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Author Topic: Should I invest in the dollar?  (Read 1778 times)
briguy37
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November 11, 2013, 09:35:56 PM
Last edit: November 12, 2013, 07:35:55 PM by briguy37
 #1

So I've been hearing a lot lately about a currency called the "US Dollar" but I'm really hesitant to invest in it at the moment.  For those of you that don't know, "dollars" are pieces of paper printed by a centralized authority called the "Fed", which distributes these "dollars" by purchasing Government bonds that keep the government and its people permanently indebted to the Fed.  Also, dollars used to be backed by gold, but now nothing really backs them except tradition as far as I understand.

Economically speaking, the dollar started the year at 1/15BTC, which was pretty good at the time, but it then hit an all time low of 1/395BTC on Mt. Gox last Friday.  I was thinking that maybe it could be a low and a great time to get in, but I find it a bit scary.  Especially when considering that the dollar has lost over 96% of its value over the past year, and the government associated with it is arguably the most fiscally irresponsible organization in the history of the world.  

However, it did great at the end of last April and part of this last weekend.  Oh, and it was kinda decent in June too.  I just don't know...  

Whatever shall I do?
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November 11, 2013, 09:39:03 PM
 #2

I prefer to call them Slavecoins.
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November 11, 2013, 09:39:07 PM
 #3

Invest in what interest you, and see where it leads.

thepiratetrader
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November 11, 2013, 09:51:39 PM
 #4

I switched.

The USD is backed by the full military power of the United States.

BTC is backed by... the USD...

So at $1/350BTC, seemed like a steal to me.
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November 11, 2013, 09:54:24 PM
 #5

I would go short on the dollar Tongue

Bitcoin is like a box of chocolates. You never know what you're gonna get !!
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November 11, 2013, 10:01:54 PM
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So I've been hearing a lot lately about a currency called the "US Dollar" but I'm really hesitant to invest in it at the moment.  For those of you that don't know, "dollars" are pieces of paper are printed by a centralized authority called the "Fed", which distributes these "dollars" by purchasing Government bonds that keep the government and its people permanently indebted to the Fed.  Also, dollars used to be backed by gold, but now nothing really backs them except tradition as far as I understand.

Economically speaking, the dollar started the year at 1/15BTC, which was pretty good at the time, but it then hit an all time low of 1/395BTC on Mt. Gox last Friday.  I was thinking that maybe it could be a low and a great time to get in, but I find it a bit scary.  Especially when considering that the dollar has lost over 96% of its value over the past year, and the government associated with it is arguably the most fiscally irresponsible organization in the history of the world.  

However, it did great at the end of last April and part of this last weekend.  Oh, and it was kinda decent in June too.  I just don't know...  

Whatever shall I do?

Awesome  Grin

We will all be so freaking rich when people actually talk like that...

We're hunting for Leviathan, and Bitcoin is our harpoon.
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November 11, 2013, 10:07:12 PM
 #7

Until the day comes that people can pay their electric bills with BTC, I would keep some FIAT on hand (to turn on the computer to access said bitcoins).  Smiley

Night gathers, and now my bitcoinwisdom watch begins.
MaxwellsDemon
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November 11, 2013, 10:08:34 PM
 #8

Oh and don't forget the Euro, often referred to as "Litecoin to USD's Bitcoin"...

We're hunting for Leviathan, and Bitcoin is our harpoon.
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November 11, 2013, 10:13:15 PM
 #9

I've noticed that many stores accept Euro in my country. I invested in it last summer because there were reports of quick mainstream adoption all around. Luckily I spent them all on useful things before the bear attack that has been going on lately.
Pruden
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November 11, 2013, 10:17:32 PM
 #10

Beware, there is a scam accusation against the ECB (EUR's Fed) because they said hackers had taken every euro in every account above 100 000 (I know, right, insane amount of coins). Supposedly it happened only to users of some shady online wallet based in a little island, but it burned a lot of people there, because they relied heavily on online wallets.
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November 11, 2013, 10:39:42 PM
 #11

The dollar is going to continue going downhill as long as Obama proceeds with his plan to make the USA a third world country.
Angering other countries by spying on them doesn't help.
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November 12, 2013, 01:15:38 AM
 #12

You want to invest in slavery??

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November 12, 2013, 02:04:48 AM
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I can't say about in the next month or so but I think in January there will definitely be a rally if the US messes with the default again....it makes people want to try alternatives worldwide.

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November 12, 2013, 02:55:52 AM
 #14

a few good reasons to hoarde some fiat. By Jason Zweig:

The stock market is near record highs. More money came into U.S. stock mutual funds the week of Oct. 23 than during any other week since 2007. Initial public offerings like TwitterTWTR +3.00% are booming.

So have you considered keeping more of your assets in cash?

At first, the question sounds crazy. With interest rates and inflation at current levels, holding cash virtually guarantees you will suffer losses after accounting for the erosion of your purchasing power. Major money-market funds yield an average of 0.02%, according to Crane Data. As a result, you will need a year to wring $2 in interest out of a $10,000 account. And by then, inflation will have taken $120 of your money at the 1.2% annual rate reported by the Department of Labor for September.

But cash doesn’t earn its keep on yield alone. All investors should realize that cash can be priceless, even when its yield after inflation is negative. Cash “is an option on the future,” says Abhay Deshpande, a portfolio manager at the New York-based First Eagle Global and First Eagle Overseas mutual funds, which have $58.4 billion in combined assets.

Having a cushion of cash can help you stay invested when stocks tumble — as they surely will sooner or later. And a cushion can enable you to do what cash-poor investors find almost impossible: Buy stocks and other assets as bear markets turn them into bargains.

There are worse fates than posting losses on cash after inflation, says Dowe Bynum, a portfolio manager at the Cook & Bynum Fund in Birmingham, Ala. “Putting a lot of money to work in overpriced, inferior businesses — that’s going to end up way more destructive to your capital than sitting in cash for a while with a negative return,” he says.

Mr. Bynum and co-manager Richard Cook haven’t been able to find a significant new stock position to add to their fund in more than a year. So cash has climbed to roughly 43% of the fund’s $135 million in assets, up from 26% in 2011.

Counting short-term corporate and foreign-government bonds, IVA International Fund has approximately 40% of its $3.3 billion of assets in cash and equivalents. “It’s rare for us to go to the levels you see today,” says Chuck de Lardemelle, co-portfolio manager of the New York-based fund. “I wouldn’t call this a bubble yet, but we see just about all asset classes as expensive, and we see very few opportunities in equities.”

At Mr. Deshpande’s Global and Overseas funds, cash totals roughly 21% of assets, a level he calls “the high side of normal.” He emphasizes that the high cash balance isn’t some kind of market-timing judgment. But in stock markets around the world, he says, “everything’s gone up.” His team will hold the cash until there is “an abundance of opportunity” again.

To be sure, fund managers earn their fee on all the assets they manage — even if much of it is just cash. Any professional or individual investor with much less than 100% in stocks has badly trailed the raging bull market. And all too many fund managers tend to increase their exposure to cash as stocks fall and spend it as they rise. That is the opposite of what value-seeking investors should do.

But you should buy fire insurance before your building burns down, not after. And you should raise some cash in your investment portfolio before the market goes down, not after.

With the S&P 500 up 26.4% this year, including dividends, and foreign markets up 15%, now is an ideal time to see whether you have more exposure to stocks than you planned. Trim back to your target and keep at least some of the proceeds in cash.

“People look at cash as a drag,” says Steven Romick, manager of the $14.1 billion FPA Crescent Fund, which is based in Los Angeles, “and if you believe the market’s going straight up from here it certainly is.” Still, cash is a “very precious commodity if other people don’t have it and you can put it to work when there’s an opportunity.”

When stocks fell nearly 90% after 1929, Benjamin Graham, the founder of investment analysis, wrote that “those with enterprise haven’t the money, and those with money haven’t the enterprise, to buy stocks when they are cheap.”

By that, he meant simply that an investor who has courage but lacks cash is as powerless as one who has cash but no courage. It is hard enough to have the guts to buy stocks when they fall. Think back to 2008 and 2009. Do you regret not having bought more stocks then? Did you sit on the sidelines because you didn’t have the money, didn’t have the enterprise, or both?

If you have to raise both cash and courage at the same time, you don’t stand a chance of buying the next time stocks are cheap.


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theonewhowaskazu
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November 12, 2013, 03:38:12 AM
 #15

a few good reasons to hoarde some fiat. By Jason Zweig:

The stock market is near record highs. More money came into U.S. stock mutual funds the week of Oct. 23 than during any other week since 2007. Initial public offerings like TwitterTWTR +3.00% are booming.

So have you considered keeping more of your assets in cash?

At first, the question sounds crazy. With interest rates and inflation at current levels, holding cash virtually guarantees you will suffer losses after accounting for the erosion of your purchasing power. Major money-market funds yield an average of 0.02%, according to Crane Data. As a result, you will need a year to wring $2 in interest out of a $10,000 account. And by then, inflation will have taken $120 of your money at the 1.2% annual rate reported by the Department of Labor for September.

But cash doesn’t earn its keep on yield alone. All investors should realize that cash can be priceless, even when its yield after inflation is negative. Cash “is an option on the future,” says Abhay Deshpande, a portfolio manager at the New York-based First Eagle Global and First Eagle Overseas mutual funds, which have $58.4 billion in combined assets.

Having a cushion of cash can help you stay invested when stocks tumble — as they surely will sooner or later. And a cushion can enable you to do what cash-poor investors find almost impossible: Buy stocks and other assets as bear markets turn them into bargains.

There are worse fates than posting losses on cash after inflation, says Dowe Bynum, a portfolio manager at the Cook & Bynum Fund in Birmingham, Ala. “Putting a lot of money to work in overpriced, inferior businesses — that’s going to end up way more destructive to your capital than sitting in cash for a while with a negative return,” he says.

Mr. Bynum and co-manager Richard Cook haven’t been able to find a significant new stock position to add to their fund in more than a year. So cash has climbed to roughly 43% of the fund’s $135 million in assets, up from 26% in 2011.

Counting short-term corporate and foreign-government bonds, IVA International Fund has approximately 40% of its $3.3 billion of assets in cash and equivalents. “It’s rare for us to go to the levels you see today,” says Chuck de Lardemelle, co-portfolio manager of the New York-based fund. “I wouldn’t call this a bubble yet, but we see just about all asset classes as expensive, and we see very few opportunities in equities.”

At Mr. Deshpande’s Global and Overseas funds, cash totals roughly 21% of assets, a level he calls “the high side of normal.” He emphasizes that the high cash balance isn’t some kind of market-timing judgment. But in stock markets around the world, he says, “everything’s gone up.” His team will hold the cash until there is “an abundance of opportunity” again.

To be sure, fund managers earn their fee on all the assets they manage — even if much of it is just cash. Any professional or individual investor with much less than 100% in stocks has badly trailed the raging bull market. And all too many fund managers tend to increase their exposure to cash as stocks fall and spend it as they rise. That is the opposite of what value-seeking investors should do.

But you should buy fire insurance before your building burns down, not after. And you should raise some cash in your investment portfolio before the market goes down, not after.

With the S&P 500 up 26.4% this year, including dividends, and foreign markets up 15%, now is an ideal time to see whether you have more exposure to stocks than you planned. Trim back to your target and keep at least some of the proceeds in cash.

“People look at cash as a drag,” says Steven Romick, manager of the $14.1 billion FPA Crescent Fund, which is based in Los Angeles, “and if you believe the market’s going straight up from here it certainly is.” Still, cash is a “very precious commodity if other people don’t have it and you can put it to work when there’s an opportunity.”

When stocks fell nearly 90% after 1929, Benjamin Graham, the founder of investment analysis, wrote that “those with enterprise haven’t the money, and those with money haven’t the enterprise, to buy stocks when they are cheap.”

By that, he meant simply that an investor who has courage but lacks cash is as powerless as one who has cash but no courage. It is hard enough to have the guts to buy stocks when they fall. Think back to 2008 and 2009. Do you regret not having bought more stocks then? Did you sit on the sidelines because you didn’t have the money, didn’t have the enterprise, or both?

If you have to raise both cash and courage at the same time, you don’t stand a chance of buying the next time stocks are cheap.

This is a dumb idea.

1) Real goods & services aren't inflationary. Corporations make goods & services. Not all corporations can be 'inferior' at once. Then go out and buy a bunch of corporations that make real goods & services. If you're not into playing with paper, then don't buy financials. But buy the transports, industrials, energy, materials, utilities, etc...

2) Its normal for the market to be reachign all time highs.

3) Just because you can "long" cash during a recession, doesn't make it a good investment. Its possible to long volatility ETNs too, and make money, but in the long term you lose out, so the odds aren't stacked in your favor. Same deal for longing stocks.

mvidetto
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November 12, 2013, 05:29:39 AM
 #16

So I've been hearing a lot lately about a currency called the "US Dollar" but I'm really hesitant to invest in it at the moment.  For those of you that don't know, "dollars" are pieces of paper are printed by a centralized authority called the "Fed", which distributes these "dollars" by purchasing Government bonds that keep the government and its people permanently indebted to the Fed.  Also, dollars used to be backed by gold, but now nothing really backs them except tradition as far as I understand.

Economically speaking, the dollar started the year at 1/15BTC, which was pretty good at the time, but it then hit an all time low of 1/395BTC on Mt. Gox last Friday.  I was thinking that maybe it could be a low and a great time to get in, but I find it a bit scary.  Especially when considering that the dollar has lost over 96% of its value over the past year, and the government associated with it is arguably the most fiscally irresponsible organization in the history of the world.  

However, it did great at the end of last April and part of this last weekend.  Oh, and it was kinda decent in June too.  I just don't know...  

Whatever shall I do?

Buy low, sell high.  Works wonders lol.
briguy37
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November 12, 2013, 06:14:49 AM
Last edit: November 12, 2013, 07:43:22 PM by briguy37
 #17

a few good reasons to hoarde some fiat...

You bring up a good point that cash yields buying power during opportune times.  For example, there will never be an opportune time to buy BTC with only BTC in your hand.  

At this point, I believe USD will continue to fall in the long run.  However, I also know that it has been getting small boosts of faith here and there on the way down, so maybe the opportunities of those boosts warrants me keeping a minor percentage in cash to take advantage of those opportunities when they arise.
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November 12, 2013, 10:45:07 AM
 #18

So I've been hearing a lot lately about a currency called the "US Dollar" but I'm really hesitant to invest in it at the moment.  For those of you that don't know, "dollars" are pieces of paper are printed by a centralized authority called the "Fed", which distributes these "dollars" by purchasing Government bonds that keep the government and its people permanently indebted to the Fed.  Also, dollars used to be backed by gold, but now nothing really backs them except tradition as far as I understand.

Economically speaking, the dollar started the year at 1/15BTC, which was pretty good at the time, but it then hit an all time low of 1/395BTC on Mt. Gox last Friday.  I was thinking that maybe it could be a low and a great time to get in, but I find it a bit scary.  Especially when considering that the dollar has lost over 96% of its value over the past year, and the government associated with it is arguably the most fiscally irresponsible organization in the history of the world.  

However, it did great at the end of last April and part of this last weekend.  Oh, and it was kinda decent in June too.  I just don't know...  

Whatever shall I do?

only invest what you can afford to lose. don´t put your housing mortgage in it. playing with this dollar can be some fun, they eventually go down even further but there are merchants that take them anyway. but watch out: there are reports that it is used for all kinds of illegal activity. there are cocain traces on virtually every dollar bill.
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November 12, 2013, 01:35:10 PM
 #19

Oh and don't forget the Euro, often referred to as "Litecoin to USD's Bitcoin"...

Shouldnt it be the other Way?
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November 12, 2013, 06:33:35 PM
 #20

Perfect parody.  Thanks!

So I've been hearing a lot lately about a currency called the "US Dollar" but I'm really hesitant to invest in it at the moment.  For those of you that don't know, "dollars" are pieces of paper are printed by a centralized authority called the "Fed", which distributes these "dollars" by purchasing Government bonds that keep the government and its people permanently indebted to the Fed.  Also, dollars used to be backed by gold, but now nothing really backs them except tradition as far as I understand.

Economically speaking, the dollar started the year at 1/15BTC, which was pretty good at the time, but it then hit an all time low of 1/395BTC on Mt. Gox last Friday.  I was thinking that maybe it could be a low and a great time to get in, but I find it a bit scary.  Especially when considering that the dollar has lost over 96% of its value over the past year, and the government associated with it is arguably the most fiscally irresponsible organization in the history of the world.  

However, it did great at the end of last April and part of this last weekend.  Oh, and it was kinda decent in June too.  I just don't know...  

Whatever shall I do?
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