Buying Altcoins/Bitcoins and investing in the stock market

[BernieCarbo]

If I'm investing in the 18-year-old version of these guys, and not planning on selling until 40 years down the road, that changes the math, big time. Am I selling in 5 years? 10? 15? Home depot guy is probably the better investment because at 22 he's what, $300,000 ahead thanks to actual money made and not having to pay off $200,000 in student loans and interest?

That's because you don't understand investing. Investing in an 18 year old who plans to work at Home Depot will return nothing. He will be worth nothing in four years, and will be worth nothing in ten years. He will have no savings and will be breaking even. The guy going to college for engineering will have unlimited potential in four years, and just by virtue of the fact that he was accepted to the engineering program makes him a better investment starting day 1. The other stuff about $200k debt is silly. It doesn't cost that much, and five of my six kids all went to college with very minimal debt.

Unless someone gets a worthless degree or goes wild with loans, education is always the best investment. It's the same with business investments: potential is one of the most important properties to evaluate.

I'm a believer that at some point actually making money should matter, and when your company is actually large enough to be traded publicly, it's at that point. You're no longer an actual start up when Doug and Boston Red can go buy your stock on Ameritrade dot com in my opinion. You should be an actual company doing things and making money. I don't like the speculative part of it being far more profitable than actual profits.

Go start a business and get back to me on that.

There are plenty of great businesses that go for years producing great products and services that turn the money back into the company, essentially investing in themselves. The bottom line won't show that they are making money, but they are increasing in value. Companies who don't do that will not make it long term.

[kaldaniels]

I’m trying to juxtapose Doug’s view of the stock market (too speculative and valuations aren’t accurate) vs him starting this thread about wanting to invest in bitcoin!

[dougdirt]

That's because you don't understand investing. Investing in an 18 year old who plans to work at Home Depot will return nothing. He will be worth nothing in four years, and will be worth nothing in ten years. He will have no savings and will be breaking even. The guy going to college for engineering will have unlimited potential in four years, and just by virtue of the fact that he was accepted to the engineering program makes him a better investment starting day 1. The other stuff about $200k debt is silly. It doesn't cost that much, and five of my six kids all went to college with very minimal debt.

Unless someone gets a worthless degree or goes wild with loans, education is always the best investment. It's the same with business investments: potential is one of the most important properties to evaluate.

Hold on a second here. What is the return we are looking at in this insane home depot worker versus engineer? The 18-year-old in your scenario has already MADE $120,000 by the time the engineer is ready to even try to make $1. And he's already spent, what, $100,000 that he hasn't started paying back, and that number will grow because of the interest rate on it? If the proposal is that "the investor" is getting a return on actual money made, then we need to talk about the timeline of selling out.

We're talking two different things here. If I'm investing for the next five years, that 18-year-old is going to give me a much better return because he's actually making money, while the other guy is doing nothing but losing money. And lots of it. 10 years down the road the college guy might be making more now that he's paid down some of his debt, but has he returned the same value as the Home Depot guy? Sure, 35 years down the road, college guy is the better investment if I'm taking my returns off of what he's going to make. 5 years? Nope. 10 years? Probably not. 15 years? Maybe. As I said earlier, it depends on the investment strategy you're looking at.

[dougdirt]

I’m trying to juxtapose Doug’s view of the stock market (too speculative and valuations aren’t accurate) vs him starting this thread about wanting to invest in bitcoin!

I enjoyed my bitcoin profits.

But let's also realize that while I don't like the speculative aspect of the stock market, it doesn't mean that I am going to ignore the entire idea that I could make some money while doing so.

[BernieCarbo]

Hold on a second here. What is the return we are looking at in this insane home depot worker versus engineer? The 18-year-old in your scenario has already MADE $120,000 by the time the engineer is ready to even try to make $1. And he's already spent, what, $100,000 that he hasn't started paying back, and that number will grow because of the interest rate on it? If the proposal is that "the investor" is getting a return on actual money made, then we need to talk about the timeline of selling out.

We're talking two different things here. If I'm investing for the next five years, that 18-year-old is going to give me a much better return because he's actually making money, while the other guy is doing nothing but losing money. And lots of it. 10 years down the road the college guy might be making more now that he's paid down some of his debt, but has he returned the same value as the Home Depot guy? Sure, 35 years down the road, college guy is the better investment if I'm taking my returns off of what he's going to make. 5 years? Nope. 10 years? Probably not. 15 years? Maybe. As I said earlier, it depends on the investment strategy you're looking at.

You don't understand investing. Even if we ignore operating costs (the Home Depot guy will burn through his earnings and have no equity, so the $120000 means nothing), the value of the engineer will be far superior. In fact, no one in his right mind would even invest in the Home Depot guy in the first place, because there is no expectation that value will increase. The engineer will make between $60-80k his first year, will only grow after that. No way will it take 10 years to catch up to the Home Depot guy or pay off loans. You didn't go to college, right? This is something you just don't understand, and it isn't too late to catch up.

[dougdirt]

You don't understand investing. Even if we ignore operating costs (the Home Depot guy will burn through his earnings and have no equity, so the $120000 means nothing), the value of the engineer will be far superior. In fact, no one in his right mind would even invest in the Home Depot guy in the first place, because there is no expectation that value will increase. The engineer will make between $60-80k his first year, will only grow after that. No way will it take 10 years to catch up to the Home Depot guy or pay off loans. You didn't go to college, right? This is something you just don't understand, and it isn't too late to catch up.

Ok. I'm not going to argue with you. I don't really care. But I'd love to know how these people you know with six-figure college debts are paying it off in less than a decade. That's a rare thing. The average bachelor degree holder takes 21 years to pay off their student loans.

[BernieCarbo]

Ok. I'm not going to argue with you. I don't really care. But I'd love to know how these people you know with six-figure college debts are paying it off in less than a decade. That's a rare thing. The average bachelor degree holder takes 21 years to pay off their student loans.

There are several things going on here:

1. You don't need to go into six figure debt.
2. Even if you do go into big debt, there is nothing preventing the student from working doing school and paying off some school then.
3. I said an electrical engineer, not an average bachelor degree holder. An average bachelor degree holder can go to Sinclair and get a degree at a very reasonable cost.

You are listening to the wrong people and reading the wrong blogs. If someone goes to a state school, works when he can, and goes for every scholarship he can, he won't need all hose loans in the first place. Again, all my kids went to college and don't have big debt. They aren't exceptional, but were just very frugal and planned carefully. It isn't hard.

Unless someone is reckless with money and has absolutely no plan, education is always an investment. If you do some research and choose something that will be in demand the next 30 years, it's a no-brainer. I didn't even go to college until I was 33, and the payback was within two years after graduating. The rest has been gravy.

[bucksfan2]

There's obviously more to it than simply: My neighbors kid sold lemonade and made $48 yesterday, so he's more valuable than Tesla. Companies on the stock market aren't playing on those levels.

I just don't exactly like the idea that a companies value is based on speculation over productivity. Yes, there's more to it than that pure, one sentence definition. But companies worth $750,000,000 should be out there actually making money, not losing it hand over fist. And yet we see examples of companies that large, and much larger, gain value while not making profit, or companies that large or larger make profit and lose value. Because someone speculated they would make more or lose less.

Perhaps I didn't state it well earlier. Or perhaps you didn't understand what I was trying to say. So I'll try it again. I understand it. But I also hate it. I'm a believer that at some point actually making money should matter, and when your company is actually large enough to be traded publicly, it's at that point. You're no longer an actual start up when Doug and Boston Red can go buy your stock on Ameritrade dot com in my opinion. You should be an actual company doing things and making money. I don't like the speculative part of it being far more profitable than actual profits.

There is no problem with actually making money, it just doesn't pay as much as potential growth does. Its not that its right or wrong, its just reality. Companies with growth are more expensive while companies with slower growth are more inexpensive. You can invest in stodgy old company and reap in their benefits, and there is nothing wrong with that, or you can invest with a high growth company and take more risks, but have a potential higher payout.

Lets say you had $20,000 and I told you could either buy into Google right now or you could buy into IBM. One is exciting new tech, one is boring old tech. Google takes that money that it makes and plows it into stuff that may revolutionize the world. IBM does, but at a lower rate, but also pays you more each quarter to keep you invested. What are you going to choose?

Its simple to say one company made money but actually lost value, but the reality is it just isn't that simple. At one point Sears was making money head over fist, not so much anymore. Toys R Us was a great American company that everyone loved, not so much. GE was once the most valuable company in the world, now its struggling to make money. While a company may be making money, its only a small part of the story.

[Boston Red]

Bitcoin is looking like a good alternative to the NASDAQ recently.

[Boston Red]

Well, we can now definitively say that the strategy you proposed back on November 24th was a bad one...unless you put it all in Amazon!

Bitcoin - down 54.2%
AMZN - up 22.3%
FB - down 27.0%

Wait, wait....

I feel a little better about Amazon than Facebook.

Nailed it!

[Z-Fly]

I know this is way late, and off topic, but Doug and Bernie are both correct.

Me - Always had 2 jobs during College. Lived on my own. No support from anyone. Went to Miami Hamilton/Middletown, because of the price ($3-5K/year in 2002-2006). The only loan I had was $3,500 that my mother asked me to take out in my name for her, then never paid back. I now have a Bachelor degree in Mechanical Engineering Technology. Got in and out in 4 years. I never have problems finding a job, and am now in the six figures world. I'm 34.

Wife - She worked some and partied some. Took loans as she needed them. Lived at home for the majority of college. Went to Miami Oxford (Undergrad) and Xavier (Masters). Her parents helped her along the way, and I did too for her Masters. She owes probably close to $100K, and was in school overall for around 8 years. She's 40, has trouble finding jobs, and makes about half of what I do.

College is useful is used correctly. At some point it was marked as a experience/status, instead of training. I think at some point America will wise up to that. My wife did better than probably most, but I can see Doug's side of the argument.

[Boston Red]

Going to college isn't, and shouldn't be, a guarantee of anything. It's an opportunity, and a fabulous one. But the person going to college has to take advantage of the opportunity (and also needs to have the innate ability to do so...unfortunately some people just do not have that capability and should not be in college).

[Kingspoint]

https://uk.reuters.com/article/us-kr...-idUKKCN1QB1J9

[Boston Red]

Thanks for the reminder. KHC was this year's buy in my wife's IRA. Oh, well.

[Kingspoint]

Thanks for the reminder. KHC was this year's buy in my wife's IRA. Oh, well.

As it said in the article, Buffet may address it in his annual report tomorrow.