The one with more volatility is more expensive because buyer has to compensate the bearer's risk by paying a risk premium (which you mentioned). More explanation later.

Well because it doesn't and it's not true. CAPM is a measure of return not a measure of risk and the formula does not take volatility into factor.

Even though their expected return are the same, their actual return will/should be different. ie 1$ coin toss gets you 10$ in the end but 2$ could give you 20$ or nothing. Since there is a chance to to earn more than the risk free alternative, some people are willing to basically gamble for a higher return and buyers often have to pay a premium for the risk the owner has taken.

CAPM is one of the more simpler models for simple estimates. Different asset classes have different and more complex models already exists and are used.

You just have demonstrated again that you are a clueless troll.

If it is so easy to trade based on "facts" why aren't you filthy rich?

Both the stock market and Bitcoin are full of "facts". But anybody with half a brain knows that markets are irrational.

You, sir, are a pitiful troll looking for attention. Probably butthurt because you didn't buy BTC at single digits.

Sorry for that, move on.

"Did you troll this dip?" Might be a better question

My gains are all in USD now.  All my other coins will stay in deep deep cold lockup until they are either worthless or my life savings.

Now I have to stay glued to charts drawing triangles and waiting for moves so I can know when to start buying back my coins.  If my targets work I will be up 25 coins or so by the end.

I do not like trading much but the technical stuff is too strong ATM.

I sold half my stake after BTC broke through resistance @ 835 or so.  Now I have the problem of finding the right point to reenter.

You're going to get shit (and you should) for starting back again after a big drop.  If you had come in to ask if we planned to sell sometime before noon EST then it would be different.

Just to show my money is where my mouth is... here is ONE of my swept cold wallets shipped to Gox this AM at 11am my time.  I sold at $830.

https://blockchain.info/tx/755d5849b5ff50174372378e71e96b941f7f2fb94147e4dfb7bc4c43df912065

That one was worth 13kUSD.

Now... you gonna start trading and predicting the market?  Or are you going to just keep asking after big moves?

PS... feel free to send donations to my Gox wallet.   1NsYQkL4ph4L7GbysvUp6Zd9e8a9m22jVT

Because I simply don't care enough. I bought into BTC when they were $13 each because they were a cool concept, not because I wanted to make money. I still stick to my guns now.

I think you should wait a little more before start yelling "i told you so".

Good for you if you made a profit playing the market. But most people who do that lose. Holding over 6 months or more is as safe a strategy as they come, and gives better ROI than anything else currently available.

If someone would have sold for 1100+, they could buy back in for almost double the Bitcoins today. It is something to consider -- even if you believe in Bitcoins, it may be best to sell and then buy back in once the market has bottomed out (this advice would unfortunately have been more useful last week...).

Being upset that 1k will buy you only 1 bitcoin reveals at least two large misunderstandings on your part.

First of all is the psychological aspect of buying an expensive unit of investment.  You think its so expensive to buy one unit that its too late to get in.  I remember think something similar about Berkshire Hathaway in the 90s when it was about 8000$ a share if I remember right.

https://www.google.com/finance?q=NYSE:BRK.A&sa=X&ei=CSOoUoPMJoPj2AWf8YGAAg&ved=0CC0Q2AEwAA

Secondly you misunderstand a fundamental advantage of Bitcoin.  Buffet may never have wanted to split BRK.A, but bitcoin has splits built in.  *IF* we sustain levels between $500 and $1000 then we will continue to the the Mbit (millibit) become the favoured denomination of btc.its already happening.  "One bitcoin" is a somewhat artificial construct.  As is 1000 mBTCs.

One last thing. I am capable of spelling out in a semi intelligent way the reasoning behind my thought processes with BTC.  But you have to understand it has not seemed worth it to me.  

I will explain why.

You started this thread with an overbearing tone.  You sounded judgemental and arrogant.  You came off as a know it all. Called some dumb, stupid, or insane.  And constantly waved around a 'degree in finance from a respected school'.  Your tone has changed somewhat.. But you still obviously have judged most here in a negative light.

To be honest this is one of several ignorant positions on display from you in this thread.

You would be better off assuming there are some here who know more than you.  I can guarantee you you have spoken to successful professional traders and folks who are highly educated.

As has been mentioned you essentially suggest we should time the market, and you were sure btc would go down at a specific time.  You may have been right about that.  But your insistence on this display of hindsight is an old pattern most of us here recognize.  Its a noob investor mistake.

Another one...  Feeling like its too late to get in btc for the price.  "Not interesting to have only 1 coin to trade". Noob error.

I just don't buy that'd its too hard to buy btc in Lebanon.  If you can use the net you can find a way.

You have a donation address and ad in your SIG.  You obviously want btc.

Youre upset some of us have not taken the time to make good arguments.  Why should we?  You came in here guns blazing.  And seem ignorant to some simple concepts. (Hindsight is 20\20 and timing the market is folly for all but the best)

Its like trying to explain to a blind man that I am not a fool to believe in color.

JayB

You could trade BTC as a local dealer in your spare time. You would need to figure out how to make a bank transfer to an exchange. Once you are set up to do this however, you can make a commission by selling to people. Sounds like your country could do with some local traders.

You could keep the profits in BTC, then you don't have to invest anything. You can build up a small amount of coins and hold onto them long term.

With regards to 'not seeing the point' at this stage:

I told many friends to buy BTC at $10 but they couldn't see the point.
I told them again at $100, but like you, they just couldn't see it going any higher.

If they had bought $100 worth of BTC at $10, it would now be worth nearly $10 000
If they had bought $100 worth of BTC at $100, it would now be worth nearly $1 000.

Me again!

How convinced are you btc will fail? How can you be sure?

If there is a nonzero chance if something happening then it is possible for you to figure out ev (which you can adjust to fit your bias)

I'm not sure what set of circumstances gives you an outcome where the best (most rational) action us not to buy any btc? How do you come to the conclusion that there is zero risk holding no btc?

So you think there's a good chance that a bitcoin will be worth somewhere between $1000 (current value) and $500,000 in the future (that being the best case where it's the dominant cryptocurrency), and you can't justify investing $10 because of the "risk"?


Interesting thought process. For me personally, assuming I thought bitcoin had a 99% chance of total failure (i.e. crash to 0), this would still be a worthwhile investment. $10 is not a significant sum of money for me, and if the potential upside (by my own estimation) was 50,000% gains, it seems like a no-brainer. If they sold lottery tickets with those odds, I'd quit my job.

At this time I have a question for our trusty OP.

Why didn't you buy?

Ugh, you are totally off topic with the trading fees argument. That has little to do with the point I'm making.

I'm going to draw a comparison here with the diet industry.

In the 1980's the USDA published guidelines about what comprises a healthy diet.

30 years later and in the face of overwhelming evidence against what they recommend at the time university educated nutritionists still recommend a 'balanced' diet based on those principals. Such that the foundation is bread and cereal.

Obesity, type II diabetes, metabolic syndrome are running rampant. The nutritionists have tried everything to justify why their food pyramid can't be wrong. They just can't see the glaring truth that people should eat plant matter first and foremost (vegetables). Everything else sparingly.

You remind me of those nutritionists, university educated, smart enough yes, but so sure of what you have been taught being 'true' that you refuse to think for yourself.

Time and time again in this thread people have spelled out the folly in trying to trade based on such naive heuristics as 'the china news was bad, so I would have sold'. I gave you an unlikely, but yet quite possible scenario in which you could lose badly and you ignore it. Instead telling me all about how you can find out the news before anyone else, know exactly how that news is going to affect the market, and then trade accordingly.

The news does not move markets, people move markets, and people are hard to predict. If people are hard to predict, then you are better off using something else. Even elliot waves is better than trying to trade the news!

I ask you this - how do you know the china news was bad, did you know that as soon as you read about it (because to me it looked good) or are you only able to tell us that after the fact because there was a sell off. Did you read about it before the market moved, or was the market already moving? If it was how far had it moved, do you still have time to make the trade, how did you know it wasn't going to reverse sharply?

Have you not noticed that every day the financial news is full of post-hoc rationalisation about why the market did this or that today. Its all written *after* stuff happened. At best you get semi-predictive news, written by somebody from an organisation that has a vested interest in trying to influence market sentiment one way or another. Much like you are doing now.

Was the silk road news bad, it certainly looked it, turns out the market rallied after that little bombshell. How is the fed taper going to affect the PM market? What's the news coming out of switzerland going to do to the price? Why are we already closing back in on $1000 is it a dead cat bounce or the next leg up? Was it the keiser report that explained the run up in LTC, or the interest in china, if it was china what caused them to pick it up? Do the chines watch the keiser report? how do you explain the subsequent NMC rise, a count that was so badly broken it looked to be going to zero.

Most of all I would like to know what on earth sparked the 2000% ANC rally on nov 22nd? I was just hours away from having some serious coin in that, bitcoin was flat, I put in a buy just under market price expecting it to fill, I came back the next day and 90% of my order hadn't filled (at least I got that tenth!), instead it had tripled overnight. What should I have done at that point? (I actually just bought what I could and had to be satisfied with the smaller position, because I believe ANC brings something new to the alt coin scene - here I go pumping it up eh!) Anyway god knows what triggered the rise - perhaps it was my buy order? Bitcoin was flat (for bitcoin) that day. Maybe a dog barked in Sweden?

Why the rise in FTC on the 30th, and why the subsequent retreat? Do you know? I don't but I was able to acquire more BTC through rebalancing and still retain a significant amount of FTC.

I watched all of these happening, I watch a lot of alt coins all the time, its starting to prove more profitable than my day job. I'm mostly in BTC but I also have a little bit of various other coin that I think might be contenders. I read the news and watch the charts but I don't pretend to believe that I have enough information to be able to 'trade' the way you describe it. I gently rebalance my portfolio, I look to mitigate risk, I massage the numbers to keep the ship on course. I do not chase the pennies. I let the coin do the work, and when it has appreciated according to the plan, I sample its fruit. I do *not* chop down the tree thinking a bigger one will grow!

This (to me) is reality, its about preservation of capital, acting rationally, keeping cool through the lunacy of the whole thing. I wasn't old enough to be part of the dot com boom and bust, but this is comparable, maybe even bigger.

I survived through the practical application of knowledge gained from being in various markets for some years. Equities, leverage trades, options. I had successes, which seemed to be perfectly understandable because the markets did exactly what they signs said they would do. I patted myself on the back. The losses, were excruciating, because the markets, they did exactly the opposite of what they said they were going to do - but only just enough to stop you out, before going on to do exactly what you "knew" they were going to do I was convinced that TA worked... and it does, until it doesn't. It was round that time when I read talebs work. This is what changed my stance on TA. I can see how it works, and I can see that if you have enough resources and are quick enough you can gain an edge, but the stress and time for the gains (with limited capital, you can only make limited gains) it just doesn't add up. So I had to unlearn everything I knew. Now I am like those annoying ex smokers, that cough and splutter in public at the merest whiff of a cigarette. No really, I *am* one of those annoying ex-smokers

Then, more specifically with BTC I learned through the stress of trying to work the $1-$32 bubble, and the anguish of what to do in the months that followed, how the charts didn't behave like they 'should' how nothing seemed to make sense.

This experience taught me so much about bitcoin, and more importantly about myself, what my greed and fear looked like, how they affected me. Why I did the things I did. Only then was I able to confidently instigate a plan, and to have the patience to execute it without fear that it is wrong. Everyone else in the world might think its wrong for them, but my plan is exactly right for me. This is when we come back to the notion that some random on the internet can come along and try and tell me "I should have done X": utter horse manure.

University teaches you a lot, I won't deny it but the most important thing is not to know stuff, but to know when you don't know stuff. I have to keep learning, I know I don't know shit about what is going on, and that is powerful, because that knowledge allows you to develop a plan that doesn't really on knowing what is essentially unknowable. So far, its all going swell, I am delighted to be me right now. Something I am not so sure I could have confidently said 5 years ago.

Seriously go ahead and try to trade! Or, save yourself some money by just posting what you *would* do if you had 100 BTC, as people in this thread have invited you to. See how it goes. I think sometimes the only way one really find out how hot the plate is, is by touching it yourself.

I'll start:

With my 100BTC my first move will be to move it all to an offline wallet, and wait.

IF anyone else wants to play along feel free

The thing is the reality is that its more like 50% of the time you will be right and 50% you will be wrong

Oh please, I asked some very basic questions. We can agree the China news was negative, but how do you know exactly what the price will do?