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Author Topic: I might be wrong in just looking at fundamentals.  (Read 243 times)
Jet Cash
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December 21, 2019, 06:01:53 PM
Merited by Cnut237 (1), CristianOff (1)
 #1

I tend to look at fundamentals, and base my investment decisions on those, but I think I may be missing out. Take stocks for example. There prices don't reflect profitability or asset values, and most companies seem to be laded with debt. But the central banks keeps printing money to buy their shares and push up the prices. Obviously this can't go on for ever, and the stock market will have to dump, but that is politically unsound, so maybe I should be exploiting the price manipulation in the short term.

The reverse seems to be true of Bitcoin. This seems to have strong fundamentals, but the price is constantly being weakened by manipulation. It is rumoured that Ripple could take over from Swift, and public awareness of this could push up the price of Bitcoin andother ctyptos,so maybe I should keep out of the stock market. Smiley
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MajorMiner
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December 21, 2019, 07:18:24 PM
Merited by philipma1957 (5), Jet Cash (5)
 #2

I tend to look at fundamentals, and base my investment decisions on those, but I think I may be missing out. Take stocks for example. There prices don't reflect profitability or asset values, and most companies seem to be laded with debt. But the central banks keeps printing money to buy their shares and push up the prices. Obviously this can't go on for ever, and the stock market will have to dump, but that is politically unsound, so maybe I should be exploiting the price manipulation in the short term.

The reverse seems to be true of Bitcoin. This seems to have strong fundamentals, but the price is constantly being weakened by manipulation. It is rumoured that Ripple could take over from Swift, and public awareness of this could push up the price of Bitcoin andother ctyptos,so maybe I should keep out of the stock market. Smiley
As long as you incorporate emotional, social, political, geopolitical, and socioeconomic biases into your equation the picture clears up  Grin
Bitcoin and the crypto markets overall are easy to manipulate and at this point in the game they evolved to be be big enough to attract attention of major companies, banks and governments.
Those actors previously were content with manipulating the major markets - commodities/stocks, but now they have a new play toy that offers even bigger short term swings.
If you have any reliable insight into any of the above channels that allow you to predict movement of any of the above assets, you should take advantage of it.
I believe crypto markets are perceived by manipulators as the ultimate play-toy, unlike the commodities/stocks market, in case of its demise due to reckless "playing" will not effect the mainstream populations or economies.
They love this toy, and they love playing rough with it because they are not afraid to break it.

Good Luck  Smiley
franky1
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December 21, 2019, 10:46:16 PM
Merited by Jet Cash (5)
 #3

when looking at the fundamentals stocks do have a fundamental value. but the price is not the same thing

take bitcoin. in 2017 its fundamental value was ~$5k yet its price was $20k
the gap of $15k was the hype/speculation/bubble area. which is not sustainable

take gold its fundamental value is ~$900 but its spot price is $1200
the gap of $300 is the speculation/hype area. which is ok. but if you see it go to $2k a ounce. expect it to not sustain that value


todays bitcoin has a fundamental value of ~$6500 and a price of the low $7k range meaning there is not much speculation hype in the price and it means its holding good value %.
but if it spikes too fast to $20k+ again then dont expect it to hold. unless the fundamental value moves up to sustain it

many stocks/shares price is not the 'value' yes many stocks/shares are hyped up by speculation.
thats why when looking for the finances of a company and adding up its assets and dividiing it by the number of shares the value is a lower number.

what is important is the history variance of the speculation on top.
if a company always has a +10%-200% buffer above the value where the price never goes below or above. then knowing when the price is near +10% of value means its a good time to buy. and if near the 200% of value is a good time to sell
techbill
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December 22, 2019, 12:25:19 AM
 #4

How long have you been in this game OP? From what I remember you're over 70 years old or so. You might just know better than all of us what best to do.
Jet Cash
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December 22, 2019, 09:23:18 AM
 #5

@franky1

How do you determine the fundamentals for shares? The central banks have been lending money to companies to buy back their own shares, and the execs have been selling. This has loaded them with debt, and doesn't bode well for the future. We also have governments who are pursuing policies to move manufacturing and farming to Asia, and this doesn't look good for the future.

Gold is being bought up by governments and central banks, so it is impossible to determine any fundamentals, at least until they announce the possibility of underpinning new crypto with gold.

Bitcoin is even harder to determine. I've seen lots of calculations related to the cost of block mining, but until we know if Bitcoin is going to be a store of value, or a payment mechanism ( or both ), it is difficult to determine the future path of the Bitcoin price. My feeling is that it will take its place alongside gold and silver. The pound got its name because it was originally a certificate for a pound of silver, and later it was linked to the price of gold. The modern pound Sterling has no intrinsic value any more, and gold is still used as legal tender in the UK in the form of the Sovereign and the Britannia.
odolvlobo
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December 22, 2019, 10:20:37 AM
 #6

The reverse seems to be true of Bitcoin. This seems to have strong fundamentals, but the price is constantly being weakened by manipulation.

It is not clear that Bitcoin has "strong fundamentals" and there is no evidence that the price is "constantly being weakened by manipulation". Maybe the problem you have is the result of your assumptions.

I feel that, except for the supply schedule, Bitcoin's fundamentals are nearly impossible to quantify, making them difficult to analyze. The most I can determine from th fundamentals is that thre is a good chance that the price will be much higher in the future, though it is far from certain.
CristianOff
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December 22, 2019, 01:19:41 PM
Merited by Jet Cash (2)
 #7

Hi Jet Cash, thought I should share my work experience on the trading floor of a big company in London when I was 17 Smiley

Never ever make decisions based on fundamentals. We must always force ourselves to look into the details and then abide by those laws, even if the
truth hurts us. For example, you can see Ethereum following a down trend (bearish). This fundamental may tell you to stay away from investing in this
because it's risky (this "hurts"). However If we look at the details, that Ethereum 2.0 is coming, that last year in December Ethereum was also following a down trend
but in March-April it went to the moon, then I am sure you will also invest in Ethereum like I did.


When I worked on the trading floor we used to do more discussion and reading news than trading. Some unserious discussions were on the phone with other department
members (group calls), while others needed physical discussion (face to face). Investing yourself is somehow risky because you only have your point of view. Getting a team
of like-minded people (who invest) but with different opinions / backgrounds would be beneficial.

Regarding stock companies you will see that a lot of them have debts. There are some companies in specific that only have debts and follow a huge stock downtrend from time
to time (big go down!). We were told in the trading floor that sometimes, some companies take loans and as collateral they use their shares. I give you $110million in shares and you give me
$100 million loan. I do not repay my loan (tax avoidance Cheesy) and you, mister bank will cashout the stock. The company will use the loan to bring the stock further up so it's not really bothering
them long term however this is not abused, just done from time to time.
The best times when you buy shares is to look at the latest date a company repaid their debt if you find any information. They will usually make the news. I also recommend you to subscribe
with Bloomberg which for me has been a successful source of information.


Keep in mind I stopped trading for a while now and my source of information comes only from experience made about 4-5 years ago. Maybe things have changed, maybe not
Jet Cash
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December 22, 2019, 04:26:30 PM
 #8

It is not clear that Bitcoin has "strong fundamentals" and there is no evidence that the price is "constantly being weakened by manipulation".

Bitcoin has now evolved in a living commercial entity. Most people restrict their view of Bitcoin fundamentals to things like mining costs, but the really important consideration is the ecosystem that is being built around it. It is this that needs to be evaluated to assess fundamentals in my opinion.

We know that there is massive whale and other manipulation of the Bitcoin price, and this is widely reported in the mass media. This will frighten off many retail buyers, and this can weaken the price.
franky1
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December 22, 2019, 07:23:16 PM
Merited by Jet Cash (2)
 #9

@franky1
How do you determine the fundamentals for shares? The central banks have been lending money to companies to buy back their own shares, and the execs have been selling. This has loaded them with debt, and doesn't bode well for the future. We also have governments who are pursuing policies to move manufacturing and farming to Asia, and this doesn't look good for the future.

Gold is being bought up by governments and central banks, so it is impossible to determine any fundamentals, at least until they announce the possibility of underpinning new crypto with gold.

Bitcoin is even harder to determine. I've seen lots of calculations related to the cost of block mining, but until we know if Bitcoin is going to be a store of value, or a payment mechanism ( or both ), it is difficult to determine the future path of the Bitcoin price. My feeling is that it will take its place alongside gold and silver. The pound got its name because it was originally a certificate for a pound of silver, and later it was linked to the price of gold. The modern pound Sterling has no intrinsic value any more, and gold is still used as legal tender in the UK in the form of the Sovereign and the Britannia.


i dont just see a price line when i look at the charts i see a value line aswell. like sea level vs surfing wave height aswell as low and high tide (layers of a sandwich/ cake, as another analogy)
for shares the bottomline value is a company share value based on the assets/collateral. EG if production completely stopped and they shut down how much assets do they hold to still make shareholders whole. then the next layer is its cashflow. it sales.
next its profit. and finally its more speculative plans for future expansion/reduction which affect the future numbers
then final part of speculation is just the gap between that and the price as thats the volatile waves of pure stupidly and demand for the shares.

for bitcoin. its not just mining cost. its also looking at UTXO for coins moved in last 3-6 months to see how much of circulation is actively participating in trades and what value those movements moved at to base the acquisition costs of those particular coins.
EG right now i dont include satoshi's stash of 2009 coins because they have not moved and are not on exchanges to impact the price. but obviously if they all moved at once into an exchange and were put to sell knowing the acquisition costs were pennies. means it can tank the price down while the holder of the coins still profits. but for now as they are not part of active circulation they dont count
i have other matrix's too that build up the layers.
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December 23, 2019, 05:53:15 AM
Merited by Jet Cash (2)
 #10

It is not clear that Bitcoin has "strong fundamentals" and there is no evidence that the price is "constantly being weakened by manipulation".

Bitcoin has now evolved in a living commercial entity. Most people restrict their view of Bitcoin fundamentals to things like mining costs, but the really important consideration is the ecosystem that is being built around it. It is this that needs to be evaluated to assess fundamentals in my opinion.

I agree that the ecosystem is the source of the fundamentals, which is what makes them so hard to quantify. Note that mining cost is not a fundamental since it does not affect the price, but instead is affected by the price.

We know that there is massive whale and other manipulation of the Bitcoin price, and this is widely reported in the mass media. This will frighten off many retail buyers, and this can weaken the price.

We don't know that, regardless of what you might have read. It is all speculation, and the reports you are reading are click-bait based on that speculation. On the other hand, I would not be surprised if there have been attempts at manipulation, but I doubt that it is as systemic as you imply.
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December 23, 2019, 12:31:32 PM
Merited by philipma1957 (2), Jet Cash (2)
 #11

I agree that the ecosystem is the source of the fundamentals, which is what makes them so hard to quantify. Note that mining cost is not a fundamental since it does not affect the price, but instead is affected by the price.

the price is speculative. and hobby miners do rush in and out due to their emotions of the price

but if you look at the base line cost of mining. the cheapest and most efficient costs.
no one is stupid to sell at a loss. so the underlying value where the price wont tank below is that bottom line support value

no one can predict the next high based on mining. but you can predict the low
i know during 2017-8's $20k that the price wont tank below $5.6k during spring summer.
i knew when next gen asics came out in september-october of 2018 that mining became more efficient(lower base value) and then in november the markets reacted as such

same with shares and stocks. if a company has less assets and cashflow and accruing debt, their base support value decreases and share holders then react.

i dont base my predictions on the future hype of speculation and ATH. i look at mining costs and other metrics and understand where the future lows will sit, not even caring bout the future highs

because if you know where the lows are you can predict any potential loses. and then just let the randomness of emotion and speculation earn you the profits.. just as long as you buy near the base support level. you cant really go wrong. but buying at the high, you will definetly go wrong.

so try not to just see the PRICE line. and try looking into the underlying value
(dont look at the ocean waves, find the coral at the sea bottom, wait for low tide)
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December 23, 2019, 12:41:23 PM
Last edit: December 23, 2019, 01:21:45 PM by franky1
Merited by Jet Cash (2), Cnut237 (2)
 #12

alot of people think fundamentals are trend analysis. believing history repeats itself
alot of them same folk then try to make trend analysis sound sexy by calling it technical analysis

but the truth is that trend analysis cannot predict or control the lows it is just used to program bots to pump and dump the highs

EG if there are 100 traders and you can convince 90 of them to program their bots to follow a certain line. guess what happens. it pumps in that lines direction.

this is not predicting. this is causing
its like abusing people screaming at someone that they are worthless and one day they will commit suicide. if you get it said enough times to make them believe it, they will end up committing suicide.
this aint predicting a suicide using psychic magic.. its causing suicide by being abusive

trend anals - yep thats what i call them.
are just the pump and dump splashers causing non sustainable waves above sea level. yes if you make a big enough splash you can make a big enough wave, but your not actually going to cause a sustainable sea level rise so expect after the wave has passed to be on stagnant water at a lower level than the wave caused by all the splashing

its like lesson one of pump and dumping
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December 26, 2019, 09:13:44 AM
Merited by suchmoon (7), Jet Cash (2)
 #13

this is not predicting. this is causing

I agree. I started a thread on this a while ago.

We are all aware that crypto markets are highly speculative - and how could they be otherwise? Comparisons within traditional markets invite erroneous inferences. Bitcoin has no physical assets (beyond mining equipment), it owns no patents or copyrights, it has no operating profits or costs (you can't really talk about mining costs because difficulty can change), it has no CEO. It even has no real current use case.

Everything with crypto is based on expectation of future utility. Store-of-value? Faster payments? We are all guessing what bitcoin and alts might be worth based on guesses as to a) the extent to which they will become 'mainstream' and a part of everyday life for everyday people, companies and governments, and b) the purpose we think they will fulfill in some future economy that doesn't exist yet.

This is why it is so speculative, why prices move so much, and why TA applied to crypto can be seen as largely a self-fulfilling prophecy.
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December 26, 2019, 04:42:08 PM
Merited by Jet Cash (2)
 #14

you could argue gold has same things.
and just pretend the cost to mine gold has no power over the market. and the rest is just speculation of utility and desire.

but thats just downplaying the cost of production..
sorry but i have been looking at different markets for years and there is a fundamental value line based on the acquisition costs.

yes the 2017 $20k was hyper inflated bubble speculation of 300% but the bottom line dip and correction showed where the real value came close to.

but hey if you want to just think everything is just pure guess and emotion. then you can keep playing with the randomness of the next ATH

ill settle for knowing a healthy low to base my trades. thus know when not to buy when the price is too high
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December 26, 2019, 05:32:14 PM
 #15

you could argue gold has same things.
You could, but I'd still argue that gold is universally accepted as a store of value, whereas bitcoin is merely anticipated to become a store of value at some point in the future.

sorry but i have been looking at different markets for years and there is a fundamental value line based on the acquisition costs.
I'm happy to accept that you have greater knowledge about markets than I do. I'm not saying I'm right, I'm just giving an amateur's opinion.

but hey if you want to just think everything is just pure guess and emotion. then you can keep playing with the randomness of the next ATH
No need to be aggressive again! I'm trying to agree with you about TA not being so great (and even merited you because it's a good point, and I concur Cheesy ) Apologies if my (admittedly uninformed) opinion about everything being based on expectation of future utility is a bit amateurish and overly simplistic. I'm learning as I go here!
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December 26, 2019, 05:37:20 PM
 #16

Mining cost creates a bottom number.

Speculation creates a top number.

Multiple whale play is involved.

Also asic builders [bitmain] can push price up.

I like frank1y’s ideas 💡  as he looks at this a lot like I do.
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December 26, 2019, 06:45:56 PM
Merited by Jet Cash (2)
 #17

but hey if you want to just think everything is just pure guess and emotion. then you can keep playing with the randomness of the next ATH
No need to be aggressive again!

not being aggressive. i dont even own a gun or threaten people.
im more sarcastic with my whit. and not afraid to say it

but bitcoins PRICE is the anticipation of the future
bitcoins VALUE lays below it. you wont find the value line on a market price graph. but its below the price if you calculated it.

so todays bitcoin PRICE is ~$7.3k
so todays bitcoin VALUE is ~$6.5k

no one can predict if its gonna be a $6.6k-$8k price at any specific time soon
but people do know that value is $6.5k and that we wont be going below that any time soon

same with gold. i dont see the $1.2k price. i just see the $900 hidden cost. and base my decisions on how close it comes to that value COST

all im saying is dont think that bitcoins price line is its value line, as thats where the whole confusion begins. thinking the price is value
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December 26, 2019, 07:43:32 PM
Last edit: December 26, 2019, 08:04:42 PM by MajorMiner
Merited by Jet Cash (2)
 #18

Mining cost creates a bottom number.

Speculation creates a top number.

Multiple whale play is involved.

Also asic builders [bitmain] can push price up.

I like frank1y’s ideas 💡  as he looks at this a lot like I do.
Solid way of looking at the bare bone fundamentals in terms of cost, but even there the "irrational exuberance" or "irrational anti exuberance" can pop up.
For example people mining coin with mining costs way above the current value of the coin in hopes of the coin going "moon"
or the exact opposite people bailing on a coin or a stock at a price below what they got in for just to do damage control - perceived or real.

The other thing that does not get talked about and for a good reason is dark pools. Much of the real trading and influence peddling happens there.
The waves the public sees are sometimes formed in those depths.
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December 27, 2019, 10:36:18 AM
Merited by Jet Cash (2)
 #19

you could argue gold has same things.
and just pretend the cost to mine gold has no power over the market. and the rest is just speculation of utility and desire.

but thats just downplaying the cost of production..
sorry but i have been looking at different markets for years and there is a fundamental value line based on the acquisition costs.
...

Gold is different. If the price drops then production drops. If the price rises, then production rises. Bitcoin production is the same regardless of the price.
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December 27, 2019, 12:40:03 PM
Merited by Jet Cash (2)
 #20

you could argue gold has same things.
and just pretend the cost to mine gold has no power over the market. and the rest is just speculation of utility and desire.

but thats just downplaying the cost of production..
sorry but i have been looking at different markets for years and there is a fundamental value line based on the acquisition costs.
...

Gold is different. If the price drops then production drops. If the price rises, then production rises. Bitcoin production is the same regardless of the price.

production doesnt stop.
bitcoin mining farms and gold mining quarrys have long term contracts
gold has land leases and year contracts of employment
bitcoin has facility leases and electric supply contracts

they dont just stop daily or hourly because of the whims of exchanges
again you seem to think the price is the value

so lets imagine it this way
the PRICE is $7.3k.. it it.. understand it?
the value is $6.5k
so if the price goes down to $7.2.. $7.1... $7k the miners are still profiting

did you know that no where in the past has the price dropped below the cost

in 2017 when bitcoin was $20k.. the cost was not $15-$20k where pools were making a loss when it went down to ~$8k
the cost was $5.6k during that summer and the price never went down below that in the summer

then with the next gen asics being released(s15-17) and selling off of second hand S9 made the cost go down to the $3-$4k range
yep cost went down FIRST and then after the bitcoin price went down.
but yet again even in the $3-4k slump the price did not go below the cost

...
what your not adding to your scenario is the concept of the industrial mining. you seem to be stuck in the cncept of hoby mining by basement dwellers who get emotional to pool hop to altcoins.
im sorry to inform you that the hobby miners are not involved in the cost base area.. they are involved in the speculative area.
i know some argue that population of people numbers has many hobby miners, and yes there are more 'people' managing their hobby rigs. but its like
100,000 people managing 100,000 rigs
where as the industrial mining is
1000 people managing 1,000,000 rigs

bitcoin mining is about RIGS not people so the 1m rigs has more influence than what hobby mining does

if you do the math. just to cover labour hobby miners say they need $1000 a month profit per asic. to cover labour of industrial farming only needs $1 per asic to ensure the manager gets his $1k a month
and then electric. hobby mining uses residential/retail rates of electric. where as industrial mining uses wholesale rates of electric
meaning industrial mining have less costs so they can survive even when prices are low because the price remains higher than costs

basically if a hobby miner can even get to having lets say $7k cost and looking to make $1k profit.. ofcourse they are not mining right now on bitcoin. because the price is not $8k.
yet industrial mining is at $6.5k cost and $1 profit need so they are still mining.

industrial miners dont just give up due to the whims of the market price
just like vegetable farmers do not give up due to the whims of a retailers special offer retail price.
because the retail price is not the same as the cost to the farmer
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