Why going all-in is not financially responsible. Capital is your Security.

[RationalSpeculator]

I agree bitcoin is the best speculation ever.

However, your savings, your capital, serves to take care of you when you cannot work anymore. Due to old age, illness or an accident. If you risk it all in bitcoin, even if the chance is only 10% that it fails, this means you have 10% chance to have no savings when you would desperately need them, when you have an accident or when you are old.

We used to live in tribes, where our children and tribe needed to take care of us when we were ill or old. Not much freedom there was in such society. Then capital was invented. People started using special stones, unique shells and later precious metals. These items represented money. In contrast to meat, you could store it for the future, and exchange it in the future for meat. That way you became more independent from your tribe and children and could take care of yourself when you were ill or old.

Today half of society is living as capitalists, saving capital for old age and being independent. The other half are socialist, not really dependent anymore on their children, but for sure very dependent on the tribe (state) to take care of them when they are ill or old.

If you want to be a capitalist that wants to become independent and have capital for old age or illness. This means, you should never risk that capital in speculations. In contrast, you should continually work to build up more savings and protect those savings against any possible economic climate that could destroy them, like the permanent portfolio does.

Sure, you can decide to speculate also, but only with a part of it, and never forget to lock in profits into your 'savings' because if you don't you are not building up any savings but are taking more and more risk and can still end up having nothing when in the end it would fail.

We all need to make money, you can chose to do that via a job, entrepreneurship or speculation. All of them are hard work and come with a lot of risk and uncertainty. Make sure you are building up something that also builds your SECURITY so you can buy meat - always - and will not become dependent on your children or the state!

Am I making sense?

edit: spelling error

[notme]

History shows saving in dollars to be foolish since the creation of the federal reserve.

I'll keep dollar cost averaging into sound money, thanks.

[RationalSpeculator]

History shows saving in dollars to be foolish since the creation of the federal reserve.

I'll keep dollar cost averaging into sound money, thanks.

I agree. I did not advise saving into dollars but in a Permanent Portfolio.

Bitcoin at this point is not sound money. If it works out it will become sound money. Until then it is a speculation.

Hence, you are dollar cost averaging into a speculation.

[justusranvier]

I think all forms of saving are speculation, and there's nothing with as much upside as Bitcoin.

To protect yourself from loss you should invest in your earning potential. Diversify your knowledge, skills, and experience so that no matter what happens in the broader economy you'll be able to earn a living.

Learning how to weld is a better investment than buying gold because practical skills allow you to produce wealth, not just trade for it.

[RationalSpeculator]

I think all forms of saving are speculation, and there's nothing with as much upside as Bitcoin.

Then you think wrong. The Permanent Portfolio is not a speculation. It has empirically proven to preserve your purchasing power in different economic climates.

To protect yourself from loss you should invest in your earning potential. Diversify your knowledge, skills, and experience so that no matter what happens in the broader economy you'll be able to earn a living.

And what if you are not able to earn a living due to illness, accident or old age?

[justusranvier]

What do you do if an unprecedentedly severe economic disruption means the goods you want to buy aren't available at any price? How can the Permanent Portfolio preserved your wealth?

That is what I mean by "all saving is speculation". Nothing can guarantee the future ability of the economy to produce the goods and services you will want to buy with deferred consumption.

The majority of illnesses in the modern world are both chronic and preventable, so they can be minimized with appropriate lifestyle changes. For the risks that can't be eliminated you can hedge against by having a strong social network.

In the current worldwide fiscal climate the people who are already old are doomed, so there's not much they can do anyway besides speculate and hope. Those who aren't yet old have the opportunity to prepare before they end up in that position.

[RationalSpeculator]

What do you do if an unprecedentedly severe economic disruption means the goods you want to buy aren't available at any price? How can the Permanent Portfolio preserved your wealth?

That is what I mean by "all saving is speculation". Nothing can guarantee the future ability of the economy to produce the goods and services you will want to buy with deferred consumption.

Even in a severe economic disruption all goods are available for some price, likely high. The Permanent Portfolio will preserve your wealth in such scenario because it holds 25% physical gold. This gold will in such scenario also be valued high. That is how you will be able to buy the goods you desire even during a severe economic disruption.

You did not answer my question: What if you are not able to earn a living due to illness, accident or old age?

[aznmonky]

i am going to agree with justusranvier on this one. the reality from which we live in right now is nothing like the golden years of america or the world, with technologically advances in a wide range of fields you will understand that the classic be safe investments and security's are obsolete in many perspectives and for many reasons bitcoin is new, innovative and thriving. you can't cure stupid idiots who waste money and don't know how to live within a budget or even know what damage they do to their independent future by deficit spending on credit. once credit was born to be used by the average user, many people young naive and not ready to live , interpreted the card or the loan as free easy money


EDIT

What do you do if an unprecedentedly severe economic disruption means the goods you want to buy aren't available at any price? How can the Permanent Portfolio preserved your wealth?

That is what I mean by "all saving is speculation". Nothing can guarantee the future ability of the economy to produce the goods and services you will want to buy with deferred consumption.

Even in a severe economic disruption all goods are available for some price, likely high. The Permanent Portfolio will preserve your wealth in such scenario because it holds 25% physical gold. This gold will in such scenario also be valued high. That is how you will be able to buy the goods you desire even during a severe economic disruption.

You did not answer my question: What if you are not able to earn a living due to illness, accident or old age?

the government steps in and takes care of you that's how messed up it is because they enable and provide a safey netting for society, the mass majority doesn't understand the depth of despair once your living on complete poverty

[notme]

What do you do if an unprecedentedly severe economic disruption means the goods you want to buy aren't available at any price? How can the Permanent Portfolio preserved your wealth?

That is what I mean by "all saving is speculation". Nothing can guarantee the future ability of the economy to produce the goods and services you will want to buy with deferred consumption.

Even in a severe economic disruption all goods are available for some price, likely high. The Permanent Portfolio will preserve your wealth in such scenario because it holds 25% physical gold. This gold will in such scenario also be valued high. That is how you will be able to buy the goods you desire even during a severe economic disruption.

You did not answer my question: What if you are not able to earn a living due to illness, accident or old age?

Nobody will give a shit about your shiny rock if the shit really hits the fan.  Weapons (for hunting and defense), bullets, and food stores are the only sensible investments for such a time.

[notme]

By the way, here is a link to an actual explanation, since your link is just a sales pitch with no details: http://earlyretirementextreme.com/wiki/index.php?title=Permanent_Portfolio

[notme]

History shows saving in dollars to be foolish since the creation of the federal reserve.

I'll keep dollar cost averaging into sound money, thanks.

I agree. I did not advise saving into dollars. I advised saving into a Permanent Portfolio.

Bitcoin at this point is not sound money. If it works out it will become sound money. Until then it is a speculation.

Hence, you are dollar cost averaging into a speculation.

25% bonds, 25% cash sounds pretty dollar-heavy to me.  You are advising saving in dollars if you are pushing this allocation.

[oakpacific]

OP of course your advice is sensible, for me personally I could reduce it to something like:"to support bitcoin is hard work, not easy money",only it's hard work that I like.

Besides, I think I should add that the bitcoin rally is creating opportunities for non-bitcoin low-risk investment as well, it's almost guaranteed that someone would be more risk seeking than you and want to borrow your fiats at high interest rate to buy BTC, a very good way to hedge your risk.

[RationalSpeculator]

Nobody will give a shit about your shiny rock if the shit really hits the fan.  Weapons (for hunting and defense), bullets, and food stores are the only sensible investments for such a time.

You obviously did not study any economic crises. Yes, the shiny rock will go up in value/purchasing power during severe economic crises. Such was the case recently in Iceland and Argentina, as in Germany and Russia during the hyperinflations.

[aznmonky]

all your citing is coming from one single site, i agree with notme, guns bullets and food are where power comes in when shit hits the fan. you going to trade some gold or some silver to people with guns? no they have no use for that. gold is used by astronauts and deemed a value because of its limited supply and its high class value in our society. someone correct me if i have gaps in my arguement

[RationalSpeculator]

25% bonds, 25% cash sounds pretty dollar-heavy to me.  You are advising saving in dollars if you are pushing this allocation.

You forgot to mention the 25% stocks and 25% physical gold that are also part of the Permanent Portfolio. But agreed, the Permanent Portfolio is very fiat heavy with his 25% bonds and 25% cash. This however does not matter. What matters is whether the Permanent Portfolio succeeded in preserving your purchasing power in all economic climates. And yes, it succeeded in beating true inflation in every climate, even in the short term! (3-5 years).

[Elwar]

Might as well go all in on Bitcoin. If it fails that means that the government won, and they will take care of you in your old age.

God bless socialism.

[justusranvier]

Saving means consuming less that you produce in the present in order to accumulate that which you guess the producers of what you want to consume in the future accept for trade. It presupposes those producers will be willing and able to trade with you, and that whatever you accumulate now will still be in your possession when you want to consume.

Saving is much more speculative than maximizing and diversifying your own ability to produce new wealth because in the latter case more of the variables are under your control.

[Spaceman_Spiff]

25% bonds, 25% cash sounds pretty dollar-heavy to me.  You are advising saving in dollars if you are pushing this allocation.

You forgot to mention the 25% stocks and 25% physical gold that are also part of the Permanent Portfolio. But agreed, the Permanent Portfolio is very fiat heavy with his 25% bonds and 25% cash. This however does not matter. What matters is whether the Permanent Portfolio succeeded in preserving your purchasing power in all economic climates. And yes, it succeeded in beating true inflation in every climate, even in the short term! (3-5 years).

Hiya RS. I don't think the Permanent Portfolio is 100% guaranteed to preserve your capital (what if a disruptive technology such as bitcoin takes over the role of gold and cash), but I do believe it is the best attempt at preserving your capital as risk-free as possible in diverse economic environments, based on historic data.  At present however, I would hedge the strategy with a few bitcoins.

[bullioner]

Agree with the general sentiment.  However, I think you would benefit from knowing what real capital is.  It's stuff that produces, cutting down the amount of labour and other production factors that need to be used to produce a certain amount.  Think machinery in a factory.  That is capital.  Savings in cash is not capital in that sense.  If referring to it as capital, it best to talk about financial capital, to distinguish it from real capital.

Savings is a way of taking value forward through time, and is not a production factor.  

[RationalSpeculator]

Saving is much more speculative than maximizing and diversifying your own ability to produce new wealth because in the latter case more of the variables are under your control.

Again you ignored my vital question:
What if you are not able to earn a living due to illness, accident or old age?

Also you repeated the same false argument 'all savings are speculative' and ignored my argument why the permanent portfolio is not a speculation.

It feels like talking to a wall.