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Old 27-10-2019, 18:48   #121
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Re: Best investment while we travel

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No problem. I realise stock prices and bond prices have nothing to do with measuring inflation, without reading back through what I wrote I must not of worded it well or separated what I was trying to say well enough.

I thought house prices were left out of the inflation measurements?

I dont think they are taken into account in Australia.

https://mobile.abc.net.au/news/2017-...ousing/8457718
Housing is a fascinating little corner to start without you want to dive into the various theories of CPI and realize it's limitations. For example, here in the US about 2/3 of people own their homes either outright or on a fixed rate mortgage. For them, the cost for shelter is fixed at the time they purchase and never really inflates. At the same time, the cost of shelter is something like 1/3 of CPI, so you don't want to underestimate it. At the end of the day you end up with a somewhat imperfect measure that doesn't really reflect the experience of a given millennial buying their first home or the retiree with a home they bought 30 years ago. I tend to think the methodology used to convert to a somewhat virtual shelter cost is probably the least worst way to do it, but if someone put forward an intelligent argument for another method I'd listen with interest.
The other fascinating subject is accounting for things like cars that once you were lucky if they lasted 5 years and 50,0000 miles, but now routinely last 10 years+ and 100,000+ miles.
Or the 60" TV that now costs less than a 10" color TV back in the day. You realize it's not right to count them as exact equivalents, but how to quantify the improvement is non-trivial. Fun stuff to kick around if you're a geek like me!
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Old 28-10-2019, 02:06   #122
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Re: Best investment while we travel

Seeing that this now appears to be the Bitcoin/Blockchain thread...

Yesterday in the news...

"On Friday, China’s leader, President Xi Jinping, absolutely floored the Bitcoin community. Speaking at a meeting of the Political Bureau of the Chinese Communist Party’s Central Committee, Xi called for the adoption of blockchain “as an important breakthrough for independent innovation of core technologies.”

State-run outlet Xinhua revealed that Xi lauded the potential benefits of blockchain technologies in a swath of industries, including finance, education, health care, food security, and more."
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Old 28-10-2019, 04:02   #123
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Re: Best investment while we travel

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Seeing that this now appears to be the Bitcoin/Blockchain thread...

Yesterday in the news...

"On Friday, China’s leader, President Xi Jinping, absolutely floored the Bitcoin community. Speaking at a meeting of the Political Bureau of the Chinese Communist Party’s Central Committee, Xi called for the adoption of blockchain “as an important breakthrough for independent innovation of core technologies.”

State-run outlet Xinhua revealed that Xi lauded the potential benefits of blockchain technologies in a swath of industries, including finance, education, health care, food security, and more."
Its interesting what drives the herd, blockchain and bitcoin aren't the same thing, he didn't embrace bitcoin but the bitcoin price soared.
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Old 28-10-2019, 04:25   #124
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Re: Best investment while we travel

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Hmmm, lots of assumptions there. I do understand the reasoning behind Bitcoin, I listen to commentary by the likes of Max Keiser etc and in a perfect world you are 100% right BUT it's not a perfect world and theres many variables.

I've seen Bitcoin change its identity from money to a store of value or digital gold, it's still trying to determine what it is. Theres many variables than can come into play.

Trying to determine value is where it comes unstuck for me, at this stage it is purely speculative, it has very limited usages other than speculation, its volatility and inefficiency makes it currently unsuitable as currency. People buy Bitcoun for one reason and onecreadon only, to get rich, hopeing someone else buys it for more than they did.

Can it be the future, will it 1 million a coin? quite possibly BUT theres no way for me to know its future as theres just way to many variables.

In theory I like it, our current fiat system will fail ,will Bitcoin replace it? I'm not a believer like the religious like followers that own Bitcoin. All successful currencies in History were backed by something tangible, not just belief.

But hey, your getting rich, good on you.

Bitcoin's value as a medium of exchange is destroyed by the high volatility of it. You would never denominate the price of anything in Bitcoin, nor keep money in Bitcoin for any purpose other than pure speculation. Even drug dealers wouldn't keep their money in Bitcoin. So other than as a proof of concept of blockchain, it has no function other than pure naked speculation. Since it has no inherent value of any kind, it is a classic Dutch Tulip situation. You would say it's a pyramid scheme except it's even shakier than that -- newcomers don't necessarily even pay previouscomers anything except to the extent that they drive the price up. A pyramid scheme at least has its own money, paid in by newcomers, which can be paid out to previouscomers. Bitcoin doesn't even have that.



Is it worth putting 1% into it? Well, do you feel lucky? There is nothing fundamentally wrong with playing around with sums of money you don't mind losing. And I think a succession of people doing just that is what has driven Bitcoin up, and might well drive it up in the future.



Once having won with that, though, is it worth keeping 95% of your wealth in it, as reported by someone upthread? Madness! Take the money and run!!
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Old 28-10-2019, 05:06   #125
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Re: Best investment while we travel

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Bitcoin's value as a medium of exchange is destroyed by the high volatility of it. You would never denominate the price of anything in Bitcoin, nor keep money in Bitcoin for any purpose other than pure speculation. Even drug dealers wouldn't keep their money in Bitcoin. So other than as a proof of concept of blockchain, it has no function other than pure naked speculation. Since it has no inherent value of any kind, it is a classic Dutch Tulip situation. You would say it's a pyramid scheme except it's even shakier than that -- newcomers don't necessarily even pay previouscomers anything except to the extent that they drive the price up. A pyramid scheme at least has its own money, paid in by newcomers, which can be paid out to previouscomers. Bitcoin doesn't even have that.



Is it worth putting 1% into it? Well, do you feel lucky? There is nothing fundamentally wrong with playing around with sums of money you don't mind losing. And I think a succession of people doing just that is what has driven Bitcoin up, and might well drive it up in the future.



Once having won with that, though, is it worth keeping 95% of your wealth in it, as reported by someone upthread? Madness! Take the money and run!!
I agree with everything you say but I will add theres some very respected macro guys (rich guys) that are now Bitcoin evangelists.....what do they see that we dont?

Personally I feel they have less faith in our current system than most and believe in the ideology of Bitcoin and blockchain. I think they also see Bitcoin as a great vehicle for getting money out of countries as geo political environments deteriorate. People flee to "percieved " safe havens.

Its certainly changed its identity, it was meant to be money but as you point out it functions very badly as money not just because of volatility but also transaction speeds amongst other things that I now cant remember.
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Old 28-10-2019, 05:08   #126
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Re: Best investment while we travel

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Its interesting what drives the herd, blockchain and bitcoin aren't the same thing, he didn't embrace bitcoin but the bitcoin price soared.
... yes, but Chinese based altcoins soared even more.
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Old 28-10-2019, 05:16   #127
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Re: Best investment while we travel

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Bitcoin's value as a medium of exchange is destroyed by the high volatility of it.
Bitcoin is not yet a medium of exchange, but it is definitely being regarded (by institutions) as a store of value.
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it is a classic Dutch Tulip situation.
Idiot.
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Old 28-10-2019, 05:23   #128
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Re: Best investment while we travel

You can keep on buying canvas sails for your yacht, claiming that new materials are "inferior" or whatever, but eventually even an idiot that owns a yacht will eventually buy good quality materials that perform better than canvas material sails.

... it takes time to educate idiots I think.
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Old 28-10-2019, 06:04   #129
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Re: Best investment while we travel

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Also not against or fore the devaluation of currencies, never said that, I said that fiat currencies not being backed by anything other than faith are abused and do lose their value, history shows that ,although you disagree.

I dont ask you to believe this, that's your choice, I'm just repeating what I've read which includes a variety of sources over the years.

"Fiat currencies" only lose their value if they are managed that way. Losing value is intentional in many cases -- it's a way for a country, particularly a small one, in a desperate situation, to get itself out of debt or improve the terms of trade. What do you think Greece has been complaining about. The problem of course is that if you print money other than in a deflationary environment ("velocity of money" question), you disrupt pricing, rob creditors, create uncertainty, and degrade the value of the currency as a repository of value. This does great harm to an economy.



But central banks in serious countries have learned a lot since the '70's and have done a very good job for at least 30 years of stabilizing the values of major currencies, which makes them work well as currencies, while still retaining the ability to engineer the money supply. This might yet whack us in the face if we get a spike up in velocity of money, which would likely be led by asset price inflation, before QE has worked its way out of the system.



But being on the gold standard or basket of commodity standard, or whatever it takes to make a non-fiat currency, takes all those tools out of the hands of central banks. That seemed like a good idea when central banks, including the Fed, seemed not to have a clue, but I think the world and the state of the art of central banking is different now. I think without QE we would have had a global meltdown starting in 2008 the likes of which the world has never seen. We may yet have it, but 11 years on I think the results are pretty amazingly good. Even DEFERRING a major global economic meltdown may have been a good result.


FWIW I think that politics are the biggest threat in the U.S. at the moment, and I am enough alarmed that I am liquidating my portfolio of U.S. real estate, some of it held since the 1980's, and entirely divesting myself of U.S. assets. Nothing good from an investment point of view can possibly come out of what is going on now, with some of the leading candidate policy proposals unheard of before in modern U.S. politics, looking much like policies tried with disastrous results in other countries -- like Argentina. I will be reinvesting the proceeds into real estate in countries with brighter futures, specifically in Northern Europe, and into acquiring one or two small companies with global businesses and patented product lines, which I think could be grown with a little investment and guidance, and whose business models should work even in turbulent times. FWIW; YMMV.
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Old 28-10-2019, 06:24   #130
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Re: Best investment while we travel

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Originally Posted by daletournier View Post
I agree with everything you say but I will add theres some very respected macro guys (rich guys) that are now Bitcoin evangelists.....what do they see that we dont?

Personally I feel they have less faith in our current system than most and believe in the ideology of Bitcoin and blockchain. I think they also see Bitcoin as a great vehicle for getting money out of countries as geo political environments deteriorate. People flee to "percieved " safe havens.

Its certainly changed its identity, it was meant to be money but as you point out it functions very badly as money not just because of volatility but also transaction speeds amongst other things that I now cant remember.

Well, you can't argue about the value of blockchain. It is an ingenious and radical concept which will have consequences in the future we can't even imagine now. It is radically decentralizing and could be radically empowering.



But Bitcoin, as someone pointed out, is not blockchain. It uses, rather than embodying block chain. It's basically nothing -- Dutch tulips. Or baseball cards. Except you can't fondle them or sniff them. It's just a name.



The volatility created by that nothingness eliminates the value of Bitcoin as a repository of value OR as a good way to get money out of a collapsing country. Because you cannot get the one function without exposure to the other aspect of it. That's the fundamental problem with it. Those who receive Bitcoin in exchange for anything and not desiring to engage in this speculation instantly convert it back to a real currency -- that's Bitcoin 101. (https://www.coingecko.com/buzz/hedgi...-for-beginners).


I actually know something about this from my professional life. I used to manage a real estate investment fund, and I used to teach at one well-known business school, and some years ago I was actually approached by one evil tech giant who will remain nameless, about starting up a blockchain currency backed by an international portfolio of real estate. The idea being to anchor the currency to some kind of repository of value to make the currency actually useful for some other purposes.


However based on my bitter experience investing in real estate in emerging markets, I knew that you don't want to mix any kind of currency risks with real estate -- and that is the major impediment to institutional investment into emerging market real estate, which the world now understands better than it did when I was active in the field.



So after studying the matter in great depth, I advised the evil tech giant, against my own personal interests, not to do it at all. I suggested that it would be much better to peg the new blockchain currency against a basket of major world currencies, or a choice of major world currencies. This would require setting up the equivalent of a small central bank, and acquiring reserves, getting rated, but it would work, and could be hugely valuable to the world -- IF the real central banks don't act to shut it down. Work apparently continues on this, but without me -- as a real estate guy I made myself superfluous with my advice So much for the billion I might have earned
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Old 28-10-2019, 06:36   #131
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Re: Best investment while we travel

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And I can show you hundreds of options that, with the benefit of 20/20 hindsight, all made many hundreds of thousands times returns. As well as millions more that expired worthless.
Exactly.

Every day there are millions of people making all kinds of predictions -- up, down, sideways, whatever. It is ALWAYS the case that, with hindsight, you can find someone who made a precisely accurate prediction. Does that mean that they knew something no one else knew? Or were they just yet another of the millions making predictions and this particular time they won the lottery? Occam's Razor would suggest the latter.

Of course, the other thing is that anyone who really does have a crystal ball, who really does "know" and can make accurate predictions on a regular basis, should be a trillionaire by now. At the very least, a billionaire. Do we have any billionaires participating here? A few millionaires, I'm sure, but billionaires? Anyone make Forbes list of the richest people in the world? Yeah. I didn't think so.
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Old 28-10-2019, 06:49   #132
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Re: Best investment while we travel

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Exactly.

Every day there are millions of people making all kinds of predictions -- up, down, sideways, whatever. It is ALWAYS the case that, with hindsight, you can find someone who made a precisely accurate prediction. Does that mean that they knew something no one else knew? Or were they just yet another of the millions making predictions and this particular time they won the lottery? Occam's Razor would suggest the latter.

Of course, the other thing is that anyone who really does have a crystal ball, who really does "know" and can make accurate predictions on a regular basis, should be a trillionaire by now. At the very least, a billionaire. Do we have any billionaires participating here? A few millionaires, I'm sure, but billionaires? Anyone make Forbes list of the richest people in the world? Yeah. I didn't think so.

I don't know if we have any billionaires, but we have a few quite smart guys on CF. You and Redneckrob are proof of that
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Old 28-10-2019, 07:34   #133
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Re: Best investment while we travel

I too spent a career in finance and have much experience in the markets. I was cfo of a large public company that owned a portfolio of bonds over 25b. Every day was a discussion of macro trends, debt markets, repo markets, yield curves. Currently the USD is the world’s reserve currency, but China is working hard to at least split those duties with us. All of this is more involved than is worth writing about, but in general it works better than most people think, and is more complicated than most could imagine. Just in the repo market, every day over 2 trillion usd is financed and unwound, all done by 2 banks. Pretty crazy. Understand your risks, and what you can afford to lose.
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Old 28-10-2019, 07:54   #134
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Re: Best investment while we travel

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Bitcoin is not yet a medium of exchange, but it is definitely being regarded (by institutions) as a store of value.
Idiot.
Elaborate on institution adoption? I hear this but have no idea what that means, what institutions and for what reasons?
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Old 28-10-2019, 08:00   #135
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Re: Best investment while we travel

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"Fiat currencies" only lose their value if they are managed that way. Losing value is intentional in many cases -- it's a way for a country, particularly a small one, in a desperate situation, to get itself out of debt or improve the terms of trade. What do you think Greece has been complaining about. The problem of course is that if you print money other than in a deflationary environment ("velocity of money" question), you disrupt pricing, rob creditors, create uncertainty, and degrade the value of the currency as a repository of value. This does great harm to an economy.



But central banks in serious countries have learned a lot since the '70's and have done a very good job for at least 30 years of stabilizing the values of major currencies, which makes them work well as currencies, while still retaining the ability to engineer the money supply. This might yet whack us in the face if we get a spike up in velocity of money, which would likely be led by asset price inflation, before QE has worked its way out of the system.



But being on the gold standard or basket of commodity standard, or whatever it takes to make a non-fiat currency, takes all those tools out of the hands of central banks. That seemed like a good idea when central banks, including the Fed, seemed not to have a clue, but I think the world and the state of the art of central banking is different now. I think without QE we would have had a global meltdown starting in 2008 the likes of which the world has never seen. We may yet have it, but 11 years on I think the results are pretty amazingly good. Even DEFERRING a major global economic meltdown may have been a good result.


FWIW I think that politics are the biggest threat in the U.S. at the moment, and I am enough alarmed that I am liquidating my portfolio of U.S. real estate, some of it held since the 1980's, and entirely divesting myself of U.S. assets. Nothing good from an investment point of view can possibly come out of what is going on now, with some of the leading candidate policy proposals unheard of before in modern U.S. politics, looking much like policies tried with disastrous results in other countries -- like Argentina. I will be reinvesting the proceeds into real estate in countries with brighter futures, specifically in Northern Europe, and into acquiring one or two small companies with global businesses and patented product lines, which I think could be grown with a little investment and guidance, and whose business models should work even in turbulent times. FWIW; YMMV.
Hmmm, I disagree with quite abit if this , QE was needed yes,QE1 and QE2? Not sure about that, deferring a problem which then creates a bigger problem later? Solve the problem, dont kick the can down the road, 2008 hasn't gone away, I'd question that as well,currently under sail, I'll write back later.
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