for instance, there is no floor.
      - zenlikethat 5y ago
        You can't generally go beyond 0 though. You'll get liquidated before that due to the exchange's risk engines. If it goes beyond, that loss is passed on to the lenders.
  - zenlikethat 5y ago
    Well, for starters the funding and borrow rate(s) are often positive because people just tend to be bullish. So things have to get pumped up somehow before they come crashing down, it's a much stronger tendency among the crypto faithful to be bullish than to be bearish. I also think the other commenter's insight about how gains on the short side are capped at $0 price is relevant. So while there is downside pressure from liquidation cascades on the levered positions, the main point is that volatility in general will smooth out. The juiced up all time highs we've seen so far have been driven by leverage. Maybe BTC sells off to $12K but if there was no leverage in the system I think it would take a lot longer to bring up to $69K than it did before.
majormajor 5y ago
Where are you getting your numbers? They don't match my recollection, or some articles I'm seeing: https://www.investopedia.com/articles/forex/121815/bitcoins-price-history.asp https://www.investopedia.com/articles/forex/121815/bitcoins-... "Bitcoin's price rose again on April 13, 2011, from $1 to a peak of $29.60 by June 7, 2011, a gain of 2,960% within three months. A sharp recession in cryptocurrency markets followed, and Bitcoin's price bottomed out at $2.05 by mid-November.4 The following year, its price rose from $4.85 on May 9 to $13.50 by Aug. 15." So let's use that $2.05 price as "ten years ago," I'm willing to give you 10 and a half years ;). A dollar in bitcoin then would be worth about $20,000 now. So sure, pretty good. Nowhere near tens of millions, though. And that $30->$2 change, and a few more up/down cycles between 2012 and 2017, shows that plenty of people thought it had already peaked. See also the various "oh no I lost my hard drive with the bitcoins I'd mined since I didn't think it was that important" stories. So sure, getting in for just a few bucks before 2011 and holding? Yeah, you're looking super great! But most people hadn't heard of it by then, and that's not who the article is talking about... when they did hear of it, you had a huge wave of pump-and-dump shitcoins proving the point of the article: the average person getting in at that point was largely too late for the level of return they were looking for.
- DennisP 5y ago
  You'd have to go a little further back. The first real price for BTC was in 2010, when someone paid 10,000 BTC for two pizzas, worth about 40 bucks. From that to the current price of $40K per BTC is a gain of ten million times. https://en.wikipedia.org/wiki/History_of_bitcoin#2010 https://en.wikipedia.org/wiki/History_of_bitcoin#2010 Of course, you had to be a serious deep-in-the-weeds enthusiast to get in that early. Maybe that's the sort of people who tend to make money on collectibles, too.
  - kingcharles 5y ago
    I had plenty of coins in 2010 that I'd mined, the problem was that they were just a toy at the time and so when I lost the keys that same year, I didn't give a shit. Now of course I have regrets :)
- deleted 5y ago

linkjuice4all 5y ago

There’s some predictability in terms of people trying to buy all the things they wanted as a kid when they finally have the adult income to afford it. Some examples include muscle cars, BMX bikes, LEGO sets, and other things that a large population of children were aware of and wanted. If you just stock-pile the big sellers or scoop up the used stuff when it bottoms out in value then you might be able to profit. The big issue is carrying costs. If I could have parked a bunch of 70s/80s Porsches in a climate controller garage for 30+ years I’d be cashing in right now.

majormajor 5y ago
How are 90s baseball cards, pogs, and yo-yos looking? Or "regular" opened copies of NHL 94 or what have you? I think we often overlook all the shit we were into that hasn't gotten expensive. We'd have to basically index-fund this shit if we had really been trying to invest in it in 2000 or so, and I think the losers would be a big problem for our fund. Maybe you bought a 3000GT instead of a Supra because you didn't see The Fast and the Furious coming. Whoops. Let's try to predict the future instead: which of things that 2022 kids are into should we be buying up for 20 years from now? Roblox items? New Pokemon cards? (I don't know if I actually can come up with any other things off the top of my head, lol.)
- NavinF 5y ago
  > which of things that 2022 kids are into should we be buying up for 20 years from now? Streamer memorabilia: https://www.gwern.net/Startup-ideas#streamer-memorabilia https://www.gwern.net/Startup-ideas#streamer-memorabilia Tho I think the average HNer is too out of touch to make good investments in this field and would be better off asking their kids
- jonhohle 5y ago
  Regular copies of NHL ‘94 aren’t worth much (because yearly sports releases have a lot of copies and are typically fungible with the year prior or later), but is still a fantastic game and worth the $17 market price. That said, 16-bit games have doubled to quadrupled in market price in the last 3-4 years and are becoming increasingly hard to find. I’m interested in seeing how a recession affects prices, but some rarer, low print games have been expensive for a decade add and probably won’t lose much value. Obviously, who would have known, but at least in video games you can watch prices start to rise about 20 years after a consoles original life.

Natsu 5y ago

> If you were looking for the next Beanie Baby for the last 20 years, do you think you would've found it? Even easier, if you just pick the right 6 numbers you could end up with millions of dollars.

raffraffraff 5y ago
Unfortunately this is why I've given up on investing anything more in stocks or crypto. Everything I invested since before COVID is down. My coinbase account currently has only 34% of the value I put into it 2 years ago, and I spread my investment over the top 5 hot currencies at that time (ethereum, cardano, algorand, sushi, bitcoin). My stock investments are doing better at 65% of what I invested (tech, engineering, infra, pharma). Most are doing ok (down about 10%) but one in particular has absolutely tanked even though their pharma products are doing great and they've got two promising drugs in clinical trials. It's value has gone down 65% in the last year. People will tell you to do you DD but the simple fact is, you can't. The market doesn't operate on any type of logic, a cat can do as well as a stock broker at picking stocks, and huge investment firms only win out in aggregate because they can (usually) absorb gigantic losses. Right now I'm "bag holding" for the foreseeable. I consider these things "back pocket lottery tickets" that might one day give me a small win. But for the future I'm maxing out my pension and saving enough to buy a rental property, because one thing that has never dipped through boom and bust (at least where I live), is rent. Edit: I lie, part of my TC is stock, so wherever I work, I am "investing in them" too
- ddorian43 5y ago
  > People will tell you to do you DD No they do not tell you to DD. Just do boggleheads method. And its your fault for "investing" in shitcoins (all coins are shitcoins). And the time horizon is 20 years and not 2. You can buy a house and it needs a repair in the 2nd year and you are again in the hole. You get a bad tenant and again bag holding. Everybody has promising clinical trials all the time.
- tasuki 5y ago
  > investment [...] hot [...] at that time I don't think "hot at a point in time" is a good way to choose investment. Perhaps exactly the opposite? Edit: uhh, and the other things? I honestly think you were a little unlucky...

bcrosby95 5y ago

> "before you heard of it" Not quite true for MTG. It was insanely popular in the mid-to-late '90s, and you could still pick up a black lotus for $250. Dual lands, which are now $100+ each, could be had for $5 each. For MTG, the problem was more "is this gonna keep increasing in value". In hindsight the answer is yes.

Ekaros 5y ago
And in foresight, maybe further question how long will it keep going up? What is the size of new player base considering how expensive it actually is. And how long will the old guard or current active players stay alive and active.

DeathArrow 5y ago

>The article is arguing that you aren't likely to be able to pick the ones that will grow faster than the economy as a whole over the time frame you intend, because it relies on an extreme amount of right-place-right-time luck. If you were looking for the next Beanie Baby for the last 20 years, do you think you would've found it? While that might be true for toys, it's not entirely true for art. Some old paintings of reasonable quality which aren't already sold at exorbitant prices will go up in price because of scarcity. After the buyers will decide they can't afford the best known ones and current favorites, their attention will switch to what can afford. For modern art you have to find quality. Because at some point in time its value will rise. So, it's possible to knowingly buy art which will appreciate, the only question is if it will beat the stock market. As for that, if I'll buy something, I won't do it as an investment. I will be happy to not lose money.

nradov 5y ago
How do you determine quality in modern art?